PILOO DHUNJISHAW SIDHWA versus MUNICIPAL CORPORATION OF THE CITY OF POONA

Citation: [1970] 3 S.C.R. 415 · Decided: 15-01-1970 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Judgment (excerpt)

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B 
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41S 
PILOO DHUNJISHAW SIDHWA 
v. 
MUNICIPAL CORPORATION OF THE CITY OF POONA 
January 15, 1970 
[J. C. SHAH AND K. S, HEGDE, JJ.] 
Con~ract-Formalities-Bornbay Provincial Municipal Corporation Act 
(59 of 1949), s. 74(2)-Contract requiring seal, and affixture of seal to 
be attesttZd by two me1nb.ers of Transport Committee-Members of Trans. 
port Committee not elecred--Contract entered into without seal-Enforce• 
ability. 
Indian Contract Act (9 of 1872), s. 70-Invoice value as compensa-
tion-When allowed. 
The appellant was the sole selling agent of motor spare parts for the 
manufacturers in the State of Bombay. The respondent-Corporation was 
constituted under the Bombay Provincial Municipal Corporations Act, 
1949. Under s. 74 of Act and the Rules relating to contracts made under 
the Act, a contract relating to the purchase of goods exceeding Rupees 
five hundred is to be made in the name of the Corporation by the Trans· 
port Manager, and, the contract has to be in writing and sealed in the 
presence of two members of the Transport Committee who should sign 
in token of the seal being affixed in their presence. Under s. 74(2), a· 
contract not made in accordance with the provisions of .the Act and the 
rules is not binding on the Corporation. The Transport Manager of the 
respondent-Corporation called upon the appellant to supply certain spare 
parts worth more than Rupees two lakhs. A formal contract incorporat
4 
ing the agreed terms w_as not and could not be executed and sealed as 
required by the Act. because, at the. time when the contract was entered 
into election of councillors to 
the Corporation had not been held and 
no Transport Committee was constituted and the powers of the C.Orpora~ 
tion and the Transport Committee were being exercised by the .Commis
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sioner pursuant to the, transitory provisions of the Act.. The 
appellant 
supplied goods from time to time and the Corporation made payments 
according to the invoices. One of the invoices was. for about Rs. 49,000-00. 
The invoice price consisted of an additional 12!% on the listed price by 
reason of the iricrease in the price made by the manufacturers. 
With 
respect to that invoice, the Transport Manager was satisfied that the rates 
quoted were 'proper rates' and he accepted the goods delivered on behalf 
of the respondent, and appropriated them. But the respondent failed to 
pay the amount and terminated the contract. 
The appellant filed a suit for a decree for the invoice amount and for 
dam·ages. The respondent contended that the contract was not enforce4 
able, because, it was not executed in tne manner prescribed by the Act. 
-On the question of the amount to which the, appellant was entitled, 
, , HELD : (I) The contr~ct was not made in accordance with the pro-
vts.ions of the Act, for, 
it Was 
not seated, and therefore, under 
s. 74(2) of the Act, the contract was not binding upon the Corporation, 
There is nothing in the transitory provisions which excludes the operation 
of s. 74(2). Hence. even if it was not possible to comply with the rules 
until the elections were held there was no warrant _for holding that the· 
-416 
SUPREME COURT-REPORTS 
[1970] 3 S.C.R. 
-sub-section did not apply and that the Commissioner or the Transp0rt 
Manager could enter into contracts without the seal of the Corperation. 
·The appellant was accordingly not entitled to maintain a suit for the price 
of the goods relying upon any contractual obligation, nor maintain the 
claim for damages on the footing that the respondent committed a breach 
·Of contract. [420 E, 421 B-DJ 
(2) But the appellant was entitled to maintain bis claim for compensation 
under s. 70 of the Contract Act. 
Under the section compensation would 
normally be the market price of the goods. 
In the circumstanf<S of the present case, the invoice value was the 
.Prevailing market value of the goods and the appellant was entitled to 
it. 
The appellant was also entitled to interest at 6% till date of pa'Yment. 
"[422 E, FJ 
Secretary of State v. G. T. Sarin and Co. l.L.R. 
II Lah. 375, 
A 
B 
.approved. 
C 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 19 ·of 
1967. 
Appeal from the judgment and decree dated July 23, 24, and 
September 26, 1963 of the Bombay High Court in Appeal 
No. 801 of 1957 from Original Decree. 
J. C. Bhatt, R. A. Gagrat and B. R. Agarwala, for the 
appellant. 
R. B. Kotwal and Naunit Lal, for the respo,n.tlent. 
The Judgment of the Cou

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