PETITIONER: N. SATYANATHAN Vs. RESPONDENT: K. SUBRAMANYAN AND OTHERS. DATE OF JUDGMENT: 29/03/1955 BENCH: SINHA, BHUVNESHWAR P. BENCH: SINHA, BHUVNESHWAR P. BOSE, VIVIAN JAGANNADHADAS, B. CITATION: 1955 AIR 459 1955 SCR (2) 83 ACT: Representation of the People Act, 1951 (Act XLIII of 1951), s. 7(4)-Appellant entered into agreement with Central Government for conveying postal articles and mail bags through Motor Vehicle Se?-vice on certain remuneration- Appellant whether disqualified for election to the House of People under s. 7(d) of the Act. HEADNOTE: The question for determination in this appeal was whether the appellant was disqualified under s. 7(d) of the Representation of the People Act, 1951 for election to the House of the People. The material portion of s. 7(d) of the Act reads as follows: "A person shall be disqualified for being chosen as and for being, a member of either House of Parliament............ (b) if, whether by himself or by any person or body of persons in trust for him or for his benefit or on his account, he has any share or interest in a contract for............ the performance of any service undertaken by the appropriate Government". The appellant (a contractor) had entered into an agreement with the Central Government. The relevant portion of the said agreement was as follows:- "The contractor has offered to contract with the Governor- General for the provision of a Motor Vehicle Service for the transit conveyance of all postal articles and mail bags from December 15, 1949 to December 14, 1952 and the Governor- General has accepted the offer. "The Government agrees to pay to the contractor Rs. 200 per month during the subsistence of the agreement 'as his remuneration for service to be rendered by him' ". Held that on the face of it the agreement was between two competent parties with their free consent, and there was a lawful cash consideration for it. The Appellant entered into the agreement with his eyes open knowing full well his rights and liabilities under the same. 84 The case was a straightforward illustration of the kind of contract contemplated by s. 7(d) of the Act. At all material times the appellant had been directly concerned, for his own benefit, in the contract of carrying mail bags and postal articles entered into by him with the Government in the Postal Department. Section 7 of the Act is clearly intended to avoid a conflict between public duty and private interests. JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 252 of 1954.
Appeal by Special Leave from the Judgment and Order dated
the 22nd January 1953 of the Election Tribunal, Vellore in
Election Petition No. 35 of 1952.
N.C. Chatterjee (A. N. Sinha and N. H. Hingorani, with
him), for the appellant.
C. V. L. Narayan, for respondent No. 1.
1955. March 29. The Judgment of the Court was delivered by
SINHA. J.-The only question for determination in this
appeal by special leave is whether the appellant is
disqualified-under section 7(d) of the Representation of the
People Act, 1951 (hereinafter called the Act) for election
to the House of the People, as held by the Election
Tribunal, North Arcot, Vellore, by its orders dated the 20th
January, 1953 in Election Petition No. 35 of 1952.
The facts of this case are not in dispute and lie within a
narrow compass. The appellant and respondents I to 3
contested the last general elections from the Dharmapuri
Parliamentary Constituency in the district of Salem in the
State of Madras. Respondents 4 to 10 who were added
subsequently by an order of the Tribunal were also
candidates for election. Their nominations also had been
held to be valid but they ultimately withdrew their
candidature before the polling took place. The appellant
was in due course declared to have been elected to the House
of the People. Thereafter, on the 5th March, 1952 the 1st
respondent filed an election petition before the Election
Commission contesting the appellant’s election
85
on the ground that the appellant was disqualified under
section 7(d) of the Act as, from the date of his nomination
and until the date of election and after, the appellant had
a contract with the Government of India in the Postal
Department for the transport of postal mail which was a
service undertaken by the Government of India. At this
stage it is necessary to state that it is admitted that the
appellant is and has been the holder of a stage carriage
service permit (Ex. B-2) dated the 26th April 1949, issued
by the Regional Transport Authority, Salem, Madras. It was
one of the conditions of the said permit that if called upon
the appellant will enter into an agreement with the
Government of India for the transport of postal articles and
mail bags. In pursuance of that obligation the appellant
entered into a registered agreement with the Government of
India on the 16th November 1949 (Ex. A-3) to be noticed in
detail hereinafter. After the appellant had filed his
nomination paper, the 1st respondent by his petition dated
the 28th November 1951 raised the objection to the effect
that his nomination should be rejected on the ground that he
had entered into a contract with the Government of India for
his own benefit for the transport of mail between Salem and
Yercaud. The Returning Officer for the Dharmapuri
Parliamentary Constituency, Salem, by his orders (Ex. A-2)
of the same date overruled the objection holding that the
service rendered by the appellant of carrying mail is not
under an agreement but on an imperative order of the
Government under Rule 160-B of the Madras Motor Vehicles
Rules. Apparently the registered agreement (Ex. A-3) had
not been placed before him.
