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PETITIONER: UNION OF INDIA

       Vs.

RESPONDENT: SURJIT SINGH ATWAL

DATE OF JUDGMENT18/01/1979

BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) SARKARIA, RANJIT SINGH

CITATION:  1979 AIR 1701            1979 SCR  (2)1002  1979 SCC  (1) 520  CITATOR INFO :  D          1987 SC1577  (12)

ACT:      Fleas-Plea of  non-compliance with  the  provisions  of Section 175(3)  of the  Govt. of  India Act, 1935 is a mixed plea of  fact and  law-A plea  not having been so pleaded in the written  statement and  any issue  not  having  been  so raised with regard to it, cannot be allowed later.

HEADNOTE:      Pleadings-Denial of  a contract-Civil  Procedure  Code, 1908 (Act  V of 1908), Order VI Rule 8 and Order VIII Rule 2 scope of.      The respondent-plaintiff  undertook the construction of a  hard   Runway,  taxi   tracks  and   dispersal  roads  at Dalbhumghar  Aerodrome,   pursuant  to   a  formal   written agreement with appellant. The respondent completed the work. At a  subsequent conference,  it was  agreed that  the total amount of  the final  bill prepared  in accordance  with the agreed rates  less a  sum of  Rs. 50,000/-  should  be  paid forthwith and the balance of Rs. 50,000/- should be paid two weeks thereafter.  On the  appellant’s failure  to make  the payment of  Rs. 50,000/-, the respondent filed a suit on the original side  of the  High Court of Calcutta to recover the said sum together with interest. The suit was dismissed by a single judge  but on  appeal, the Division Bench of the High Court allowed the appeal and decreed the suit.      Dismissing the appeal by certificate, the Court, ^      HELD :  1. A plea of non-compliance with the provisions of Section 175(3) of the Goverrnment of India Act, 1935 is a mixed plea of fact and law. [1006 B]      2. The  plea of  illegality of an agreement, not having been so pleaded in the written statement and no issue having been raised  with regard  to it  cannot be allowed later. To permit such  a plea  to be  raised several  years after  the institution  of   the  suit   would  greatly  prejudice  the plaintiff. If  such a  plea had  been raised, in the instant case, at  the appropriate  stage,  the  respondent-plaintiff might have  come out  with a  suitable answer. He might have had his  own pleadings amended either by seeking to rest his case on  the original agreement or under Section 65 or 70 of

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the Contract Act. [1005 G-H, 1006 A]      3. The  illegality of  a contract  must be specifically pleaded as much as the denial of a contract. Under Order VI, Rule 8  of C.P.C.,  where  a  contract  is  alleged  in  any pleading, a  bare denial  of the  same by the opposite party shall be  construed only  as a denial in fact of the express contract alleged  or of  the matters  of fact from which the same may  be implied, and not as a denial of the legality or sufficiency in  law of such contract. And, under Order VIII, Rule 2  C.P.C., the defendant must raise by the pleading all matters which  show the  suit not to be maintainable or that the transaction  is either void or voidable in point of law. [1006 B-D]      Kalyanpur Lime  Works Ltd.  v. State  of Bihar and Anr. [1954] S.C.R. 958 referred to. 1003

