1. SHAH ZAMAN BABAR, J.--This is a first appeal by Federation of Pakistan (defendant) from the judgment and decree of Senior Sub-Judge, Peshawar, dated 22-12-1960, whereby a decree for the recovery of Rs, 62,487-10-6 has been granted in favour of M/s. Mohammad Shafi & Sons (plaintiff).
2. On 23-8-1947 the Federation of Pakistan through Major E. Baran in charge of the Contract Branch of C. R. P. A. S. entered into an agreement with M/s. Mohammad Shafi & Sons for the supply of fresh onions in quantity of 1,80,000 lbs. to 0. C. Supply Company, Peshawar and 3,00,030 lbs. to 0. C.
2. Supply Company, Nowshera, for Mardan, Nowshera and Risalpur Stations. The rate fixed was at Rs, 9-12 per hundred lbs. The period of the contract was six months commencing from 1-10-1947 and ending on 31-3-1948. Under the terms of the agreement M/s. Mohammad Shafi & Sons deposited a security of Rs, 2,340 on 2-9-1947. Before the operation of the contract could be taken in hand in the first week of September 1947, due to Partition and Independence exodus of non-Muslims and influx of refugees into Pakistan, epidemic like cholera spread in the Punjab which also gave rise to increase in the demand of fresh onions. The prices of fresh onions, therefore, soared high and high and as such the contractor showed reluctance to commence the operation of the contract of the supply of fresh onions to the Government. The contractor alleges that due to the unpredictable conditions and rise in the prices of fresh onions, the Government through its Officers, who were operating the contract assured the contractor orally and in writing and by insertion of a special condition in the contract that the operation of the contract be taken in hand earnestly from the date of the commencement, and that the contractor will be compensated on account of the increase in the prices of fresh onions. The contractor further alleges that he completed the contract within the stipulated period, but the total supply of fresh onions fell short by 13,4391bs. on account of the scarcity and non-availability of fresh onions at all times during the contract period. The Government substituted this shortage by dehyderated onions etc., worth Rs, 3,526-3.0 at its own cost, and the contractor was debited with the same amount. In spite of the assurances the contractor was paid for his total supply of fresh onions at the rate of Rs, 9.12.0 per hundred lbs., and the Government refused the payment at enhanced rates. The contractor Mjs. Muhammad Shaft & Sons, therefore, instituted the present suit on 12-4-1951 for a total claim of Rs, 1,02,856-7-10 inclusive of the items detailed below :-- Rs.
(1) Amount wrongly debited 3,526-3-0 (2)Difference of actual purchase rate and the contract rate of fresh onions47,082-3-0 (3)Establishment charges at the rate of 5%3,600-0-0 (4)Profit at the rate of 10 % 7,200-14-0 (5)Income-tax (approximate) 17,000-0-0 (6)Interest at the rate of 12% per annum for 3 years22,107-3-10 (7)Amount towards security 2,340
3. The learned Senior Sub-Judge, Peshawar by the impugned judgment held the plaintiff entitled to the following amounts:-- (1)Rs, 2-340-0-0--Security amount.
3. (2)Rs, 3,526-3-0--Wrongly recovered from the plaintiff by the defendant.
4. (3)Rs, 47,082-3-0--Over and above the stipulated rate of Rs, 9,12 per hundred lbs. in view of the special condition attached to the contract, supplemented by subsequent assurances given by the defendant from time to time.
5. (4)Rs, 9-539-4-6--As interest calculated at the rate of 6% per annum.
6. He, therefore, granted the plaintiff a decree for the recovery of Rs, 62,487-10-6 against the defendant with proportionate costs, by his judgment dated 22-12-1960. The pleadings of the parties gave rise to the following issues :- (1)Is the suit barred by time ?
7. (2)Whether in accordance with the terms of the agreement dated 23-8-47, the plaintiff has to bring the present suit within 3 months from the time when the dispute arose between the patties? If so, is plaintiff estopped from instituting the present suit ?
