Decided on January 11,1968

P.K. RATNAVELU Appellant


- (1.) THIS appeal is by the defendant in a suit for return of an oral loan. Admittedly the defendant was an employee in the plaintiff's shop for 8 or 10 years, The plaintiff says that in 1958 the defendant along with his father requested a loan of about Rs. 2500 to renovate their house, agreeing to repay it by set off against a moiety of his future salary for a year or two and the balance in a lump with interest. Sums were advanced as required from April 1958 to November 1958, totalling to about Rs. 2500/ -. In November 1958, the defendant left the plaintiff's service. After giving credit for Rs. 536. 48 p. for his pay and for Rs. 77/-for his bonus for the period April 14 to November 14,1958, the plaintiff claims back Rs. 1939. 32p with interest from loth november, 1958. The defendant admits to have received the amount from the plaintiff, but denies to have received it as a loan and contends it to be part of his remuneration. The Munsiff dismissed the suit but the Subordinate Judge the decreed it with some reduction in interest claimed. Hence this second appeal.
(2.) THE plaintiff as pw. 1 has sworn to his case. THE defendant's case as testified by himself is: He swears He must then know the profits of the business. But he deposes This is too good to be believed of an employee whose remuneration was a quarter of the profits. Ext. A7 is a register in which the monthly wages of the employees in the plaintiff's shop are entered in 4 columns the total pay for the month, amount already, paid, balance, paid, signature of the employee. THE entries for Chithra, Vaikasi and Ani of the year 1128 (1953), are acknowledged by, signature by the defendant. Those entries consistently show that the defendant's pay was Rs. 70p. m. in that year. In the light of these entries, it is difficult to believe his present plea that he was not a paid employee but a sharer in profits. THE non-mention in his written statement of his share in profits of the shop is significant. True, the plaintiff has sworn that the defendant's salary was not a fixed one but was variable according to his fancy at the end of each year. That is also unbelievable; and his own accounts in Ext. A7 disprove it. As there is no definite claim by the defendant to any further sum by way of salary than what has been given credit for in the plaint accounts I need not enquire the quantum of his salary here. It will suffice to find that the plea that his remuneration was a share of the profits of the plaintiff's business is false. Counsel for appellant contended that the plaintiff has to be non-suited as he has not proved the payments to have been by way of loan and that the defendant's admission of receipt of the sum from the plaintiff would not make him liable for its repayment unless the plaintiff proves positively that the sum paid was a loan agreed to be repaid, and relied on a single judge's ruling in Bihari Lal v. Lata Chandu Lal (AIR 1939 Lahore 386) in support. That ruling has obviously overlooked S. 70 of the Contract, which reads: "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 latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered. " Commenting on this Section the learned authors Pollock and Mulla have observed thus: "' Does' This expression includes payment of money. It must not be supposed that because S. 69 provides for the case of payment of money therefore the present Section excludes that case. " (See page 429 of the 8th edition of the text.) In State of West Bengal v. M/s. B. K. Mondal (AIR; 1962 sc. 779), the Supreme Court has held that if the three conditions mentioned in the Section are satisfied the case has to be decided under the Section. That was a case of a firm of building contractors who had put up certain structures on the request of certain officers of the State Government claiming compensation for their work. It was found that there was no contract for these works valid or binding on the Government under S. 175 (3) of the Government of india Act, 1935. Still, the Court awarded com-pensation for the work under S. 70 of the Contract Act. On appeal by the State, Gajendragadkar J. , speaking also for Wanchoo J. and Rajagopala Ayyangar J. , observed thus: "it is plain that three conditions must be satisfied before this section (S. 70, Contract Act) can be invoked. The first condition is that a person should lawfully do something for another person or deliver something to him. The second condition is that in doing the said thing or delivering the said thing he must not intend to act gratuitously; and the third is that the other person for whom something is done or to whom something is delivered must enjoy the benefit thereof. When these conditions are satisfied s. 70 imposes upon the latter person, the liability to make compensation to the former in respect of or to restore, the thing so done or delivered. . . . If a person delivers something to another it would be open to the latter person to refuse to accept the thing or to return it; in