To the election petition filed by the 1st respondent the
appellant filed his written statement on the 28th May 1952
denying that he was disqualified for election as a member of
Parliament by virtue of the provisions of section 7(d) of
the Act. His contention was that “it is the exclusive
privilege of the Government of India to convey all postal
articles from one place to another and it is a normal
function of the Government statutorily reserved to itself.
There is no justifi-
86
cation to regard the carrying of mails from one place to
another as the performance of any service undertaken by the
Government”. It was further averred on behalf of the
appellant that it was not justifiable to regard him as
having any interest in a contract for the performance of any
service undertaken by the appropriate Government within the
mischief of section 7(d) of the Act; and that he had been
only carrying out the obligations imposed upon him by Rule
160-B of the rules framed under the Motor Vehicles Act. It
was also contended that under article 103 of the
Constitution of India the question as to the dis-
qualification of a member has to be decided by the President
whose decision shall be final.
On those pleadings the following issues were framed by the
Election Tribunal:-
1.Is the nomination of the 1st respt. invalid because of the
prohibition contained in section 7(d) of the Representation
of the People Act, 1951, or for any of the reasons set forth
in paras. 9 to 11 of the petition?
2.Has this Tribunal no jurisdiction to decide the question
as regards the disqualification of the returned candidate,
because of article 103 of the Constitution of India?
It is not necessary to refer to the additional issue bearing
on the question of limitation arising from an interlocutory
application for impleading those candidates (respondents 4
to 10) whose nomination had been accepted but who had
withdrawn from the contest. Both these issues were decided
against the appellant. The Tribunal on a very elaborate
discussion of the points raised before it, held that the
postal service including the transport of mails is a service
undertaken by the Central Government within the meaning of
section 7(d); that at the date of the nomination the
appellant was a contractor under the Central Government;
that the agreement between the Government and the appellant
involved mutual obligations which could not be referable to
a bare statutory duty on the part of the appellant but that
it was the result ‘of mutual assent based upon a free
87
offer and acceptance; and that the agreement was supported
by valid consideration. The Tribunal also held that article
103 of the Constitution was not a bar to its jurisdiction to
decide, the controversy. Accordingly it allowed the
election petition and held the appellant’s election to be
void in terms of section 100(1)(c) of the Act, with costs to
the respondent. Hence this appeal.
In this appeal the contentions raised before the Election
Tribunal, except the objection to the Tribunal’s
jurisdiction in view of the provisions of article 103 of the
Constitution, have been pressed before us by the learned
counsel for the appellant. It is manifest that the
determination of this case must depend upon the true
construction and legal effect of the agreement (Ex. A-3)
admittedly entered into by the appellant with the Central
Government. It is therefore necessary to set out in some
detail the relevant clauses of the agreement. The appellant
(called the “contractor”) is of the one part and the
Governor-General of India of the other. The preamble says–
“Whereas the said contractor Sri. N. Sathianathan has
offered to contract with Governor-General for the provision
of a Motor Vehicle Service for the transit conveyance and
delivery of all postal articles and mail bags as defined in
the Indian Post Office Act, 1898, as amended from time to
time,……………. from the 15th day of December 1949 to
the 14th day of December 1952 and the Governor-General has
accepted such offer upon the terms and Conditions
hereinafter appearing…………..
Now this indenture witnesseth that the contractor in
pursuance of the said agreement and in consideration of the
premises and of the payments hereinafter agreed to be made
to him…………….
It is hereby mutually agreed and declared between and by the
parties hereto as follows:-
1.Contract to carry:-The contractor shall during the
continuance of this contract, that is to say, from the 15th
day of December 1949 until the 14th day of December 1952 or
until the said contract shall be determined by such notice
as is hereinafter men-
88
tioned or otherwise in (hereinafter referred to as the said
contract period) duly and safely convey………… by means
of motor vehicles of good and reliable manufacture all
postal articles and mail bags……………..”
By clause 4 the contractor is permitted to carry passengers
and their luggage by bus provided there is accommodation
available and provided that the mail service is not
prejudiced in any way. By clauses 5 and 6 the contractor is
required to -maintain in good order and repair a number of
motor buses and their spare parts at his own expense and to
bear all municipal and other taxes payable in respect of the
motor vehicles. Clause 7 contains the schedule of penalties
in the event of non-completion of any journey or of delay in
completion thereof in accordance with the time table, etc.
By clause 8 the contractor is made absolutely liable and
responsible for the due and safe custody and delivery in
good order and condition of postal articles and mail bags.
