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PETITIONER: BHAGWAN SINGH

       Vs.

RESPONDENT: RAMESHWAR PRASAD SASTRI & OTHERS

DATE OF JUDGMENT: 14/04/1959

BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. SINHA, BHUVNESHWAR P. WANCHOO, K.N.

CITATION:  1959 AIR  876            1959 SCR  Supl. (2) 535

ACT: Election Dispute-Disqualification for membership-Election to State  Legislature-Interest  in  contracts-Contract  entered into  as Mukhiya of Panchayat-Representation of  the  People Act, 1951 (43 Of 1951), ss. 7(d), 81, 100(1)(a).

HEADNOTE: The election of the appellant as a member of the Bihar State Assembly was challenged under s. 7(d) of the  Representation of the People Act, 951, by the first respondent who was also a  candidate for election for the same constituency, on  the ground that at the date of the nomination the appellant  had an  interest in contracts for execution of works  undertaken by  the Bihar Government, and that his nomination  had  been improperly  accepted.  The appellant’s plea inter  alia  was that  he  had executed the contracts not in  his  individual capacity  but  as the Mukhiya of the Village  Panchayat  and therefore the disqualification imposed by s. 7(d) of the Act could not be invoked against him.  The contracts in question related to community projects undertaken in pursuance of the Second  Five  Year  Plan,  under  which  the  execution   of different works adopted under the plan was to be by  popular local agencies like Village Panchayats.  The contracts  were all in the prescribed form and the appellant, at the com- 536 mencement  of the contract, described himself by  his  name, stating  that he belonged to the village.  The  preamble  to the  contract showed that the appellant undertook  to  carry out the construction of the development project under  local works  programme mentioned in the contract as  per  estimate attached  thereto,  that  he agreed  to  execute  the  work. according  to  and  subject  to  the  terms  and  conditions contained therein and that he undertook to contribute 50% of the cost in cash and labour.  At the end of the contract  he signed as Mukhiya, giving his address as the Gram Panchayat. The  Election Tribunal found in favour of the appellant  and dismissed  the election petition, but, on appeal,  the  High Court  took  the  view  (1)  that  the  description  of  the appellant  given  by  him at the time  when  he  signed  the contracts  was  not  a term of the contract  and  could  not therefore support his plea that he had executed the contract

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as  Mukhiya of the Panchayat, and (2) that the fact that  he undertook liability to execute the contracts as required and to  become  liable for payment of any fine  imposed  by  the local  government  officer  in case of  his  default  showed obligations  of a personal character inconsistent  with  his plea. Held, that, on a proper construction of the contracts taking into  account  all the terms and conditions as a  whole  and considering  them  in  the light of the  background  of  the Second  Five  Year  Plan,  when  the  appellant  signed  the contracts  as the Mukhiya of the Village Panchayat he  acted as its agent and not as an individual acting in his personal capacity.

JUDGMENT: CIVIL APPELLATE, JURISDICTION: Civil Appeal No. 139 of 1959. Appeal  by special leave from the judgment and  order  dated January 8, 1959, of the Patna High Court in Election  Appeal No.  I of 1958, arising out of the judgment and order  dated November  30,  1957,  of the Election  Tribunal,  Patna,  in Election Petition No. 353 of 1957. B.   K. P. Sinha and D. P. Singh, for the appellant.G. C. Mathur and Dipak D. Choudhri, for respondent No. 1. R. H. Dhebar, for respondent No. 3. 1959.  April 14.  The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-This appeal by special leave arises  from the’  election  petition filed by respondent I (No.  353  of 1957) in which he claimed a declaration that the election of the appellant as a member of the 537 Bihar  Legislative  Assembly Maner  Constituency  should  be declared  to be void.  In the last General Election for  the said  constituency  which was held in  February-March  1957, there were three candidates, the appellant, respondent I and respondent 2. The last date for filing nomination papers  at the  said  election was January 29, 1957; the  ’said  papers were  scrutinised  on February 1, 1957.   Respondent  I  had challenged the validity of the appellant’s nomination  paper at the said scrutiny but the returning officer had overruled the  objection raised by respondent I and had  accepted  the nomination  paper of the appellant along with ’those of  the two other candidates.  After the counting of votes was  done on March 3, 1957, the appellant was declared duly elected at the  election inasmuch as he had got 9,826 votes while  res- pondents  I and 2 had got 7,526 and 49  votes  respectively. Thereupon respondent I filed his election petition under  s. 81   of   the  Representation  of  the  People   Act,   1951 (hereinafter called the Act). In his petition respondent 1 challenged the election of  the appellant on several grounds all of which were  controverted by  the  appellant.  On the allegations of the  parties  the tribunal  had  framed  several issues and  parties  had  led evidence on them.  At the stage of arguments, however,  only a  few issues were pressed by respondent I and all  of  them were  found against him and in favour of the appellant.   In the  result the tribunal dismissed the election petition  on November 30, 1957. Against  the  said  decision of the  tribunal  respondent  I preferred  an  appeal  in the High Court  of  Judicature  at Patna;  and in his appeal he pressed only issue No. 1.  This issue was whether the nomination of the appellant was hit by the provision of s. 7(d) of the Act and as such whether  the said nomination had been improperly accepted.  On this issue

