JUDGMENT Jagdish Sahai, J.
1. On a difference of opinion between my brothers Nigam and Katju in First Appeal No. 2 of 1955 the following question of law has been referred to me by them under Section 98(2) of the Code of Civil Procedure:
"Whether the terms of Section 175(3) of the Government of India Act, 1935, require the execution of a formal document or whether the contract can be culled from the correspondence passing between the parties?"
2. The facts giving rise to this reference are as follows:
The State of Uttar Pradesh (hereinafter referred to as the respondent) owned and possessed two bungalows at Bahramghat, Tahsil Fatehpur, district Bara Banki, known as the Works Manager's bungalow and the Works Superintendent's bungalow. These bungalows stood on the land belonging to the Oudh-Tirhut Railway Administration (hereinafter referred to as the O.T.R. Administration) and not the Government of U. P. The respondent offered to sell these bungalows for Rs. 19,965-6-6, their book value, to Thakur Dan Singh Bisht (hereinafter referred to as the appellant) by means of a telegram dated 23-12-1948. The offer was accepted by the appellant by means of a telegram as also by a confirmatory letter both dated 27th December, 1948. The respondent confirmed the sale on 12-1-1949. The appellant, however, did not pay the sale price nor did he take possession of the bungalows and sometime in July, 1949, refused to go through the sale. The respondent served a notice dated 28th of November, 1949, on the appellant and on the failure of the appellant to comply with the terms of the notice resold the two bungalows on 5-2-1950 for a sum of Rs. 6,250/-. Thereafter, the respondent filed the suit giving rise to this First Appeal for recovery of a sum of Rs. 14,762-6-6 made up by the inclusion of the sum of Rs. 13,715-6-6 the difference in the price agreed to be paid by the appellant and the one received by the respondent in the sale held on 5-2-1950, a sum of Rs. 1,044-3-0 claimed as maintenance charges and Rs. 2-11-0 as miscellaneous charges. The total of these three items comes to Rs. 14,762-4-6 but a decree for a sum of Rs. 14762-6-6 was claimed.
3. The suit was contested by the appellant, inter alia, on the plea that Section 175(3) of the Government of India Act (hereinafter referred to as the Act) required , the execution of a formal document of contract and inasmuch as It was not done in the present case, the respondent could not sue the appellant on the basis of letters and telegrams spelling out from them the contract between the appellant and the respondent to the effect that the appellant had agreed to purchase from the respondent the two bungalows mentioned above for a sum of Rs. 19,965-6-6.
4. In respect of this plea issue No. 7, which is reproduced below, was framed:
"7. Is the contract relied upon by plaintiff not valid and not enforceable for non-compliance with the provisions of Section 175 of the Government of India Act as alleged in Para 25-A of the written statement and if so its effect?"
The learned trial Judge answered this issue in favour of the respondent and against the appellant on the finding that the letters and the telegram "effected a valid contract between the parties within the meaning of Section 175(3) of the Government of India Act of 1935 and the plaintiff is, therefore, competent to sue for damages for breach of this contract." The trial Court decreed the suit of the respondent for the recovery of a sum of Rs. 13,715-6-6 with proportionate costs on 11-10-1954.
Against that decree First Appeal No. 2 of 1955 was filed in this Court, which was heard by Nigam and Katju, JJ. and as already said earlier, the learned Judges differed of the question as to whether or not the respondent could plead a binding contract against the appellant on the basis of the letters and telegrams mentioned above. I am not called upon to go into any other matter relating to this First Appeal and have simply to answer the question referred to me.
5. Section 175(3) of the Act reads as follows: "(3) Subject to the provisions of this Act with respect to the Federal Railway Authority, all contracts 'made in' the exercise of the executive authority of the Federation or of a Province shall be expressed 'to be made' by the Governor-General, or by the Governor of the Province as the case may be, and all such contracts and all assurances of property 'made' in the exercise of that authority shall be executed on behalf of the Governor-General or Governor by such persons and 'in such manner' as he may direct or authorise." (underlined (here in ' ') by me)
6. Provisions like Section 175(3) of the Act have existed in all the Constitution Acts passed ever since the British Crown took over the responsibility of directly administering India in 1858 soon after the war of independence (popularly called the Indian mutiny).
7. In the Government of India Act, 1858, (21 and 22 Vict. c. 106) Section 40 reads as follows:
"40. Power to sell and purchase, and to enter into contracts, vested in Secretary of State in Council, etc.--The Secretary of State in Council, with the concurrence of a majority of votes at a meeting, shall have full power to sell and dispose of all real and personal estate whatsoever for the time being vested in Her Majesty under this Act, as may be thought fit, or to raise money on any such real estate by way of mortgage, and make the proper assurances for that purpose? And to purchase and acquire any land or hereditaments, or any interests therein, stores, goods, chattel, and other property, and to 'enter' into any contracts whatsoever, as may be thought fit for the purposes of this Act:
and all property so acquired shall vest in Her Majesty for the service of the Government of India; 'and any conveyance of or concerning any real estate to be made by the authority of the Secretary of State in Council may be made under the hands and seals of three members of the Council'."