that case S. 70 would not come into operation. . . . It is only where he voluntarily accepts the thing or enjoys the work done that the liability under S. 70 arises. . . Therefore, in our opinion, all that the word 'lawfully' in the context indicates is that after something is delivered or something is done by one person for another and that thing is accepted and enjoyed by the latter, a lawful relationship is born between the two which, under the provisions of S. 70, gives rise to a claim for compensation. . . . S. 70 deals with cases where a person does a thing for another not intending to act gratuitously and the other enjoys it. . . . A request is thus not an element of S. 70 at all though the existence of an invalid request may not make S. 70 inapplicable. An invalid request is in law no request at all, and so the conduct of the parties has to be judged on the basis that there was no subsisting contract between them at the material time. " Sarkar J. , speaking also for Das Gupta J. , observed: "we also think that this appeal should fail. . . . (We) do not think that any contract had. in the present case, come into existence. . . . The question is, are the three requisites of S. 70. . . satisfied. We think they are. There is no dispute that Government had taken the benefit of the work. We also feel no doubt that the respondent did not intend to do the work gratuitously. . . . We also feel no doubt that the work was done lawfully. . . . There is no law, as Bachawat J. , said that Government cannot take any work except under a contract in respect of it made in terms of S. 175 (3) of the Government of India Act. That section does not make it unlawful for the Government to take the benefit of work done for it without any contract at all. . . . Now, by its terms S. 70 of the Contract Act must be applied where its requisites exist; if it is necessary to imply a contract or to contemplate the existence of a quasi-contract for applying the section that must be done. . . " To the same effect are the following observations of the supreme Court in F. R. Subramaniam v. Thayanna (AIR. 19610) SCR. 663 at 667): "counsel for the appellant submitted that, as in the view of the High Court the respondent failed to prove the oral agreement pleaded by him, the suit should have been dismissed, and they should not have awarded compensation quantum meruit which was not claimed. It was urged that the respondent must succeed or fail on the case pleaded by him, and not on a cause of action not pleaded. In our view, there is no Substance in this contention.-Evidently, the respondent made additional constructions to the building and they were not done gratuitously. . . . The respondent claimed under an oral agreement compensation at prevailing market rates for work done by him even if he failed to prove an express agreement in that behalf, the court may still award him compensation under S. 70 of the Contract Act. By awarding a decree for compensation under the Statute and not under the oral contract pleaded, there was in the circumstances of this case no substantial departure from the claim made by the respondent. " In the present case it is admitted that the plaintiff had delivered the amount to the defendant and that the defendant had enjoyed the benefit of that payment. That the payment of the plaintiff was not gratuitous is also conceded. Thus all the three conditions requisite for attracting S. 70 of the Contract Act are conceded in this case. It then follows that the defendant is "bound to restore the thing delivered", which in the context of this case means "bound to repay the amount paid. " that the thing delivered cannot be restored in specie is too hypertechnical an objection to carry conviction and is against the valuable opinion of the learned authors Pollock and Mulla. If goods delivered are to be returned, there is no good reason to hold that money paid need not be returned under the section. The contention that the plaintiff has to be non-suited for lack of proof by independent evidence (except his own testimony) that the amount paid was Moan agreed to be repaid has no merit.
(3.) AS the defendant has filed to prove his plea that the amount claimed in the plaint bad been paid to him as remuneration for his services, the plaintiff is entitled to decree. But the plaintiff himself has sworn: The above statement obviously implies that the sums paid before 9-8-1958 were not to be repaid. Ext. Al shows that the sums paid before 9 81958 totalled to Rs. 487. 79p. and that the plaint amount of Rs. 1900 odd includes that too. On the plaintiff's own testimony the aforesaid sum of Rs. 487 odd has to be deducted from the plaint claim. In the result, the decree of the Court below is modified by deducting Rs 487. 79 out of the principal amount claimed. Consequential changes will also be made in regard to interest and proportionately in the costs As this appeal has succeeded only in part, I make no order as to costs here. Decree accordingly.;

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.