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the  tribunal had found in favour of the appellant  but  the High  Court reversed the said finding and accepted the  plea of respondent 1. As a result of this finding the High  Court allowed the appeal preferred by respondent I and 68 538 declared  on  January  8, 1959, that  the  election  of  the appellant was void under s. 100(1)(a) of the Act. The   validity  of  the  appellant’s  nomination  has   been challenged  under s. 7(d) of the Act on the ground  that  at the date of the nomination he had an interest in a  contract for   the  execution  of  works  undertaken  by  the   Bihar Government.   There  is  no  doubt  that  if  a  person   is interested  in  a  contract for the execution  of  any  work undertaken by the appropriate Government he is  disqualified for  membership of the State Legislature in  question.   The appellant, however, denied that the disqualification imposed by S. 7(d) could be invoked against him.  His case was  that the  contracts  in question had not been undertaken  by  the Bihar Government but they bad been undertaken by the Central Government; and he also urged that he had not taken the said contracts individually in his personal capacity, but as  the Mukhiya of the Jeorakhan Tola Gram Panchayat.  On both these issues  the  Election  Tribunal  and  the  High  Court  have differed;  and it is the said two issues that arise for  our decision  in  the present appeal.  It is clear that  if  the appellant  succeeds in showing that he had entered into  the impugned  contracts  not individually but on behalf  of  the Panchayat  of  which  he was the Mukhiya  it  would  be  un- necessary to consider whether the works covered by the  said contracts  had been undertaken by the Government  of  Bihar. Let us therefore first consider that point. The  impugned contracts are five in number.  They  were  for the  execution  of  works  under  local  development   works programme   envisaged  under  the  Second  Five  Year   Plan formulated by the Government of India.  These contracts  are evidenced  by  five documents, Exs. 16-A, B, C, D &  E.  The first  is  for the construction of  Beyapore-Jeorakhan  Tola Road, the second for the construction of the Beyapore M.  E. School,  the third for the construction of a  Dispensary  at Jeorakhan Tola, the fourth for the construction of the  Gram Panchayat  building, and the last for the construction of  a well  at the said village.  It is admitted by the  appellant that  these contracts had not been completed at the time  of his nomination. 539 In  considering  the appellant’s plea that he  had  executed these contracts as a Mukhiya of the Village Panchayat of his village,  it  would  be  necessary  to  bear  in  mind   the background  of the scheme in pursuance of which these  works were undertaken.  The Second Five Year Plan published by the Planning  Commission  in 1956 shows that the  programme  of’ starting  these’  works  was treated as a part  of  the  co- operative   movement  and  the  Commission   had   therefore recommended  that  the  States were to  sponsor  and  assist actively  in  the Organisation and  development  of  Village Panchayats  which  was  an  important  constituent  of   the programme of fostering corporate life in the rural areas  as it  would promote among the rural community active  interest in  the development programmes of the villages.  The  object of  this  programme  which would operate in  areas  not  yet reached  by  the National Extension Service  was  to  enable village  communities  to undertake works  of  local  benefit mainly with their own labour.  The Commission realised  that the  resources of all the States taken together  would  fall