(underlined (here in ' ') by me).
8. In 1859 the Government of India Act, 1858, was amended by means of the Government of India Act, 1859, (22 and 23 Vict. c. 41) (hereinafter referred to as the 1859 Act). Section 5 of that Act reads as follows;
"5. Mode of executing contracts - All contracts purporting to be 'entered' into by the Secretary of State in Council which shall have been previous to the passing of this Act 'made' under the hands and seals or hands of three or more members of Council shall be as valid and effectual to all intent and purposes whatsoever, as the same would have been if section forty of the said Act had contained an express provision that the contracts 'to be entered into' by the Secretary of State in Council pursuant to that Act might be so made;
and from and after the passing of this Act all contracts 'in writing entered into' by the Secretary of State in Council with the concurrence of a majority of votes at a meeting, may be expressed to be made by the Secretary of State in Council under that designation, and, if such, as, if made between private persons, would be by law required to be under seal, may be made, varied, or discharged under the hands and seals of two members of the Council, or, if such, as, if made between private persons, would be by law required to be signed by the parties to be charged therewith, may be 'made', varied or discharged under the hands of two members of the Council;
and the benefit and liability of such contracts shall pass to the Secretary of State in Council for the time being."
(underlined (here in ' ') by me).
9. Thereafter, though successive amendments were made to the 1858 Act, no change was made in respect of this matter.
10. The counter-part of Section 175(3) of the Act in the 1915-19 Act was Section 30 and in the present Constitution it Is Article 299(1). Both these provisions are reproduced below. 'Article 299(1) reads--
"(1) Contracts--Contracts 'made' in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of property 'made' in exercise of that power shall be executed on behalf of the President or the Governor by such persons and in 'such manner as he may direct or authorise'."
In the Government of India Act, 1915-19, the relevant provision was Section 30 which reads as follows:
Power to execute assurances etc. in India.
"(1) The Governor-General in Council and any local Government may, on behalf and in the name of the Secretary of the State in Council ..... make any contract for the purposes of this Act.
(2) Every assurance and contract made for the purposes of Sub-section (1) of this section shall be executed by such person and 'in such manner as the Governor-General in Council by resolution directs or authorises, and If so executed may be enforced by or against the Secretary of State in Council for the time being."
11. It would be noticed that the language of Section 175(3) of the Act and Article 299(1) of the Constitution of India is similar. Section 30(2) of the 1915-19 Act is not materially different but contains a provision which is omitted both from Section 175(3) of the Act and Article 299(1) of the Constitution, the same being "and if so executed may be enforced by or against the Sectary of State in Council for the time being." The position in Section 30(2) of the 1915-19 Act clearly was that if a deed of contract or assurance of property was not prepared in the manner provided by that section, it could neither be enforced against the Secretary of State nor by him. Section 175(3) of the Act and Article 299(1) of the Constitution have not adopted words to that effect.
12. It is trite that all the provisions mentioned above in the various Constitution Acts were made by way of public policy in order to protect public interest so that the funds of the State were not frittered away by reckless or clandestine contracts and with a view to ensure proper handling of such affairs. The use of the words Governor-General and the Governor of a Province in Section 175(3) of the Act instead of the Secretary of State in Council had to be made because under that Act, the body, Secretary of State in Council, was dissolved. These previsions were made so that no contract or assurance of property could be made in the name of any one except the principal officer of the State or the Head of the State i.e. the Secretary of State in Council (in 1915-19 Act), the Governor-General and the Governor of a province (in the 1935 Act) and the President and the Governor of a State in the Constitution).
My brother Nigam has taken the view that a contract envisaged by Section 175(3) of the Act can be spelt out from correspondence also and a formal document is not imperative and further that even if a contract is made in the teeth of that section it will not be binding on the Government though it would bind the other party to the contract. My brother Katju has, on the other hand, taken the view that such a contract cannot be culled out from correspondence and that where a contract is not in conformity with the provisions of Section 175(3) of the Act, it is unenforceable both by as also against the State.