8. (3)If issue No, 2 is proved in the affirmative, whether the condition mentioned in issue No, 2 is void, and not binding on plaintiff?
9. (4)Has plaintiff no cause of action?
10. (5)Whether the plaintiff entered into a contract on 23-8-47 with the defendant for the supply of 4,80,000 lbs. of fresh onions at the rate of Rs, 9-12-0 per hundred lbs. for the period between 1-10-47 up to 31-3.48, if so, whether the aforesaid rate of payment was superseded by a special condition that plaintiffs would be paid enhanced rate after the termination of the contract?
11. (6)Whether plaintiff commenced supply of the onions on the express assurance of the defendant that they would be paid the enhanced rate mentioned in issue No, 5?
12. (7)if issues 5 and 6 are proved in the affirmative, what is the enhanced rate to which plaintiff would be entitled ?
13. (8)Whether the G. O. C., Peshawar accepted the plaintiff's claim of enhanced rate and by his letter dated 26-10-48 recommended payment of Rs, 61,409-11-0 to the plaintiff on this account?
14. (9)Whether any ex gratia offer was made on behalf of the defendant to the plaintiff in settlement of the plaintiff's claim?
(10) If issues 8 and 9 or either of these, is proved in the affirmative, what is its effect on the present suit?
(11) Whether the plaintiff failed to supply onions, and hence the defendant had to meet the demand by a risk purchase of tinned hyderated onions etc. which involved loss of Rs, 3,526-3-0 as mentioned in para. 6 of the plaint?
(12) If issue No, 11 is proved, whether the, defendant was entitled to debit the said amount to the plaintiff's account?
(13) If issue No, 12 is not proved in the affirmative, are plaintiff entitled to claim the sum of Rs, 3,526- 3-0?
(14) Whether plaintiff have actually spent Rs, 47,082-3-0 on the purchase of onions supplied to the defendant over and above the stipulated rate of Rs, 9-12-0 per 100 lbs. If so, is he entitled to recover this amount from the defendant?
(15) Is plaintiff entitled to recover Rs, 360 as his establishment charges ?
(16) Has plaintiff paid Rs, 17,000 as income-tax on the suit amount, if so, is he entitled to realise this amount from the defendant?
(17) Whether plaintiff is entitled to recover Rs, 7,200-14-0 as a profit at the rate of 10% on the cost price of the onions supplied to the defendant ?
(18) Is plaintiff entitled to realise Rs, 22,107-3-10 by way of interest on the suit amount at the rate of 12% per annum?
(19) Whether the sum of Rs, 2,340 deposited by the plaintiff in advance as security was adjusted in his final account and as such plaintiff is not entitled to recover the same ?
(20) Relief? Additional issue.
(21) Whether the plaintiff's Arm is duly registered and is, therefore, competent to sue the defendant as such?
4. The learned Advocate-General while arguing the appeal for the defendant-appellant, did not press issues Nos, 15, 16, 17, 19 and 21. He conceded that the plaintilf-respondent was entitled to the return of the security amount of Rs, 2,340 as the same was never refused to him.
5. The principal points for decision in the appeal are enumerated below :- (1)Whether the suit is within time ?
15. (2)Whether any special condition to the effect that the plaintiff could claim enhanced rates was inserted in clause 6 of the agreement.
16. (3)Whether any assurance was given to the plaintiff to the effect that his claim for enhanced rates could be considered, if so, with what effect and to what amount the plaintiff is entitled on the basis of the assurance?
17. (4)Whether the plaintiff is entitled to any interest for the total amount to which he is held entitled ?
6. The learned Advocate-General argued that the suit of the plaintiff was barred by time as the same was not instituted within three months from the expiration of the period of contract, as required by clause 20. Further condition (Exh. P. B. 4/24) attached to the contract agreement.
18. Clause 20 is recapitulated below:-- "I hereby agree that the Governor-General-in-Council shall be discharged from all liability under the contract or otherwise in relation to the subject-matter thereof unless an arbitration or a suit, where such suit lies, is commenced within three months from the expiration of the period mentioned in clause I hereof or any extension thereof."