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far  short  of  the  requirements of this  Plan  and  so  it recommended large transfers of resources from the Centre  to the  States.   In  this connection  the  conclusion  of  the Commission was that out of Rs. 200 chores sanctioned for the year 1957-58, 12 cores would be required for the Centre  for schemes  undertaken or directly sponsored by  the  Community Project  Administration and 180 crores were to form part  of the  balance  for the States.  Thus it is obvious  that  the basic idea underlying the Plan was to evoke popular response to  the  community projects undertaken in pursuance  of  the Plan  and to leave the execution of different works  adopted under  the  Plan to be fulfilled by popular  local  agencies like Village Panchayats. This policy was emphasised by the Secretary of the  Planning Commission  in his communication to all  State  Governments, No.  PC/Pub/52/53  dated  August  11,  1953  (H.  1).   This communication  set  out the seven categories of  work  which were most suitable for assistance and it said that the local contribution  in  cash or kind or through  voluntary  labour together 540 with  any contribution that the State Government or a  local body might make should be a minimum of 50% of the total cost of each work.  The intention was to spread the benefit  over as  wide  an area and to as many people  as  possible.   The State Governments were accordingly requested to arrange  for a detailed scrutiny of the schemes before they were accepted and for making adequate provisions providing for their  pro- per  execution.   They  were also  required  to  nominate  a liaison officer for each district or other suitable unit for the  purpose of checking the execution of the works and  for maintenance of such initial accounts as might be  necessary. This communication makes detailed provisions about financing and  accounting procedures to be followed and  required  the State  Governments  to make progress reports  from  time  to time. It  appears that the Government of India was aware that  the District  Boards  whose  primary responsibility  it  was  to sponsor  these  undertakings would find the  project  beyond their   financial   resources  and  so   it   accepted   the recommendation of the Planning Commission to contribute  50% of the cost of each of the schemes on the condition that the remaining  half had to be found by the District Board or  by the  public  to be benefited by it in the form  of  cash  or voluntary labour. The five impugned contracts related to community projects of the  kind envisaged by this programme.  By its letter  dated February  27, 1954 (H. 2) the Bihar Government  had  advised all  the  District Local Boards to assist the  execution  of such projects and to afford all facilities to and co-operate with   the  district  officers  in  the  execution  of   the programmes undertaken by these projects without charging any remuneration for the same.  The idea clearly was that if the Village  Panchayats sponsored works undertaken  under  these programmes they should encourage people to contribute labour and  even  money.   The  result  would  be  that  the  works undertaken  would benefit the community at large and if  any saving was made in executing the contract it would enure for the  benefit  of the village Panchayats  that  were  usually expected to be the sponsoring units. 541 It  is  in  the light of this background  that  we  have  to consider the question whether the contracts in question  had been executed by the appellant in his individual capacity as contended by respondent I or in his capacity as the  Mukhiya

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of the Village Panchayat as urged by the appellant. The four contracts evidenced by Exs. 16A, C, D and E are all similarly executed whereas contract 16-B which is in respect of the construction of the Beyapore M. E. School is somewhat differently  worded.   With regard to this  latter  contract both  the  Election Tribunal and the High Court  are  agreed that it had been executed by the appellant as the  Secretary of  the Beyapore Madhyamik Vidyalaya and that in  this  con- tract  the  appellant was not  personally  interested.   The Election Tribunal took the view that the other contracts are substantially  of the same character whereas the High  Court has  held  that  they are entirely different  and  that  the appellant has personally executed them.  The question  which we have now to decide is whether this view of the High Court is right. We  would  take Ex. 16-A as typical of  the  remaining  four contracts.   The  material terms of this contract are  8  in number  and  they are all in the prescribed  form.   At  the commencement  of  the contract the appellant  has  described himself by his name and he has stated that he belongs to the village  of  Jeorakhan  Tola  and  that  his  profession  is cultivation.   The preamble to the contract shows  that  the appellant  undertook  to carry out the construction  of  the development project under local works programme mentioned in the contract as per estimate attached thereto and he  agreed to  execute the work according to and subject to  the  terms and  conditions contained therein, and he also undertook  to contribute  50% of the cost in cash and labour.  At the  end the  appellant  has  signed as Mukhiya  and  has  given  his address  as Jeorakhan Tola Gram Panchayat.  The  High  Court took the view that the description of the appellant given by him  at the time when he signed the contract was not a  term of  the  contract and could not therefore support  his  plea that he had executed the contract as Mukhiya of 542 the  Panchayat.   It is on this ground that the  High  Court distinguished this and the other three allied contracts from the school contract, Ex. 16-B.  In this latter contract  the appellant has described himself as the Secretary,  Madhyamik Vidyalaya,  both at the commencement of the document and  at the end where the appellant has signed.  In our opinion, the distinction  made by the High Court between the two sets  of contracts  is not valid.  We do not see any reason  to  take the  view that the description given by the appellant  about his  status while he signed the contract is no part  of  the contract  itself.   Incidentally  we may  observe  that  the contract  is accepted by the officer who signs as the S.  D. O.,  Dinapore.  The designation of the officer given by  him while  signing the acceptance of the contract indicates  the character  in which the officer has accepted  the  contract. Similarly  the description given by the appellant about  his status  and character when he signed the contract should  be taken  to  denote  the character in which  he  executed  the contract. The  High Court also thought that cls. 4 and 7 by which  the appellant  undertook  liability to execute the  contract  as required  and  to  become liable for  payment  of  any  fine imposed   by  the  local  government  officer  in  case   of his  default clearly showed obligations of a  personal  type which  were inconsistent with his plea that he  had  entered into the contract as the Mukhiya of the Panchayat.  We think that  this  argument  has no force.  If the  nature  of  the liability  undertaken  by  these  two  clauses   necessarily involves  the conclusion that the execution of the  contract must be by an individual person, then it is significant that