13. It is well settled "that the provisions under the successive Constitution Acts relating to the form of contract between the Government and the private individual are mandatory and not merely directory." (See Bhikraj Jaipuria v. Union of India, AIR 1962 SC 113 and State of West Bengal v. M/s. B. K. Mondal and Sons, AIR 1962 SC 779). It would be noticed that the word used in Section 175(3) of the Act is 'executed'. Learned counsel are agreed that Section 175(3) excludes an oral contract or assurance of property and on that point there is no conflict of authority in this country. Actually this Court in the case of Devi Prasad Sri Krishna Prasad Ltd. v. Secy. of State, AIR 1941 All 377, clearly held that the section did not permit oral contract or assurance of property. It is elementary that what a word means is to be gathered in addition to its dictionary meaning, from the context in which it is used. (See Lachhmi Narain Marwary v. Balmukund Marwary, AIR 1924 PC 198, and Pt. Ram Narain v. State of Uttar Pradesh, (S) AIR 1957 SC 18). In fact the law goes so far as to require a word being read in the sense furnished by the context even though it may not strictly accord with the dictionary meaning. (See Altrincham Electric Supply Ltd. v. Sale Urban Council, (1936) 154 LT 379). Section 175(3) of the Act also like similar provisions in other Constitution Acts also uses the word 'made' with regard to contracts and assurances of property but only at the stage where the contract is formed and at the stage of drawing up of the instrument or indenture the word used is 'executed' and not 'made'.
This, to my mind, is a significant circumstance indicative of a deliberate choice of the word by the legislature. It appears to me that the setting in which the word 'executed' has been used along with the meaning of that word is suggestive of the preparation of a format document.
14. The word 'execute' amongst others, has been given the following meaning in the Shorter Oxford English Dictionary.
"To follow out, carry into effect, to give effect to (law); To go through the formalities necessary to the validity of. Hence, to complete and give validity to it by signing, sealing etc."
15. To execute a document simply means to perform what is required by law to give validity to a writing as by signing and sealing it. (See Ramrup Singh v. Jang Bahadur Singh, AIR 1951 Pat 566 and Sultan Ahmad v. Maksad Hussain, AIR 1944 Pat 3).
16. In Baliram v. Kamalja, AIR 1924 Nag 367, Sundar Chaudhari v. Lalji Chaudhari, AIR 1933 Pat 129, Keshwar Mehra v. Rajeshwari Pershad Singh, AIR 1935 Pat 497 and Abdul Hasan v. Mt. Wajib-un-nissa, AIR 1948 Pat 186, the question arose as to what does the word 'execution' means and what was said in those cases shows that the learned Judges were taking the view that the expression 'execution of a document' connotes the preparation of a formal deed.
17. The word 'execute' is generally used in the sense of performing an act solemnly and in a formal manner. It cannot, therefore, be seriously disputed that the word 'executed' does suggest that there should be 3 formal contract between the Government and the other party or parties. It would be noticed that the word 'execute' or 'executed' has been brought forward from one Constitution Act into another and this word appears not only in Section 175(3) of the Act, and in Section 30(2) of the 1915-19 Act but also in Article 299(1) of the Constitution of India. The three Constitution Acts mentioned above were drafted by legal experts. It cannot be supposed that the draftsmen were unaware of the implications of the word 'execute' or 'executed' and if formality was not to be of the essence, the purpose would have been served by using expressions such as 'made', 'arrived at' or 'entered into'.
18. The expression 'assurance of property' also is suggestive of there being a formal document to evidence a transaction. The words 'assurance of property' are to be found in the relevant provisions of all the Constitution Acts beginning with 1858 and ending with the present constitution. For the first time these words occur in Section 40 of the 1858 Act. I have underlined (here into " " ) the words "or to raise money on any such real estate by way of mortgage, and make the proper assurances for that purpose" while reproducing Section 40 of the 1858 Act. These words clearly show that the expression 'assurance of property' means mortgages or conveyances of property. The use of the words "and make the proper assurances for that purpose" clearly suggest that there should be a formal document to evidence it. It is in that sense that the term 'assurances of property' has been used in the relevant provisions of the succeeding Constitution Acts including Section 175(3) of the Act.
19. In Ramanatha Aiyyar's Law Lexicon, the word 'assurance' has been given the following meaning;
"A deed of instrument of conveyance, the lagal evidence or transfer of property (3 Bl. Com. 294); ''An assurance is something which operates as a transfer of property" (per Kay, L. J. Re: Ray, (1896) 65 LJ Ch 316 at p. 320). 'Assurance' in contract means 'making secure' "insure'. It means the act of assuring; a declaration tending to inspire full confidence."
The word 'assurance' has been given the following meaning in the Shorter Oxford English Dictionary:
"An, engagement; pledge or guarantee (law) the conveyance of lands or tenements by deed, a legal evidence of conveyance of property."
In Webster's New International Dictionary, the following meanings have been given to the word 'assurance':
"Act of assuring, as by personal engagement; a pledge or guarantee, also, a declaration tending to inspire full confidence. Law. The act of conveying, or the instrument or other legal evidence of the conveyance of, real property; --usually called common assurance."
20. It is trite that the expression "assurance of property" is a term of art and a product of the law of England. It is therefore permissible to see the English law on the subject and reference to Halsbury's Laws of England and some English cases would not be out of place. (See Smith v. Alabama, (1887) 31 Law Ed 508).
