THE NEW MARINE COAL CO. (BENGAL) PRIVATE LTD. versus UNION OF INDIA

Citation: [1964] 2 S.C.R. 859 · Decided: 05-04-1963 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Appeal(s) allowed

Cited by 5 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

-
2 S.C.R. 
SUPREME COURT REPORTS 
859 
THE NEW MARINE COAL CO. (BENGAL) 
PRIVATE LTD. 
v. 
UNION OF INDIA 
(P. B. GAHlNDRAGADK-'.R, K. N. W-'.NOHOO and 
K. C. DAs GuPTA JJ.) 
Goods delivered under ill•gal contract-Party. receiving 
the same and enjoying the ben•fit-Bound to pay compensation-
Estoppel by negligence-Should b• pleadeil-El•ments of Estoppel 
by negligence-There must be a legal duty~N egligence mu"t be 
the proximate course-Governmen{ of India Act, 1935, 
(25 & 
26, Geo. 5, ch. 42) s. I75 (3)-Indian Contract Act, 1872 (IX 
of 1872), 
s. 70-Indian Evidence Act, 1872 (1 of 1872), 
s. 115. 
The appellant filed a suit on the Original Side of the 
Calcutta High Court against the respondent for the recovery of 
a certain amount representing the price of coal supplied to 
the respondent. The appellant's case was that if the contract 
under which the coal was supplied was illegal by, reason of 
it being in contravention of s. 175 (3) of the Government of 
India Act, 1935, the respondent was liable to pay compen-
sation under s. 70 of the Indian Contract Act, since the Coal 
was not supplied gratuitously and the respondent had enjoyed 
the benefit thereof. 
The respondent's case was that the contract was illegal 
and s. 70 of the Indian Contract Act was not attracted. It 
was further alleged that the respondent had issued and sent 
bills to cover the amount and intiination cards in accordance 
with the usual practice and ordinary course of dealings. The 
respondent, it was alleged paid the amount by a cheque to a 
person authorised by the appellant and on presentation of 
proper receipts. It was therefore alternatively pleaded that 
the appellant's claim having been satisfied, he had no cause 
of action. 
It was established in the course of the trial that the 
appellant had not in fact authorised any person to issue the 
receipts but a certain !'erson not conµected with the appcllal\t 
1963 
Abril 
5 
1963 
Ntw Marine Coal 
Co. ( B tngal} P, Lui. 
v. 
L' nitm rJ b1dia 
\ 
860 SUPREME COURT REPORTS [1964] VOL. 
firm, 'without the consent· or knowledge of the appellant got 
hold of the intimation cards and bills addressed to the appellant 
forged the documenlS and fra11dulently received the cheque 
from the respondent and appropriated the amount for himself. 
The rr.sponder.t had not pleaded in its written statement that 
it was due to the negligence of the appellant that the third 
person was able to get hold of the 
intimation card and 
perpetrate the fraud. 
Neither was it pro\'ed in the ease that 
the appellant was in fact negligent. 
The Trial Judge found that the respondent was bound to 
pay compensation under s. 70 of the Indian Contract Act and 
rejected the alleged payment of the bills and in the retult 
decreed the amount prayed for hy the appellant. The respondent 
thereupon appealed to a Division Bench. 
Both the Judges 
agreed that the appeal sl10ulcl be allowed. 
Regarding the 
invalidity of the agreement and th~ inapplicability of s. 70 of 
the Contract Act both the J1dges agreed in favour of the 
present respondent. 
But while one of the Judges was not 
prepared to consider the plea of negligence which was raised 
by the present respondent for the first time in the appeal the 
other judge held that there was negligence on the part of the 
pre<;ont appellant. 
The present appeal was filed on a certi-
ficate g1'rnted by the High Court. 
' 
In this Court, apart from the questions of'the invalidity 
o( the contract under s. 175 (3) of the Government of fndia 
Act and the applicability of s. 70 of the Contract Act, it was 
argued on behalf of the appellant that a plea of negligence 
should have b"en raised by th~ respondent in its pleadings and 
that the appellate r.ourt 
\Va!! :n error in allowing such a plea 
to be raised for th" first time in appeal. It was contended 
further that in support of the pica of negligence it must be 
shown that the party against whom the plea is raised owed a 
duty to the party who raises the pica and that the negligence 
must not be merely or indirectly connected with the misleading 
effect but must be the pr,oximate cause of the result. 
Held that the contract is illegal and void. 
If in pursuance of the void contract, the appellant ha• 
performed his part ancl the respondent has received the benefit 
of the performance of the rontract by the appellant, s. 70 of 
the Contract Act would justify the claim made by the appellant 
against the rr'.spondent. 
State of w_,t Beng

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