19. The contention is not weightly in law. The liability to pay the amount claimed by the plaintiff was finally decided by the defendant on the 8th of June 1951 vide Exh. P. W. 1/7 (Pages 166 and 167 of the printbook) in reply to the notice Exh. P. W. 1/6 (Pages 164,165 and 166 of the printbook) under section 80, dated the 5th of January 1951. The offer of ex gratia payment of Rs, 10,000 was made to the plaintiff by the defendant on 16-6-49 vide Exh. P. B. 17 (page 157 of the printbook). The suit was lodged on 12-4-1951 within three years of the offer of ex gratia payment. Clause 20, referred to above, limiting the time to institute the suit within three months of the expiration of the period of contract is void to this extent in view of section 23 of the Contract Act and section 28 read with section 3 and Schedule 1 of the Limitation Act, as held in Islamic Republic of Pakistan v. Nazar Din Khattak & Sons . We, therefore, affirm the finding of the learned trial Court that the suit of the plaintiff-respondent is within time.
7. In the present case ex parte proceedings were ordered on 15.12.1951, which were later on set aside on 11.8-1952. During the ex parte proceedings the statement of Muhammad Shaft plaintiff was partially recorded on 22.1.1952. In this statement the tender forms etc. were exhibited as Exh. P. A., P.
20. A./1 and P. A./2. In the Form "Instructions to Tenderers" (Exh. P. A/2) a general amendment is introduced in clause 6 after the word "compensation". This amendment is exhibited as P. A/3, and is fully quoted below:-- "For short term contracts for 3 or 6 months.--Form 1. A. F. Z. 2137-A. Instructions to tenderers.
21. Insert at clause 6 after word "compensation" at the end of first sub-para. "In the event of any tender being accepted no claim for enhacement of rates will under any circumstances whatsoever be considered."
22. The "Special Condition" in question to the same clause 6 is exhibited as Exh. P. A./4, which is recapitulated as under "SPECIAL CONDITION"
23. Clause 6 after word 2 "compensation" at the end of sub-para. states 'no claim for enhancements will be allowed for short term contracts of 3 and 6 months. Should the contractor feel he has a legitimate cause the claim will receive consideration on its merits'."
24. This special condition of clause 6 has been exhibited as Exh. B-2/24 at the time of the statement of the plaintiff at the trial. The original agreement or its duplicate are stated to be in possession of the defendant. The defandant has failed to produce them on the ground that they are not available at the headquarters, Rawalpindi. The counsel for the defendant in his statement on 1-7-54 has not admitted the insertion of the special condition (Exh. B-2/24) in clause 6 of Form No, 1 A.F.Z. 2110. In his Urdu statement dated 22-1-1952 in the ex parte proceedings the plaintiff has stated that the difficult circumstances of supply of the onions at the contract rate of Rs, 9-12-0 were brought in the notice of the defendant, but the defendant insisted, on the commencement of the operation of the contract at all cost, and for this reason the amendment Exh. P. A/3 was replaced by the Special Condition Exh. P. A/4. Explaining the two amendments the plaintiff further stated that under the amendment Exh. P. A/3 there could be no claim at enhanced rates, but under the amendment Exh. P. A/4 a contractor was entitled to enhanced rates under legitimate circumstances, and that after the insertion of condition Exh. P. A/4 in the Contract and the assurances of the defendant's officers that he will be entitled to claim at enhanced rates, he commenced the operation of the contract of supply of onions. In his testimony at the trial on 24-2-1955, the plaintiff stated :- "At the time of the submission of my tender I had no knowledge about clause 6 on Exh. P. B. 2/24 in which it was stipulated that no enhancement will be allowed in case of short term contract. I objected to this clause. The defendant, therefore, added "Special Condition" to clause 6 of Exh. P. B.
25. 2/24. After this I executed the contract. This contract was signed on behalf of the defendant by Major E. Behran, who was in charge of the Contract Section."