21. In Haisbury's Laws of England, Vol. 32 Simond's Edition, p. 355, in Article 562, under the heading 'Assurance at common law and under statute', it has been stated as follows:
"Interests in land were formerly conveyed by assurances which took effect at common law, or by statute, or partly at common law and partly by statute. The assurance is now made by deed alone, but, formerly, the conveyance by deed of interests involving immediate possession for an estate of freehold was, save in certain special cases, accompanied by delivery of possession - that is, in such a case, seisin though forms of conveyance were used which were intended to avoid actual delivery of possession,"
Again, the same Volume at p. 362, in Article 574, under the leading 'Form and contents of Assurance', sub-heading Normal requirements', the following has been stated:
"An assurance of real property normally follows the ordinary form of a deed inter partes. It contains the date and parties, the recitals showing the title to the property conveyed and the object of the conveyance, the receipt clause, the actual grant, the description of the property conveyed, and the limitation of the estate taken by the grantee. In addition there are covenants for title which were formally express, but are now usually implied from the use of the appropriate statutory words."
22. In Cunliffe v. Brancker, (1876) 3 Ch D 393 at 7. 402 it was observed as follows:
"The word "convey" by itself does not show much; it is a word of general meaning, denoting any act by which real property is passed from one person to another a rather more modern term, I believe, than "assure", but having the same meaning."
23. In (1896) 1 Ch 468 at p. 476, it was observed as follows:
"But Section 124 enacts as follows:
'The committee of the estate or such person as the judge approves, shall in the name and on behalf of the lunatic execute and do all such assurances and things for giving effect to any order under this Act as the judge directs,' and so on. Now, a covenant is not strictly an 'assurance'. There has been considerable contest as to the meaning of that word in cases arising under the Bills of sale Acts. An 'assurance' is in reality something which operates as a transfer of property; and an assurance can hardly include a covenant. But the section says, 'all such assurances and things', and those two latter words are put in, no doubt, in order to enlarge the power I should say that, in furtherance of the general intention, this section is wide enough to enable the Court to authorise the Committee of a lunatic to execute a conveyance on behalf of a lunatic with all such covenants as are usual in such a conveyance, including the ordinary covenants for title."
In Corpus Juris Secundum, Vol. 7, p. 133, the following has been said with regard to the wcrd 'assurance':
"Assurance. It has been said that "assurance" is a term having several distinct meanings; and that the primary meaning of that word is act or declaration of assuring, or that which is designed to give confidence. It has also been defined generally as a promise; a representation, declaration, or persuasion; also, a making secure; insurance. In conveyancing, the word has been defined as a conveyance, any instrument which Confirms the title to real estate; the legal evidence of the transfer of property. In commercial law, a pledge, guaranty, or surety."
24. In my opinion, the words 'assurance of property' occurring in Section 175(3) of the Act as also in Section 30(2) of the 1915-19 Act and Article 299(1) of the Constitution of India mean any document of conveyance or the legal evidence of the transfer of property as was clearly stated in Section 40 of the 1859 Act. It is obvious' that such a document has got to be in writing and must be of a formal nature. Transfer of property can only be made in this country by a written and formal deed and if the property happens to be valued at Rs. 100/-, the deed has also got to be registered. Under the circumstances, it appears to me that no assurance of property, within the meaning of Section 175(3) of the Act, could be made by means of letters or correspondence. Such a conveyance can only be made by means of a formal document. The word 'contract' has been used in the various Constitution Acts in the sense in which that word is defined and used in the Indian Contract Act. The position of a contract under Section 175(3) of the Act Is not different from that of an ''assurance of property" and if the latter requires a formal document, it is difficult to believe that the former could be made by means of correspondence. It Is because "of the us" of the word 'executed' that it has been held that Section 175(3) does not countenance an oral contract. If the word 'executed' has got to be given its meaning, of being in writing so as to exclude oral contracts and assurances of property, there is no reason not to give to that word meanings which the context would bear i.e. the drawing up of a formal document.
25. In view of the fact that all the Constitution Acts require a certain amount of formality and strictness with regard to the execution of contracts and assurances of property, it would be surprising if the same did not require the execution of formal documents. It cannot be in public interest that the Government should dispose of its property otherwise than in a formal manner and by a written instrument evidencing the same. To my mind, it would be subversive of the scheme of Section 175(3) of the Act and other similar provisions in other Constitution Acts to accept that even though in an other matters there is great strictness and the provisions are mandatory, laxity has been permitted with regard to the execution of deeds of contracts and "assurances of property", from which alone rights would flow and which alO'ne would be determinative of the title of the parties. It is true that in Section 175(3) of the Act, the corresponding provisions in the 1915-19 Act and the Constitution, the words relating to signing and sealing of contracts and assurances of property have been omitted, but in my opinion no significance can be attached to the omission because that has been made good by the use of the word 'executed' which did not occur either in Section 40 of the 1858 Act or Section 5 of the 1859 Act. These latter provisions used the words 'made' or 'enter into'. I have already held earlier that the setting in which the word 'executed has been used in Section 175(3) of the Act is in the sense of drawing up a formal deed and even if the word executed may be assumed to be neutral (I have held to the contrary) colour is provided to it by the context.