By clause 10 nongazetted postal and telegraph officers
travelling on duty on the route allotted to the appellant
are declared to be entitled to travel free of all charges
and such official passengers shall have precedence over
ordinary passengers. Clause 13 provides that the contract
shall not be transferred by the contractor to any person or
company without the previous consent in writing of the
Director-General of Posts & Telegraphs. By clause 15 the
Government agrees to pay to the contractor Rs. 200 per month
during the subsistence of the agreement “as his remuneration
for service to be rendered by him hereunder”‘. This monthly
sum of Rs. 200 is liable to be increased or decreased
proportionately to the increase or decrease in the mileage
to be covered. Clause 18 is in these terms:-
“In the event of the contractor failing to secure a renewal
of the permit on the line this contract will automatically
terminate on the date up to which the old permit shall be
valid and in such case no compensation shall be payable to
either party for such termination. This contract may be
absolutely determined and put an end to by either of the
contracting
89
parties giving four calendar months notice in writing to the
other of his intention so to determine and put an end to the
same”.
Clause 21 contains the usual arbitration clause to the
effect that all disputes and differences arising out of or
in any wise touching or concerning the agreement shall be
referred to the sole arbitration of the Director-General of
Posts and Telegraphs or his nominee. It is also provided
that the award of the arbitrator shall be final and binding
on the parties.
It will be observed that the agreement set out above is a
formally drawn up document which satisfies all the
requirements of a contract. It is not the appellant’s case
that the contract has been vitiated by undue influence,
fraud or such other cause. But it has been argued that it
was a necessary sequel to the stage carriage permit granted
by the Transport Authority under the Motor Vehicles Act read
along with the relevant rules. In this connection reference
was made to rule 160-B of the Madras Motor Vehicles Rules
which is as follows:-
“It shall be a condition of every stage carriage permit that
the holder of the permit shall, if so required by the
transport authority which granted the permit, carry mails at
such rates and on such terms as the transport authority may
fix after consultation with the holder of the permit and the
postal authorities concerned”.
The rule quoted above has apparently been made under the
authority of section 48(d) of the Motor Vehicles Act. It is
common ground that the agreement aforesaid between the
appellant and the Central Governmentis in pursuance of rule
160-B aforesaid; but it has been argued on behalf of the
appellant that though the agreement aforesaid has the
“semblance of a contract”, it is lacking in the “essential
ingredients of a free consensus of acceptance and offer”.
This argument is based on the further contention that the
appellant has been carrying mail on his buses in performance
of a statutory obligation which cannot come within the
mischief of
12
90
section 7(d) of the Representation of the People Act, 1951.
The material portion of the section is in these terms:-
“A person shall be disqualified for being chosen as, and for
being, a member of either House of Parlia-
ment……………………….
(b)if, whether by himself or by any person or body of
persons in trust for him or for his benefit or on his
account, he has any share or interest in a contract
for……………………………… the performance
of any services undertaken by the appropriate Government”.
It has further been argued alternatively that if the
agreement has the force of a contract, it is totally lacking
in consideration because the monetary consideration provided
for in the agreement is no more than the subsidy already
fixed by the Regional Transport Officer by his orders dated
the 23rd July, 1949; that the agreement in question being
with a third party, namely, the Governor-General, to render
service which was already due to another party, namely, the
Transport Authority for the same consideration cannot amount
to a valid contract supported by consideration; and finally,
that the transport of mail is not a “service undertaken by
the Central Government”.
In our opinion, there is no substance in any one of these
contentions. It is true that the appellant entered into the
contract aforesaid with the Central Government for the
transport of postal articles and mail bags on the 16th
November, 1949. From before that date be had been carrying
on the business of plying buses on the route allotted to him
by the Regional Transport Authority. But he entered into
the contract with his eyes open and knowing full well his
rights and liabilities under the same. No one is compelled
to carry on the business of stage carriage service or for
the matter of that, of transporting postal articles and mail
bags. In terms of the permit, it is open to the Government
to call upon a permit holder to-undertake the additional
burden of carrying postal articles and mail bags which
carries with it the additional remuneration to be fixed by
the Transport Authority after consultation with the postal
autho-
91
rities and the carrier. It is not every stage carriage
permit holder who is called upon to do so. At the time the
appellant entered into the contract with the, Government in
the postal department he may not have had any idea of
standing for election to the House of the People when in
future the general elections came to be held. If he wished
to steer clear of the difficulty created by section 7 of the
Act, he could have given due notice to Government under
clause 18 of the contract referred to above. On the expiry
of the term of the notice he would have been free to stand
for election to a State or Central Legislature. Section 7
of the Act is clearly intended to. avoid a conflict between
public duty and private interest.