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the  same two clauses occur in the school contract  and  yet the  High  Court has held that the said  contract  has  been executed by the appellant not in his individual capacity but as the Secretary of the Madhyamik Vidvalava.  Therefore  too much  reliance  cannot be placed upon these two  clauses  to support the view that the contract has been executed by  the appellant personally. Besides, the High Court has not properly considered the term of the contract by which the contracting 543 party  undertakes to contribute 50% of the cost of the  work in  cash or labour.  In other words, the  contracting  party becomes  a  sponsoring agent of the contract and  agrees  to undertake  50%  of  its  cost.   It  is  very  difficult  to appreciate the suggestion that the appellant personally  and in his individual character agreed to contribute 50% of  the cost  in cash or labour.  In’ ordinary course a  person  who undertakes to carry out a building contract expects to  make profit  and would never agree to contribute 50% of the  cost of  the  contemplated work.  This clause  clearly  indicates that  the sponsoring of the contract was really done by  the Village  Panchayat which agreed through its Mukhiya that  it would  contribute  50%  of the cost either  in  cash  or  in labour.   Consistently with the general policy of  Plan  the Village  Panchayat became a sponsoring agent and  hoped  and expected  to obtain popular response from the villagers  who would  contribute their labour and thus make up the  50%  of the  cost of the intended work.  Therefore, in our  opinion, if  the contract in question is considered in the  light  of the  background of the Plan of which it forms one item,  and all  its conditions are taken into account  together,  there can  be  no doubt that the appellant as the Mukhiya  of  the Village  Panchayat  acted as its agent when  he  signed  the contract.,  and not as an individual acting in his  personal capacity. This position is also corroborated by the record kept by the Village  Panchayat  in  respect of  these  contracts.   This record  consists  of  the  several  proceedings  before  the Village  Panchayat,  the  budgets  adopted  by  it  and  the resolutions  passed  by it from time to time in  respect  of these  contracts.  It had been alleged by respondent 1  that the whole of this record had been fabricated for the purpose of the present proceedings.  The Election Tribunal has  made a  definite finding against respondent I on this point.   It has considered the oral evidence given by the appellant  and other witnesses in proving the said record.  It has examined the  entries themselves on their merits and has  taken  into account the fact that some of the exhibits showed that  they had been signed and 544 approved  by  the District Panchayat Officer  from  time  to time.    The  tribunal,  therefore,  thought  that  it   was impossible to believe that all persons who purported to sign the record had helped the appellant to manufacture it simply because  the appellant was the Mukhiya of the village.   The judgment of the High Court shows that it was not prepared to reverse  this  finding  in terms.   It  has,  however,  made certain  observations in respect of this record which  would show  that it was not prepared to attach any  importance  to it.   "  The papers ", says the judgment, " do  not  inspire much  confidence and cannot be relied upon in proof of,  the facts  disclosed  by them ". It is unfortunate that  when  a serious allegation was made against the whole of the  record alleged  ’to have been kept by the Village Panchayat and  it had  been categorically rejected by the  Election  Tribunal,