26. It may be noted that the contract agreement was executed on 23-8-47 for a period of six months commencing from 1-10-47 and ending on 31-3-48. From the first Urdu statement of the plaintiff it can be reasonably inferred that the Special Condition was inserted after the execution of the1 agreement, and that the operation of the contract started after the insertion of the Special Condition. In the second statement the plaintiff, however, asserts that the special condition to clause 6 of Exh. P. B. 2/24 was added before the execution of the contract agreement by Major E.
27. Behran. From the record it is apparent that the plaintiff had been purchasing the fresh onions for its supply to the two Stations at Peshawar and Nowshera at enhanced rates varying from time to time than the contract rate of Rs, 9-12-0 during the operation of the contract, and submitting fortnightly bills for the same. The plaintiff has been writing to the operating officers of the contract about the scarce availability of the fresh onions and its purchase at enhanced rates. In none of such letters the plaintiff has based his claim for enhanced rates on the special condition alleged by him to be a part of the contract. In his letter Exh. P. G. dated 6/7-10-47 (at pages 69/70 of the printbook) the plaintiff has mentioned that "due to continued disturbed conditions onion in the market is not available. The onion supplied to you to date was purchased by us from Rs, 16-0-0 to 18-0-0 per maund". In the plaintiff's letter Exh. P. C. 49/9 dated 10-11-47 (pages 79/80 of the printbook), it is laid : "We are prepared to undergo an amount of loss which may be due to the rise of the market prices; but we do not know how we can be held responsible when the onions are not available in the market.
28. We shall be obliged if you will very kindly keep all factors in view before we are declared at fault."
29. In the plaintiff's letter Exh. P. C/46, dated 6-12-47 (at page 91 of the printbook) in reply to various letters from the 0. C. SSD, Nowshera and other officers, it is stated :- "We agree that we are bound by the terms of agreement but you will agree with us that when onions are not available in the market why we should be penalized."
30. In various letters on behalf of the operating officers of the contract we find that the Special Condition has not been specifically referred to as a reason for the claim of the plaintiff at the enhanced rates. In the letter Exh. P. B/1, dated 8-10-47 (at page 70 of the printbook) from the C. R. P.
31. A. S. C. Peshawar to the plaintiff, E. Behran Major, has mentioned : "We realise your difficulties but every effort must be made to supply fresh onions, as our reserve of dehyderated onions is running very low."
32. In the letter Exh. P. B/2, dated 17-11-47 (at page 81 of the printbook) E. Behran wrote to M/s. Muhammad Shafi & Sons in the last para:-- "As regards the rise in the market prices the case will be considered on its merits, but ensure that supply officers demands are met in full at all times."
33. In the letter Exh. P. B/3, dated 26-11-47, (at page 83 of the printbook Major E. Behran wrote to M/s. Muhammad Shafi & Sons in reference to the plaintiff's letter dated 10-11-47 (Exh. P. C. 49/5):- "A claim for ex gratia payment is based on the proved loss on the operation of a contract as a whole, and hence it can only be considered on the termination of your contract."
34. Again in the letter Exh. P. B/4, dated 3-1-48 (at page 111 of the printbook) Behran wrote to the plaintiff's letter dated 16-12-47:-- "Please note that your case is under consideration, and the decision when arrived at will be intimated to you."
35. In another letter Exh. P. B/5 dated 19-1-48 (at page 116 of the printbook) from H.Q. 9 (F) Div. Regt. R. P.
36. A. S. C. Peshawar to the plaintiff, Lt.-Col. Q. A. Khan wrote with reference to the plaintiff's letter dated 15-1-48 :- "Please note that your claim will be considered finally on the termination of the contract as per instructions from Pak. Army letter No, 1917/7/A/S T6, A-2, dated 21 November 47."
37. The same Col. again wrote to the plaintiff vide letter Exh. P. B/6, dated 21-1-48 (page 116 of the printbook) with reference to the plaintiff's letter dated 15-1-48 :- "The matter has been taken up by the authorities and necessary investigations are being made by this Headquarters. If the case is proved in your favour, the recoveries made from your bills referred to in your letter will be refunded to you."