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2053 of 1969.      From the  Judgment and  Decree  dated  16-7-68  of  the Calcutta High Court in Appeal No. 199-A of 1964.      R. B.  Bhatt, E. C. Agarwala and Girish Chandra for the Appellant.      H. B. Datar and Ashok Grover for the Respondent.      The Judgment of the Court was delivered by      CHINNAPPA REDDY,  J.-Not content  with raising  a false plea, the  appellant, Union  of  India  has  preferred  this appeal  on  a  technical  ground.  The  respondent-plaintiff undertook the construction of a hard Runway, Taxi tracks and dispersal roads at Dalbhumghar Aerodrome. There was a formal written agreement  between the  parties (Agreement  No :  A- VII/96 of  1944-45). The  respondent completed  the work  in 1945. The  agreement provided  for the work to be done "with stone at site". As no stone was available at the site, stone had to  be obtained  by blasting  a rock  in a  hillock. The rates stipulated  in the  agreement were  on the  basis that stone was  available at site and not on the basis that stone had to  be obtained  by blasting  rock. Some  of the  rates, therefore, required revision. There was a conference between the parties in November, 1947. On the side of the Government the Superintending  Engineer, the Executive Engineer and the Deputy  Accountant  General  were  present.  In  respect  of fourteen items  of work  the old  rates were not altered. In respect of  ten items  of work  only the rates were altered. Out of  these ten  items, rates were substantially increased for nine  items but  slightly decreased  for one  item.  The rates agreed  between the parties at the conference were the very rates  which had  been previously fixed by a Government Engineer named  Ramani Roy and suggested to the plaintiff by the  Superintending   Engineer  for   his  acceptance.   The plaintiff initially  objected to  the rates but withdrew his objections at  the conference.  It was agreed that the total amount of  the final  bill prepared  in accordance  with the agreed rates,  less a  sum of  Rs. 50,000/-,  should be paid forthwith and  the balance of Rs. 50,000/ should be paid two weeks thereafter.  As agreed  the amount  of the final bill, less Rs. 50,000/-, was paid but not the sum of Rs. 50,000/-. The sum  of Rs.  50,000/-  was  not  paid  despite  repeated demands by  the plaintiff.  The plaintiff  therefore,  filed suit No.  531 of 1951 on the original side of the High Court of Calcutta  on 24th January, 1951 to recover the sum of Rs. 50,000/- together with interest.

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    In the  plaint,  as  filed  originally,  the  plaintiff stated that  it was  agreed that  the work should be done by the plaintiff on the terms and conditions 1004 mentioned  in   certain  letters  that  passed  between  the parties. No reference to the written agreement was initially made in  the plaint  but by  a later amendment reference was also made to the agreent No. A-VII/96. The plaintiff further stated in  the plaint  that after the completion of the work there was  a conference in November, 1947 at Calcutta and an agreement was  arrived at  between the parties regarding the rates at  which the  plaintiff was  to be  paid for the work executed by  him. He  claimed that  in accordance  with  the terms of  the agreement arrived at in November, 1947, he had yet to be paid a sum of Rs. 50,000/-.      As we said earlier, the suit was filed on 24th January, 1951.  The  defendant,  Union  of  India,  filed  a  written statement on 1st February, 1956, five years after the filing of the  suit. The contract for the execution of the work was admitted. The  completion of  the  work  was  admitted.  The conference alleged  by the  plaintiff to  have been  held in November 1947  was denied.  The agreement  said to have been arrived at  the conference  was also  denied. These  denials have been  found to  be false  by the  Courts below  and the learned Counsel  for the  appellant had  to admit  before us that the denial was ‘unfortunate’. It is a matter not merely of surprise  but of  shock to  us that  such a blatant false plea should  have been  raised by  a  Government  in  solemn proceedings before Court of law. Far from setting an example as  an  ideal  litigant,  we  notice  that  such  false  and untenable  pleas   are  often   raised  on   behalf  of  the Government. This is a matter which needs looking into by the authorities that are concerned with it and we earnestly hope that some  suitable remedial  action will  be taken to avoid such pleas.  To continue the story, no plea was taken in the written statement  that the contract between the parties was hit by  any failure to comply with the provisions of Section 175(3) of the Government of India Act, 1935.      More than  a dozen  years after  the institution of the suit and  eight  years  after  the  filing  of  the  written statement, an  application  for  amendment  of  the  written statement was  filed on  25th April,  1964,  to  enable  the defendant to raise the plea that the contract was hit by the failure to  comply with  the provisions of Section 175(3) of the Govt.  of India Act, 1935. The application was dismissed on 1st May, 1964, but it was observed that the defendant was entitled to  raise the  plea sought  to  be  raised  by  the amendment even  without an  amendment. Thereafter  the  suit proceeded to  trial. Mr.  Justice Mallick who tried the case decided in  favour of the plaintiff on the several questions of fact  which were  raised. A question regarding compliance with the  provisions of  Section 80 Civil Procedure Code was also decided  in favour  of the plaintiff. He, however, held that the suit was based not on Agreement 1005 No. A-VII/96  of 1944-45  but on  the agreement  arrived  at between the  parties in  November, 1947, that this agreement was bad  for non compliance with the requirements of Section 175(3) of  the Govt.  of India  Act 1935,  and that the suit had, therefore, to be dismissed. On the basis of the finding that the  1947 agreement was bad for non compliance with the requirements of  Section 175(3)  of the  Govt. of India Act, 1935, the  learned Judge  also held  that the  Court had  no jurisdiction to entertain the suit. The suit was accordingly dismissed. On  appeal, a Division Bench of the Calcutta High

