HARI CHAND MADAN GOPAL AND OTHERS versus STATE OF PUNJAB

Citation: [1973] 2 S.C.R. 582 · Decided: 06-10-1972 · Supreme Court of India · Bench: J.M. SHELAT · Disposal: Dismissed

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Judgment (excerpt)

582 
HARi CHAND MADAN GOPAL AND OTHERS 
A 
v. 
STATE OF PUNJAB 
October 6, 1972 
[J.M. SHELA1, D. G. PALEKAR, K. K. MATHEW, S. N. DWIVEDI 
AND Y. V. CHANDRACHUD, JJ.) 
The Indian Independence (Rights, PropfN'ty and Liabilities) Order, 
1947, Cl. 8(3) and Punjab Partition (Comracts) Order, 1947, cl. 2(d)-
Scope of-Liability of appellant to respondent regarding contracts entered 
into lVith tile p.rovince of P1111jah 
Prior 
to 
pc.rtition-S. 63 Contract 
Act-Re111ission of a part of the pro111ise hy the pron1issec effcc1ii·e even 
ll'ithout consideration fron1 the pro111isor·. 
Sometin1e in 1944 an agreen1ent was entered into bct\\'ecn the appel~ 
lant and the then Province of Punjab, whereby the appellant agreed to 
act as a Clearing Agent (Foodgrains) for the sale a:!ld purchase of food. 
grains on behalf of the Province on payment of a 
qommission. 
The 
appellant obtained stock of rice from the Rationing Controllers . 
On August 14, 1947, the Governor·Ge:neral issued, in exercise of his 
power under s.9(1) (b) of the Indian lndep~ndence Act, 1947, the Indian 
Independence (Rights, Property and Liabilities) Order, 
1947. Clause 
8(3) of the Order provided that any contract made o,r> behalf of the Pro-
vince of Punjab, if it was not exclusively for the purpose of the Province 
of East Punjab in India, was <le,111£d to have been made on behalf of 
the Province of West Punjab in Pakistar" 
On the same day, the Govern-
or of the Prov(r.ce of Punjab also issued the Punjab Partition (Contracts) 
Order, 1947. 
Clause 2(d) of the Governor's Order provided that every 
C:Ontract entered ink> on behalf of the Governor in accordance with s.175 
of the Government of India Act, 1935, shall, in so far as it relates to 
services to be rendered for-the benefit of areas \vithin the tV.'O new Pro· 
v\r.ces of East Punjab and West Punjab, be deemed to have been entered 
into with the t\\"O Provinces as t\vo sepa.ratc contracts having effect respect-
ively in relation to the services to be rendered in each of the Provinces. 
The Governor of Punjab also issued another Order, the Punjab Parti-
tio.n (Apportionment of Assets and Liabilities) Order, 1947, for a gene· 
ral financial settlement between the two new Provinces. 
As the two new 
Provinces did not arrive at any agreement, the Chief Justice of the Fede-
ral Court gave his a\vard according to which 60% of the total assets 
were to go to the Province of West Punjab in Pakistan a.!ld 40% thereof 
to the Province of East Punjab in India. 
With respect to the stock supplied to the appellant, the appellant made 
certain payments to the respondent, and the responde.rtt, State of Punjab, 
sued the appellant for the balance. 
The appellant, while denying liabi-
lity, also contended that the liability if any, WM to the extent of 40% 
only of the amount due. 
The trial court substantially decreed the suit. 
On appeal, the High Court reduced the amount payable by the appellant 
to the respondent. 
In appeal to this Court. 
HELD : ( 1) It could not be contended by the appellant that the res-
pondent had no right to sue on the basis that the rights under the con-
tract accrued under cl. 8(3) of the Governor-General's Order, in favour 
II 
c 
D 
E 
F 
G 
H 
A 
B 
c 
D 
E 
F 
G 
H 
HARi CHAND V. PUNJAB (Dwivedi, J.) 
583 
of the Government of West Punjab in Pakistan. It is qi. 2(a) of the 
Governor's Order that applies to the contract. The clause deals with 
contracts with continuing obligation'. 
In the period when the contract of 
agency was subsisting it created the relationship of principal and age'!t 
between the contracting parties, and the relationship imposed mutual obh-
gations. 
The appellant was bound to render the service of acting '!8 a 
clearing agent and of purchasing and selling foodgrains for the Province 
of Punjab. 
The contract was not a completed contract, but one which 
imposed th,e continuing obligation of rendering the service of an agent 
on the appellant. Therefore, cl. 2(d) of the Governor's Order applied 
and that clause itself provided for the bifurcation of a· single and indivi-
sible contract into two separate contracts. [588C-F;" 591Al 
(2) The fields of operation of the two Orders, the Governor-Gene-
ral's Order and the Governor's Order did not overlap and therefore the 
question of one prevailing over the other did not arise .. [589GJ 
(3) Clause 8(3) of the Governor'General's Order dealt with the don· 
tracts which formed the subject-matter of s.177(1) of the Go

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