38. Col. Q. A. Khan wrote letter Exh. P. B/26, dated 3-5-48 (at page 145 of the printbook) to M/s. Muhammad Shafi & Sons in reference to letter dated 15-4-48. For the sake of expediency this letter needs reproduction in full :- "E. A. 362. Exh. P. B./26. No, ST 6-C/1626A/X, dated 3-5-48, from Commandant 9 (F) Div. Regt. R. P. A.
39. S. C. to Messrs Muhammad Shafi & Sons. H. Q. 9 (F) Div. Regt. R. P. A. S. C., Peshawar.
40. Without Prejudice.
41. Subject. Onion Contract. S. T. 6(C)/1626A/X 3 May 1948.
42. To Messrs Mohammad Shafi & Sons.
43. Govt. Contractors, Peshawar.
44. Ref. Your letter No, 28/MS/67 of 15 April 1948.
45. In accordance with the condition of the Contract Deed signed by you it is clearly laid down that 'in the event of any tender being accepted no claim for enhancement of rates will under any circumstances whatsoever be considered.' But under the circumstances that prevailed in the Province and the reasons stated by you in your various applications received during the course of the contract, you may put a statement of losses sustained by you during 1st October 1947, to 31st March 1948.
46. (2)Please ensure that the statement is made out under the following headings and supported by the original receipt for the purchases made by you:-- ArticlesQuantity Supplied.Contract rate per 100 1bs.Market purchase price per 100 1bsCost at contract rate.Total loss.
47. (3)Claim submitted by you vide your above-mentioned letter together with original receipts are returned herewith for resubmission in accordance with para. 2 above. (Sd.) Lt.-Col. Cod. 9(F) Div. Regt. R.F.A.S.C. (Q. A. Khan Tel. 595)."
48. It appears that pursuant to the letter Exh. P. B/26, the plaintiff submitted the statement Exh. P. C/10 (at page 356 of the file) wherein he calculated his total loss to be amounting to Rs, 47,082-3.0 as difference in the cost of purchase and the cost at ccntract rates. In this statement the plaintiff gave his loss on account of the defendant's risk purchases to be Rs, 3,526-3-0. This amount has been recovered from the plaintiff. The plaintiff showed his total loss sustained by him during the operation of the contract from 1-10-47 to 31-3-48 to be Rs, 61,409-11-0. To settle the matter with the plaintiff, the defendant through its officers convened a Board of Officers on 12-8-1943 at C.R.P. A. S. C's Office Headquarters 9(F) Div., Peshawar Cantt. The plaintiff had also attended the Board's Meeting and it appears that he did not base his claim for enhanced rates on the special conditions before the Board. In this Board a similar dispute of Malik Ghazi Khan of Hangu was also considered.
49. The Members of the Board were P. Ws. Major Muhammad Muqarrab Khan, President, Captain Subah Sadiq, R. P. A. S. C., Member, besides Captain A. R. Beg as Member. The Board was also attended by P. W. Izzat Bakhsh, Deputy Director of Food and Civil Supplies, Peshawar. The Board proceedings are fully given in Exh.P. W. 1/4 (at pages 151/152 of the printbook). This Board proceeded to verify and check figures supplied by the contractors. The Board was of the opinion that during the period of the contract the prices rose considerably and fluctuated from day to day on account of the disturbances of 1947, shortage of labour and lack of the main suppliers of the commodities. The Board admitted the claim of the plaintiff calculated at Rs, 47,082-3-0. The Board's Meeting was convened apparently in reference to G.H.Q. (P) Q.M.C.s Br. St. 6 A2, letter No, 1917 7/A S. T. 6 A2 of 21st November 1947 (at page 149 of the printbook). Brig. C. A. L. Davis Commandant 9 (F) Div., Peshawar wrote letter Exh. P. 1/5, dated 26th October 1948 (at pages 149/150 of the printbook) to G.H.Q., Rawalpindi. In this letter the case of Messrs Muhammad Shafi & Sons was also mentioned, as under : -- "(a) During the running of the contract they several times approached this H. Q. in person and in writing and put up their difficulties which were fully realised and an assurance was given that due consideration would be given to their case at the termination of their contract period (copies of the correspon-dence are enclosed herewith for ready reference).