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the  High Court should not have made its own finding on  the point in clear and unambiguous terms. The  oral  evidence led by the appellant in support  of  the record  and the other material circumstances  considered  by the  Election Tribunal do not appear to have  been  properly taken  into account by the High Court in dealing  with  this point.   The High Court was, however, impressed by  what  it called two defects in respect of this record-.  It  observed that the accounts had not been audited as required by r.  20 of  the Bihar Gram Panchayat Account Rules, 1949,  and  that the  cash  balance had not been kept by the Mukhiya  in  the nearest  Post Office Savings Bank or in any  recognised  Co- operative  Bank or a Government Treasury in the name of  the Panchayat  as  required  by  r. 8.  These  two  defects  may undoubtedly  suggest  that  the officers  of  the  Panchayat including  the appellant had not acted properly and had  not complied with the obligations imposed by the said rules; but it  is difficult to understand how the said two defects  can have  a  material and direct bearing on the question  as  to whether the record had, been fabricated.  If the High  Court intended to hold that the record bad in fact been fabricated it  should  have considered the relevant  evidence  and  the material circumstances 545 more  carefully and should have made a definite  finding  in that  behalf.   To  say  that  the  record  bore  only   the signatures  of  the appellant and his clerk and to  seek  to draw an adverse inference from that fact is, in our opinion, adopting a wrong approach to the question.  If the appellant was the Mukhiya he was bound to sign the record, and so  was the  clerk  bound  to write it;  that  cannot  therefore  be treated  as  a  suspicious circumstance by  itself  We  have carefully  examined  this  question and we do  not  see  any reason  why  the  well-considered finding  of  the  Election Tribunal  on  this  point should  not  have  been  accepted. Therefore, we must assume that the Panchayat record produced by the appellant is not shown to have been fabricated. Besides, the High Court itself appears to have assumed  that this  record showed that there was an understanding  between the  appellant  and the Village Panchayat in regard  to  the financial  obligations  involved  in the  execution  of  the impugned  contracts.   "  It  might  well  be  ",  says  the judgment, " that the loss or the profit was ultimately to be borne or pocketed by the Gram Panchayat itself " ; but that, according to the High Court, " does not take away the effect of  the contract itself which on the face of it was  entered into by the appellant himself ". If the Panchayat agreed  to bear   the  loss  or  take  the  profit  flowing  from   the performance  of  the contract then it clearly  supports  the appellant’s  case that he had executed the contract  as  the Mukhiya of the Panchayat.  The arrangement to which the High Court refers, if genuine, would be wholly inconsistent  with the  case set up by respondent I that the contract had  been executed by the appellant personally. The High Court has also held that the appellant had not made out  this specific case either before the returning  officer when  his  nomination  was  challenged  or  in  the  present proceedings  when  he  filed  his  written  statement.   The appellant  had  no  doubt stated in reply  that  he  had  no interest in any contract undertaken by the State Government. According to the 69 546 High  Court his failure to add the further  particular  that the  contract  had  been executed,by him on  behalf  of  the Panchayat  shows that the said plea is an afterthought.   We

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are  unable to see the force of this criticism.   But  apart from it, the question raised by the appellant relates to the construction  of  the  contract and we do not  see  how  the construction of a document can be prejudicially affected  by the  failure of the party to make a more specific  and  more precise  plea  in his written statement.  We have  no  doubt that,  if  the contract is considered as a whole,  it  would show  that the appellant had executed it as the  Mukhiya  of the Village Panchayat and this conclusion cannot be affected by  the  alleged  defect in the plea taken  by  him  in  the written statement. The  High  Court  has also relied on the fact  that  if  the contract  was  intended to be executed by the  appellant  on behalf of the Panchayat it should have been executed in  the name of the corporate body as required by s. 6 of the  Bihar Panchayat Raj Act (Bihar Act 7 of 1958).  It may be that the Gram Panchayat is a body corporate by the name specified  in the  notification  under  sub-s.  (1) of  s.  3  and  has  a perpetual succession and a common seal, and so has power  to contract  in  the  name of the body corporate;  but  as  the judgment of the High Court itself points out the  invalidity of  the  contract would not affect the merits of  the  issue raised under s. 7(d) of the Act.  That is the view taken  by this  Court  in Chatturbhuj Vithaldas  Jasani  v.  Moreshwar Parashram  (1),  and that in fact is the point made  by  the High  Court  in rejecting the  appellant’s  contention  that since  the contract was invalid he could not be said  to  be interested  in it under s. 7(d) of the Act.  Therefore,  the invalidity  of the contract cannot help us in  deciding  the question  as  to  whether, on  its  true  construction,  the contract can be said to have been executed by the  appellant in  his personal capacity or as the Mukhiya of  the  Village Panchayat.   Our  conclusion, therefore, is  that  the  four impugned  contracts have been executed by the  appellant  as the Mukhiya of the Village (1)  [1954] S.C.R. 817. 547 Panchayat just in the same way as he had executed the school contract  as  the Secretary of the  Vidyalaya  in  question. That  being so, s. 7(d) cannot be invoked against  him.   In view of this conclusion it is unnecessary to decide  whether the works in question had been undertaken by the  Government of Bihar or by the Central Government. The  result  is that the appeal must be allowed,  the  order passed by the High Court set aside and that of the  tribunal restored ; respondent I shall pay the costs of the appellant throughout;  and  the Election Commission shall  bear  their own. We  would  like to add that, after this  appeal  was  argued before  us on April 2, 1959, we had announced  our  decision that the appeal would be allowed and that the judgment would be delivered later on in due course.  It is in pursuance  of that order that the present judgment has been delivered. Appeal allowed.