26. When I hold that Section 175(3) of the Act requires the drawing up of a formal document all that I intend to say is that the form of the document shall be one which is in use under the practice and the law of the land to evidence the particular type of transaction. Obviously what form a particular deed or indenture is to take would depend upon the nature of the transaction. If it is the placing of an order by the Government, It can only be an order form, if it is agreement to sell" and purchase property it is to be in the form of an Agreement deed, if it is a sale it must be in the form of a sale deed and if it is a mortgage it must be a mortgage deed.
27. While dealing with the provisions of Section 33(2) of the 1915-19 Act, the Bombay High Court in Municipal Corporation of Bombay v. Secy. of State, AIR 1934 Bom 277 and Krishnaji Nilkant v. Secretary of State, AIR 1937 Bom 449 took the view that a contract contemplated by that section must be of a formal nature. In an earlier rase under Section 40 of the Government of India Act of 1858, a similar view was taken by that High Court in Municipal Corporation of Bombay v. Secy. of State, ILR 29 Bom 580.
28. In Secy. of State v. Bhagwsndas Goyerdhandas, AIR 1938 Bom 168 a Division Bench of that Court disagreed with the earlier Bombay cases and held that not withstanding the use of the word 'executed', which implies a formal document, it was not necessary that the contract envisaged by Section 30(2) of the 1915-19 Act should be of a formal nature.
In Secy. of State v. Yadavgir Dharamgir, ILR 60 Bow 42 :. (AIR 1936 Bom 19) a similar question was posed but not answered because it did not arise upon the pleadings. The learned Judges, however, made the following observation:
"It is clear that in order to bind the Secretary of State, there must be a deed executed on his behalf and in his name by a proper authority............."
29. The Madras High Court in Sankara Mining Syndicate Ltd. v. Secy. of State, AIR 1938 Mad 749 held relying upon AIR 1934 Bom 277 and Secy. of State v.
Chettyar Firm, ILR 4 Rang 291 : (AIR 1927 Rang 14) that a contract which was not executed in a solemn and formal manner was neither enforceable by the Government nor could it be enforced against it. In this judgment, however, Rutledge, C. J. was also influenced by the consideration that under the rules framed by the Governor General in Council, a formal document was necessary.
30. In Perumal Mudaliar v. Province of Madras, AIR 1950 Mad 194 while dealing with a contract under Section 175(3) of the Act, it was held by that Court that firstly the contract should be embod'ed in a formal document and secondly even if no formal document had been executed, the correspondence must clearly show what exactly was agreed to. In this case also, the question never arose that any contract spelt from correspondence could be enforced by the Government against the other party to the contract.
31. In ILR 4 Rang 291 : (AIR 1927 Rang 149 to which 1 have already referred earlier, the Rangoon High Court also took the view that the- contract contemplated by Section 30 of the 1915-19 Act must be embodied in a solemn and formal document.
32. The Calcutta High Court in Union of India v. B. C. Nawn (Bros.) Pr. Ltd., AIR 1961 Cal 620 held that "a formal bilateral instrument is not imperative under Section 175(3) of the Government of India Act, It can very well be evidenced by letters." The learned Judges followed the earlier case of the same Court in Ghosh Singh Partners Ltd. v. Union of India, AIR 1959 Cal 287.
33. The same Court in Ram Nagina Singh v. Governor General in Council, 84 Cal LJ 275 held that Section 175 was mandatory and a contract not in compliance with that Section was void.
34. in Province of Bengal v. S.L. Puri, 51 Cal WN 753, it was held that even letters' headed "Government of India" did not comply with the provisions of Section 175(3) of the Act.
35. In S. C. Mitra and Co. v. Governor General in Council, ILR (1950) 2 Cal 431, it was held that if contract is not made in accordance with the previsions of Section 175(3) of the 1935 Act, it was not valid against the Government.
36. The Patna High Court in Dominion of India Bhikraj Jaipuria, (S) AIR 1957 Pat 586 held that the provisions of Section 175(3) of the Act or for the matter of that the provisions cf Article 299(1) of the Constitution are mandatory and must be strictly complied with in order to form a contract which could be enforced against the Government. The learned Judges had not to deal with the question as to whether the State could enforce such a contract against a private person.