50. (b)They have been submitting their claims to this H. Q. monthly. These claims were duly supported by a certificate signed by the Deputy Director of Food and Civil Supplies N.-W. F. P. The certificates show that the average cost price per 100 lbs. stated to have been paid by them is lower than the market rates.
51. (c)Several times the contractors failed to tender the supplies and risk purchases were made against them. These risks were not covered by purchasing ONIONS from the market but Td. Stuff was issued. In certain cases supply officers have purchased onions from the Market @ Rs, 30 to Rs, 35 per 100 lbs. This proved that onions in the market have gcne up high. When the prices go high this obviously means that the same are not available in sufficient quantity.
52. (d)In the light of the facts that R. P. A. S. C. specifications are to be considered prior to the supplies being accepted the contractors while purchasing ONIONS GREEN had to cut down the stalks which in the opinion of this H. Q. is wastage beyond 50%.
53. (e)Taking in view all these facts, it is considered that the account maintained by the contractors are accurate and genuine beyond doubts.
54. (f)Bills for purchases made during the period have been checked by the board and are found correct together with receipts submitted by the contractors.
55. (3)It is felt that the contractor Malik Ghazi Shah of Hangu and M. Mohammad Shafi & Sons have suffered a heavy loss as shown in the attached proceedings and have stressed that they maintained supplies under the most difficult uncertain condition and circumstances. In view of the above-mentioned factors it is recommended that their claims should receive due consideration.
56. (4)It is further recommended that risk purchases, made by issuing Td. Stuff only at contractors' expenses may also be considered as normal issues to troops. If this is agreed to by you necessary action to have these amounts paid to the contractors will be taken separately."
57. The defendant kept quiet after the proceedings of the Board but the plaintiff insisted from time to time that his case be settled by the defendant. Pursuant to the insistence of the plaintiff, Lt., Col. Commandant in letter Exh. P. B./17, dated 164-49, (at page 157 of the printbook) wrote to the plaintiff as under "REGISTERED.
58. No, 121626-A/148/S. T. 6(C) H. Q. 12 Div. Rest. R. P. A. S. C., Peshawar, 16th June 1949.
59. To Messrs Mohammad Shafi & Sons, Govt. Contractor, Shad Building Peshawar Cantt.
60. Subject : Claim for enhancement of contract rates onions contract at Kohat, Thel, Peshawar and Nowshera during the period 1st October 1947 to 31 March 1948.
61. Reference: The H. Q. No, 121626-A/X/S. T. 6(C) of 19th of May 1-949.
62. It has been decided by higher authorities that taking into consideration the high market rates prevailing at Peshawar during October, November and December 1947, they are prepared as a special case to recommend to the Govt. of Pakistan the grant of an ex gratin payment of Rs, 10,000 (Rs, Ten thousand) worked out as under representing the difference between the contract rate and wholesale market rates in respect of your contract for onions supplied during the months of October, November, December, 1947 in full and final settlement of your claim.
2. Please forward a certificate to the effect you are willing to accept the amount of Rs, 10,000 in full and final settlement of your claim. (Sd.) Lt.-Col. Commd."
63. This offer of ex gratia payment of Rs, 10,000 to the plaintiff pertained to the period October, November and December 1947 as is manifest from this letter. The plaintiff in his letter Exh. P. C. B dated 8-7-1949 (at pages 153-154 of the printbook) did not accept the ex gratia offer of Rs, 10,000 as against his total claim of Rs, 61,409. It may be noted that this ex gratia payment of Rs, 10,000 pertained to the period of the contract relating to October, November and December 1947, and that the period of the contract for the months of January February and March 1948 had been ignored. In the letter Exh. P. B/21, dated 24-8-1950 from H. Q. 9(F) Div. R. P. A. S. C. to the plaintiff (at pages 158 and 159 of the printbook) the plaintiff was again informed :- "After reconsideration of your case for ex gratia payment, the higher authorities have regretted that no increase to the settlement already offered vide H. Q. 12 Div. Regt. R. P. A. S. C. letter No, 121626- A/148/S. T. 6(C) of 16th June 1949 can be entertained.