The Tribunal discussed a number of authorities with
reference to the English and the American Law of Contract
for arriving at the conclusion that the agreement between
the appellant and the Government of India in the Postal
Department had all the ingredients of a valid contract. The
Tribunal need not have travelled so far afield, especially
when the provisions of the Indian Con tract Act which govern
the case are sufficient to answer all the contentions raised
on behalf of the appellant. On the face of the transaction
the agreement was between two competent parties with their
free consent. There was no question -but that there was
lawful consideration, The permit for the stage carriage had
been granted by, the authority under the Motor Vehicles Act;
and the agreement for transport of postal articles and mail
bags was between the Government of India in the Postal
Department and the appellant for a cash consideration.
But it was argued that the agreement was in pursuance of a
pre-existing obligation imposed by the rule aforesaid framed
under the Motor Vehicles Act. It is true that the permit
does contain a condition that the permit-holder may be
called upon to undertake transport of mail bags and postal
articles but that is only a notice to intending applicants
for a stage carriage permit that the grantee of such a per-
mit may have to render that additional service for an
92
additional remuneration if called upon to do so by the
authorities of the Postal Department. If any one was not
prepared to undertake that additional responsibility, he was
free not to make an application for such a permit; but that
does not mean that the agreement actually entered into
between the Postal Department and the permit holder is not
an independent contract governed by its own special terms.
As indicated above, clause 18 has reserved the right to
either party to terminate the contract on giving four
months’ notice. The appellant must be presumed to have
known that the agreement that he had entered into with the
Postal Department will stand in the way of his running as a
candidate for election to the Central or the State
Legislature. There was nothing to prevent him from giving
the necessary notice to the department and thus terminate
his agreement so as to be free to stand as a candidate for
election to the legislature. Section 7 of the Act is
intended to ensure that there is no occasion for a conflict
between public duty and private interests. The appellant
had a clear and free choice before him. If he was anxious
to serve the community as a member of the Central
Legislature, he had to give up his private gains in the
shape of the remuneration for carrying postal articles and
mail bags in his buses. It may be that on his terminating
the agreement with the postal department he would have to
give up his stage carriage permit also but not necessarily
so. If on the same route a number of bus services are
permitted to different parties, the Postal Department may
choose any one of them to enter into the agreement for the
carriage of mail bags and postal articles. But even if
there was only one service for the route in respect of which
the appellant held the stage carriage permit, if he had to
give up his permit, some other party would take his place
for running the bus service and carrying the postal articles
and mail bags.
It was further argued that the appellant had no hand in the
fixing of the remuneration to be paid by the Postal
Department for carrying its mails, etc. But it is clear, by
a reference to the terms of the rule
93
quoted above, that the amount of the remuneration had to be
fixed by the department after consultation with the carrier.
It was always open to the latter to demur to the terms
proposed by the department and if he found that the
department was not prepared to accept his terms he was not
bound to enter into the agreement. The fact that he had
agreed to carry postal articles and mail bags was possibly
an additional qualification for him to obtain a renewal of
his permit and thus gave him an advantage over his competi-
tors. Hence instead of being an additional burden or a
handicap to him, it was an additional advantage to him in
the matter of getting a renewal of his permit in preference
to others. The agreement was therefore based on mutual
promises, by the appellant to carry the mail bags, etc., and
by the Postal Department to pay him suitable remuneration
for the services thus rendered.
It was further contended on behalf of the appellant that the
Central Government could not be said to have ‘undertaken’
any ‘service’ within the meaning of section 7(d) of the Act
when it made arrangements for the carriage of mail bags and
postal articles through the appellant.’ It has not been and
cannot be contended that the Government is bound in the
discharge of its duties as a sovereign state to make
provision for postal mail service. The provisions of the
Indian Post Office Act, VI of 1898, are only enabling in the
sense that they authorize the State agency to have the
exclusive privilege of conveying letters, etc. for the
convenience of the public and for the benefit of the
Government, without making it obligatory upon it to provide
every individual and every place with those facilities. It
may be that those facilities are being extended from time to
time and are being brought nearer to every home but that is
only evidence of the fact that the State as a welfare state
is anxious to provide for the conveniences of the public in
the matter of communications and correspondence. That is to
say, the Government in the Postal Department has only
undertaken a service to be rendered to the community and
that such
94
a service is not an essential function of a sovereign state.
It cannot be gainsaid that the Governmentr in the Postal
Department is rendering a very useful service and that the
appellant has by his contract with the Government undertaken
to render that kind of service on a specified route. The
present case is a straightforward illustration of the kind
of contract contemplated by section 7(d) of the Act. At all
material times the appellant has been directly concerned,
for his own benefit, in the contract of carrying mail bags
and postal articles entered into by him with the Government
in the Postal Department.
For the reasons aforesaid we have not the least hesitation
in holding that the conclusions arrived at by the Tribunal
are entirely correct. The appeal is accordingly dismissed
with costs.
Appeal dismissed.