37. The same Court in S.K. Sen v. Provincial P. W. D. State of Bihar, AIR I960 Pat 159 held that a contract entered into in order to be binding end enforceable against the State Government must be made in strict conformity with the formalities prescribed by Article 299(1) of the Constitution or Section 175 of the Government of India Act.
38. In Dharmeshwar Kalita v. Union of India, (S) AIR 1955 Assam 86 a Division Bench of the Assam High Court while dealing with the scope of Section 175(3) of the Act held that "compliance with these requirements would result in a document which it would be difficult to characterise as not formal." tt was also said in that Judgment that the Government was not bound by a contract executed or arrived at in a manner not provided by Section 175(3) of the Act, but they expressed no opinion as to whether the Government could enforce such a contract against a private party because the question never arose there.
39. In Secretary of State v. G. T. Sarin and Co., AIR 1930 Lah 364, it was held by a Division Bench of the Lahore High Court that Section 30(2) was mandatory and not merely directory and a contract entered into by a person not authorised on behalf of the Governor-General in Council is ultra vires and not a valid contract.
40. This Court in AIR 1941 All 377 (supra) held that a extract contemplated by Section 175(3) of the Act need not be Incorporated in a formal deed or under seal. This case was distinguished in a later case of this Court in BriJ La| Suri v. State of U. P., AIR 1954 All 393, wherein It was held that a contract does not comply with the provisions of Section 175(3) of the Act unless it is executed not only on behalf of the Governor but also in ,his name.
41. The only other case of our Court requiring notice is U. P. Government v. Nanhco Mal. AIR I960 All 420. It was held in that case that contracts net expressed to be made in the name of the President or the Governor are not void though they are not enforceable against the Union or the State Government until ratified by them. The decision is based upon what the learned Judge thought to be the ratio in Chaturbhuj Vithaldas Jasani v. Moreshwar Parsharam, AIR 1954 SC 236.
42. On behalf of the State reliance is placed upon three decisions of the Supreme Court and it is strenuously contended that the observations made by their Lordships in those cases lead to the conclusion that a contract or assurance of property can be spelled out from correspondence also and a formal deed is not necessary and further that even though a contract or assurance of property may not have been prepared in conformity with the requirements of Section 175(3) of the 1935 Act or Article 299 of the Constitution, it would be binding on the other party to the contract or the assurance of property but not on the Government until ratified, if the ratio of the Supreme Court In the cases on which the learned Advocate General has relied, and which I will presently discuss, is the same as enunciated by him, it is obvious that those observations would conclusively determine the fortunes of the present case.
43. The first case is that of Jasani, AIR 1954 SC 236. That was a case where the election of Jasani to the Lok Sabha was challenged in an election petition on the ground that he was subject to the disqualification set out in Section 7(d) of the Representation of the People Act (Act 43 of 1951) as he was interested in a contract for the supply of goods to the Central Government. The relevant portion of Section 7(d) of the Representation of the People Act reads as follows;
"A person shall be disqualified for being chosen as a member. .........
(d) if ................. by himself ........ he has any share of interest in a contract for the supply of goods to ................ the appropriate Government."
In that case the Supreme Court had to consider whether the contracts made by the Chairman of the Board of Administration with Moolji Sicka and Co., of which Jasani was a partner, not being expressed in the name of the President, were still contracts within the meaning of Section 7(d) of the Representation of the People Act. "The only flaw" was "that the contracts were not in proper form end so because of this purely technical defect, the principal could not have been sued me contention was that as these contracts were not expressed to be made by the President, they are void." Reliance was placed upon Article 299(1) of the Constitution and it was submitted that the provision being mandatory and the contracts being violative of it, it could not be said that in law there were any contracts between the Government and Jasani.
The Supreme Court observed as follows:
"Now, Section 7(d), Representation of the People Act does not require that the contracts at which it strikes should be enforceable against the Government; all it requires is that the contracts should be for the supply of goods to the Government. The contracts in question are just that and so are hit by the section."
The question before the Supreme Court, was not as to whether a contract could be spelled 'out of correspondence in the absence of a formal document The submission was only to this effect that the contracts, not being in the name of the President, were hit by Article 299(1) of the Constitution and the Supreme Court repelled the submission after holding that for that reason the contracts were not void, the same could be ratified and that Section 230 of the Contract Act would apply to such contracts. Their Lordships relied upon Collector of MasuIIpatam v. Venkata Narrainapan, 8 MOO Ind App 529 at 554 (PC) where it was held that when a Government officer acts in excess of authority, Government is bound if it ratifies the excess. In the present case, the principle of ratification is not applicable because the contract is not being challenged on the ground that It was not expressed in the name of the Governor but on the ground that it was not executed at all inasmuch as no formal deed was prepared. That being so, to my mind, the case is clearly distinguishable.