64. Please therefore forward a certificate to the effect that you are willing to accept the offer in full and final settlement of your claim."
65. From the discussion of the various documents mentioned above on behalf of the plaintiff and the defendant, it is proved that the plaintiff did not base his claim for enhanced rates on the strength of the special condition in question. We, therefore, do not agree with the learned trial Court that the plaintiff has proved the existence of the special condition as constituting a part of the agreement of contract.
66. The learned trial Court has also held that the plaintiff is entitled to the amount of Rs, 47,082-3-0 over and above the stipulated rate of Rs, 9-12-0 per hundred lbs. on the assurance given by the defendant from time to time. The learned Advocate-General argued that the assurances advanced to the plaintiff by the Government officials in operating the contract may amount to undertaking which may form the subject of a moral obligation binding in honour but the same do not create any legal responsibility. The contention is repellable in view of section 70 of the Contract Act. The contract was completed by the plaintiff for the defendant lawfully and not gratuitously.
67. This section provides for the obligation of persons enjoying benefit of non-gratuitous act and lays :- "Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the letter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered."
68. The terms of section 70 are unquestionably wide, but they are to be applied with discretion to enable the Courts to do substantial justice in cases where it would be difficult to impute to the persons concerned relations actually created by contract. The relation under this section is created by the fact that one person lawfully does something for another or delivers anything to him and by the fact that the other person enjoys the benefit thereof, and when the relation arises, the liability to make compensation or to restore the thing delivered arises as a statutor liability not arising out of contract. The very purpose of the section is to lay down in what circumstances such a relation must be taken to exist, viz. in what circumstances the plaintiff may claim that his act has directly created or reasonably justified the inference that he is entitled to compensation. An act is lawful while it is done in conformity with the principle or spirit of law, whether moral or judicial.
69. In Siti Fakir v. Chand Bewa and others it has been ruled :- "The words of section 70, Contract Act, are very wide, and applied with discretion, they enable the Court to do substantial justice in a case where it would be difficult to impute to the person concerned relation actually created by a contract. For the application of that section three elements are necessary, viz., first, that the act should be lawfully done for another; second, that it should not be the doer's intention to do it gratuitously; and third, that the other party should enjoy the benefit of it."
70. In A. V. Palanivelu Mudaliar v. Neelavathi Ammal and another it is laid :-- "The question whether compensation (remuneration for services rendered) should or should not be awarded must depend upon the intention of the person at the time of his doing the thing for which he demands the compensation. He is obviously the person to state what his intention was. Where it is clear that he was under the impression that he would receive remuneration for the services, it cannot be predicted that he intended to act gratuitously and so he is entitled to claim reasonable compensation".
71. In Pallonjee Eduljee & Sons v. Lonavala City Municipality it has been held :-- "The applicability of section 70, Contract Act, cannot therefore be excluded by the mere fact that there is no enforceable contract.
72. The relation under section 70, Contract Act, is created by the fact that one person lawfully does something for another or delivers anything to him and by the fact that the other person enjoys the benefit thereof; and when this relation arises, the liability to make compensation or to restore the thing delivered arises as a statutory liability not arising out of contract. The very purpose of the section is to lay down in what circumstances such a relation must be taken to exist, viz., in what circumstances the plaintiff may claim that his act has directly created or reasonably justified the inference that he is entitled to compensation.
73. The basis of the compensation under section 70 should be in proportion to the benefit enjoyed by the party for whom anything is done and to whom anything is delivered; and appropriate compensation is to be awarded mainly from that aspect."