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Court consisting of A. N. Ray and S. K. Mukherjee. JJ., held that  the  defendant  not  having  pleaded  in  the  written statement that  the contract  contravened the  provisions of Section 175(3)  of the Goverment of India Act there being no issue with  regard to  Section 175(3),  the  learned  Single Judge was wrong in entertaining such a plea, at that belated stage. It was observed that the request for amendment of the written  statement   was  made   thirteen  years  after  the institution of  the suit  and that the plaintiff was greatly prejudiced by  such a  plea being  entertained. It  was also held by  the Division  Bench that there was no new agreement in November  1947. All that was done in November 1947 was to settle the  rates for  "additional or  substituted work"  as provided in  clauses 12  and 12-A of the original agreement. In view  of their  concusion that  the  plea  regarding  the invalidity of the agreement should not have been entertained by the  learned single  Judge, the  Division Bench held that the Calcutta  High Court  had jurisdiction  to entertain the suit. The  appeal was  allowed and  a decree was granted for Rs. 50,000/-  with interest  from the  date of judgment. The Union of  India has  preferred this  appeal  pursuant  to  a certificate  granted   under  Article   133(1)(a)   of   the Constitution of  India  (as  it  stood  prior  to  the  30th amendment).      Shri Bhatt, learned Counsel for the appellant submitted that the  suit was  based on the agreement of November, 1947 and that  this agreement  was  void  as  the  provisions  of Section 175(3)  of the  Govt. of  India Act,  1935, were not complied with. We do not prima facie agree that the suit was based on  any agreement  arrived at  in November 1947. We do not, however,  desire to  go into  the question  as  we  are satisfied that the Appellate Court was right in holding that the defendant  was not  entitled  to  raise  the    plea  of illegality of  the agreement,  not having  so pleaded in the written statement  and not  having  raised  any  issue  with regard to  it. We  agree with  the  learned  Judges  of  the Calcutta High  Court that to permit such a plea to be raised several years  after  the  institution  of  the  suit  would greatly prejudice  the plaintiff.  It such  a plea  had been raised at the appropriate stage, the plaintiff might have 1006 come out  with a  suitable answer. He might have had his own pleadings amended  either by seeking to rest his case on the original agreement  or under Section 65 or Section 70 of the Indian Contract  Act. We  do not  wish to  speculate on  the possible alternate  cases which the plaintiff might have put forward had  the plea  been raised.  We only wish to observe that the  plea that  the provisions of Section 175(3) of the Govt. of  India Act  had not  been complied  with is a mixed plea of  fact and  law.  We  further  agree  with  the  view expressed by  the learned  Judges of the Calcutta High Court that the  illegality of  a  contract  must  be  specifically pleaded as  much as the denial of a contract. Order VI, Rule 8 provides that where a contract is alleged in any pleading, a bare  denial of  the same  by the  opposite party shall be construed only  as a  denial in fact of the express contract alleged or of the matters of fact from which the same may be implied, and  not as a denial of the legality or sufficiency in law  of such contract. Order VIII, Rule 2 Civil Procedure Code  prescribes  that  the  defendant  must  raise  by  his pleading  all   matters  which  show  the  suit  not  to  be maintainable, or  that the  transaction is  either  void  or voidable in  point of  law. In  Kalyanpur Lime Works Ltd. v. State of  Bihar and  Anr.,(1) the Supreme Court reversed the judgment of the High Court on the ground that the High Court

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was not  justified in  allowing to  be raised at the time of argument the  question whether  there was a contravention of Section 30  of the  Govt. of  India Act  1915. Reliance  was placed upon  Order VI,  Rule 8 and Order VIII, Rule 2 of the Civil Procedure  Code 1908.  We are,  therefore, of the view that the  Division Bench  of the  High Court  was  right  in holding that  the learned  single Judge was not justified in permitting the  defendant to  take  up  the  plea  that  the contract  was   hit  by  the  failure  to  comply  with  the requirements of Section 175(3) of the Govt. of India Act. In the result the appeal is dismissed with costs. S.R.                                        Appeal dismissed 1007