44. Another submission was advanced on the basis of this decision was that the rationale of the case is that even oral contracts could be made by the Government, without hitting Article 299(1) of the Constitution. In my opinion, that is not the ratio of the case.
45. My brother Nigam has, on the basis of the passage, which is reproduced below, from Jasani's case, AIR 1954 SC 236, come to the conclusion that a formal document was not imperative:
"It would in our opinion be disastrous to hold that the hundreds of Government Officers who have dally to enter into a variety of contracts, often of a petty nature, and sometimes In an emergency, cannot contract orally or through correspondence and that every petty contract must be effected by a ponderous legal document couched in a particular form."
46. The decision in Jasani's case, AIR 1954 SC 236 came up for consideration before their Lordships of the Supreme Court in Bhikraj's case, AIR 1962 SC 113 and the passage from Jasani's case, AIR 1954 SC 236 extracted above, was explained by their Lordships in the following words:
"The rationale of the case in our judgment does not support the contention that a contract on behalf of a State not in the form prescribed is enforceable again the State. Bose, J. expressly stated that.................
..........................................................................................................................................................................
The facts proved in that case clearly establish that even through the contract was not in the form prescribed, the Government had accepted performance of the contract by the firm of which Jasani was a partner, and that in fact there subsisted a relation between the Government and the firm under which the goods were being supplied and accepted by the Government. The agreement between the parties could not In the case of dispute have been enforced at law, but it was still being carried out according to its terms; and the court held that for me purpose of the Representation of the people Act, the existence of such an agreement which was being carried out in which Jasani was interested disqualified him."
47. In the case of Bhikraj, AIR 1962 SC 113 (supra) the learned judges of the Supreme Court clearly held that a contract not In conformity with Section 175(3) of the 1935 Act could not be enforced. It will be profitable to reproduce below the following passage from that judgment:
"It is in the interest of the public that the question whether a binding contract has been made between the State and a private individual should not be left open to dispute and litigation. The whole aim and object of the legislature in conferring powers upon the head of the State would be defeated if in the case of a contract which Is in form whether the contract was intended to be made for and on behalf of the State or on behalf of the person making the contract. This consideration by itself would be sufficient to imply a prohibition against a contract being effectively made otherwise than in we manner prescribed. It is true that in some cases, hardship may result to a person not conversant with the law who enters into a contract in a form other than the one prescribed by law. It also happens that the Government contracts are sometimes made in disregard of the forms prescribed; but that would not be a ground for holding that departure from a provision which is mandatory and at the same time salutary may be permitted."
48. The case of Bhlkraj, AIR 1962 SC 113 (supra), in my opinion, does not in any way advance the cause of the State of U. P., and if at all, can be pressed into service by the appellant.
49. The third case of the Supreme Court, on which reliance has been placed is State of Bihar v. M/s. Karam Chand Thapar and Bras. Ltd., AIR 1962 SC 110. That decision again does not deal with the question as to whether or not a binding contract between the Government and a private individual can be culled out from the correspondence. In that case, Karam Chand Thapar had taken three building contracts from the State of Bihar for which a formal document was executed. One of the clauses of the agreement was that any dispute arising between the parties would be referred to an arbitrator. Disputes arose between the parties. Thereafter, an agreement deed, referreing the matter to the arbitration of Col. Smith, was drawn up and signed on February 6, 1948, by Karam Chand Thapar on the one hand and by Sri Y.K. Lal, the Executive Engineer, on the other. The question that arose for consideration before the Supreme Court was whether Sri Y. K. Lal had entered into agreement on behalf of the Governor. There was a properly executed formal deed and there was no question of culling out a contract from, correspondence. Some letters were relied upon by the Stale of Bihar to show that the Government had authorised Sri Y. K. Lal to execute the agreement. On the ground that Section 175(3) of the Act does not prescribe any particular mode in which authority must be conferred, the Supreme Court held that the agreement dated February 6, 1948, was not violative of Section 175(3) of the Act. This case also, in my judgment, does not help the respondent.
50. I now proceed to consider AIR 1962 SC 779, even though it was not cited at the Bar. The learned Judge followed the decision in Bhikraj's case AIR 1962 SC 113 (supra) and observed as follows:
"It is common ground that the contracts in question were not executed by any persons duly authorised by the Governor in that behalf and the question is whether the said contracts can be said to be valid in spite of the fact that they do not comply with the mandatory requirements of Section 175(3) of the Act. In our opinion, there can be no doubt that failure to comply with the mandatory provision of the said section makes the contracts invalid, ................. There can be no doubt that in enacting the provisions of Section 175(3) the Parliament intended that the State should not be burdened with liability based on unauthorised contracts and the plain object of the provision, therefore, is to save the State from spurious claims made on the strength of such unauthorised contracts. Thus the provision is made in the public interest and so there can be no difficulty in holding that the word "shall" used in making the provision is Intended to make the provision itself obligatory and not directory. This is the view taken by this Court in AIR 1962 SC 113, and with respect, we are in entire agreement with that view.................