74. In Secy. of State and another v. G. T. Sarin & Co. it has been held :- "Section 70 must be interpreted according to its clear and explicit terms and not in reference to the provisions of the English Law relating to the matter. The section is much wider than the English Law and goes beyond it. Where the Secretary of State receives from the plaintiff grain for purpose of feeding horses which he had undertaken to maintain he is equitably bound to pay compensation to the plaintiff for the quantity so delivered and consumed by the horses though contract proves to be invalid. The plaintiffs are therefore entitled to money equivalent of the grain as compensation under section 70 assessed at the market rates prevailing on the dates on which the supplies were made."
75. At page 370 it is observed "As to the amount of compensation, it is obvious that it must be assessed at the market rates prevailing on the dates on which the supplies were made. It was conceded that, taken as a whole,2 3 4 5 the sum so due would be larger than the amount claimed by the plaintiff according to the price fixed in the agreement.
76. I would therefore hold that though the plaintiffs could not recover the price of the grain supplied on the contract, as such, they were certainly entitled to the return of the grain in question, but as it could not be restored having been consumed long ago, they must get its money equivalent as compensation under section 70."
77. Consequently we hold that in view of the defendant's assurances to the plaintiff that the latter's case would be considered at the close of the contract in appreciation of the circumstances and the higher rates of purchase of fresh onions prevailing during the period of the operation of the contract, the plaintiff is entitled to recover the excess rates than the contract rate of Rs, 9-12-0 per hundred lbs. then prevailing in the market.
78. The plaintiff has claimed Rs, 47,082-3-0 for the total supply of the fresh onions at the enhanced rates over and above the stipulated rate of Rs, 9-12-0 per hundred lbs. This claim is based on the various bills submitted to the defendant. An extract of the bills is Exh. P. C/10 on the file. The bills submitted fortnightly by the plaintiff on account of the supply of onions must have been checked with respect to the weights of onions mentioned in them. The defendant has paid the plaintiff for these weights at the contract rate of Rs, 9-12-0. The quantity and rates mentioned by the plaintiff in his claim before the Board of Officers were also checked and found correct. We, therefore, for these reasons, find the claim of the plaintiff for Rs, 47,082 on account of the excess rates to be correct.
79. The amount of Rs, 3,526-3-0 on account of the risk purchases by the defendant has been recovered from the plaintiff. The defendant has not disputed the accuracy of this recovery. In the letter Exh. P. B./6 dated 21-1-48, referred to earlier, Lt.-Col. Q. A. Khan had assured the plaintiff that if his case is proved in his favour the recoveries made from his bills will be refunded to him. In Exh. P.
80. W. 1/5, referred to above, it is also recommended that the risk purchases made at the contractors expenses may also be considered as normal issue to the troops. In view of the assurance and this recommendation it was not desirable on the part of the defendant to have realised the amount of risk purchases amounting to Rs, 3,526-3-0 from the plaintiff. The plaintiff has, therefore, been rightly held to be entitled to this amount also.
8. The claim for the refund of the security amount of Rs, 2,340 to the plaintiff has not been disputed by the defendant-appellant.
81. The learned trial Judge has held the plaintiff entitled to interest amounting to Rs, 9,539-4-6 at the rate of 6% per annum on ground of equity. In AIR 1930 Lah. 364, cited above, it is also ruled:-- "Party which is allowed compensation under section 70 on equitable grounds in a contract which it is unenforceable being invalid, is not entitled to interest on the sum due from the other party."
82. In view of this authority we hold that the plaintiff-respondent is not entitled to the recovery of the interest to the tune of Rs, 9,539-4-6.
83. Thus we hold that the plaintiff-respondent is entitled to the following items claimed by him:--
(1) Rs, 3,526-3-0 Wrongly debited, (2)Rs, 47,082-3-0 Amount of difference of annual pur chase rate and the contract rate of fresh onions, and (3)Rs, 2,340 security amount, total Rs, 52,948-6-0 and pass a decree with costs in favour of the plaintiff-respondent for a sum of Rs, 52,948-6 0 only. Withthis modification, the appeal is dismissed with proportionate costs.