Mr. Chatterjee has attempted to argue that the conclusion about the obligatory character of the provisions of Section 175(3) is Inconsistent with the decision of this Court in 1954 SCR 817 : AIR 1954 SC 236. In that case a contract for the supply of goods had been entered into with the Central Government by the firm Moolji Sicka and Company of which the candidate Chatturbhuj was a partner. The contract In question had not complied with the mandatory provisions of Article 299(1) of the Constitution (which corresponds substantially to Section 175(3) of the Act) and the question which this Court had to consider was whether in view of the fact that the contract in question had contravened the provisions of Article 299(1) the candidate Chatturbhuj could be said to be disqualified for being chosen as a member of Parliament by virtue of the disqualification set out in Section 7(d) of the Representation of the People Act 43 of 1951.....
................It would thus be seen that in the case of Chatturbbuj, 1954 SCR 817 AIR 1954 SC 236, 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 3. 7(d) of the Representation of the People Act on the ground that it did not comply with the provisions of Article 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 Section 7(d). Mr. Chatterjee, however, contends that in considering the effect of non-compliance of Article 299(1), Bose, J. has also observed that "the Government may not be bound by the contract but that is a very different thing from saying fiat the contract was void and of no effect' and that it only meant that the principal (Government) could not be sued but there wilf be nothing to prevent ratification if it was for the benefit of the Government."
Mr. Chatterjee points out that this observation shows that the contract with which the Court was dealing was not treated "as void and of no effect", It would be noticed that the observation on which Mr. Chatterjee relies has to be read in the context of the question posed for the decision of this Court and its effect must be judged in that way. All that this Court meant by the said observation was that the contract made in contravention of Article 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 Section 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. We are not prepared to read the said observation or the final decision in the case of Chatturbhuj, 1954 SCR 817: AIR 1954 SC 236 as supporting the proposition that notwithstanding the failure of the parties to comply with Article 299(1) the contract would not be invalid. Indeed, Bose, J. has expressly stated that such a contract cannot be entereed against the Government, and is not binding on it."
51. It would be noticed that except the case of Jasani, AIR 1954 SC 236 (supra) where the Supreme Court considered the provisions of Article 299(1) of the Constitution, in the other three cases referred to above, their Lordships were dealing with the provisions of Section 175(3) of the Act, with which I am concerned in the present case. In my judgment, the effect of the decisions of the Supreme Court mentioned above, is that any contract in contravention of Section 175(3) of the Act is invalid. In fact, their Lordships have clearly said so. It is true that the learned Judges have also said that such contract would not bind the Government and have said nothing about the Government's right to enforce against the other contracting party, but that was because the contracts in those cases were being sought to be enforced against the Government and the question as to whether the same could be enforced by the Government did not arise.
52. It is true that the word like "and if so executed, may be enforced by or against the Secretary of State in Council for the time being" occurring in Section 30(2) of the 1915-19 Act do not find place either in Section 175(3) of the Act or Article 299(1) of the Constitution, but that, to my mind, does not make any difference and the difference could be inferred only if the words "enforced ................. against the Secretary of the State ................." had been omitted and the words "may be enforced by the Secretary of the State" had been allowed to remain. It appears to me that words to that effect were not provided for in Section 175(3) of the Act or Article 299(1) of the Constitution because the same were unnecessary and redundant. The provisions of Section 175(3) and Article 299(1) of the Constitution are mandatory and it is well established that if a particular thing is required to be done in a particular manner, It shall' be done in that manner or not at all. (See Nazir Ahroad v. Emperor, AIR 1936 PC 253(2) at p. 256). The draftsmen of the 1935 Act and the present Constitution were legal experts and very well knew that the violation of mandatory provisions could not result, in the acts committed in breach, being treated as nullity.
53. The question whether a contract in contravention of Section 175(3) of the Act can be enforced by the Government has not been referred to roe and I am not called upon to go into it. Once it is held that there is no contract in the present case, within the meaning of Section 175(3) of the Act, as I am holding, the question whether the so-called contract can be enforced by the respondent against the appellant may not arise. That question would arise in cases where there is a contract but the same has been executed on behalf of the Government by some one not authorised to do so. However, the question not having been referred to me I need not decide it.
54. For the reasons mentioned above, I would answer the question referred to me by saying that the provisions of Section 175(3) of the Act require the execution of a formal document and that a contract, like the one before me, cannot be culled out from the correspondence.
55. By the Court. (NIGAM AND KATJU, JJ.) The opinion of the third Judge has been received on the question referred to him. In the light of the decision of the third Judge, this appeal is allowed with costs and the suit of the State of Uttar Pradesh dismissed with costs in both the Courts.