What is concept of reimbursement of unjust enrichment regarding Government Contract?

 Taking into account the legal position as enunciated in these judgments, the impugned award holds that the absence of a contract would not deprive the respondent/contractor from a reasonable remuneration for the work performed. The view taken in the impugned award is plausible, and based on an application of law laid down in the judgements referred to therein. Reference is also apposite to the judgment of a co-ordinate bench of this Court in M.C.D. v. Ravi Kumar, MANU/DE/4058/2017, where this Court had occasioned to specifically consider an identical issue, viz :-

"(i) Whether in absence of a formal agreement/contract awarding additional works to the respondent, the respondent is entitled to make a claim for such work?"

{Para 30}

31. As regards the above issue, this court held as under :-

"12. Interpreting the said provision, Supreme Court in case of Mulamchand v. State of Madhya Pradesh MANU/SC/0009/1968 : AIR 1968 SC 1218, held that in the absence of a formal contract between Dominion of India and a private individual not in the form required by Section 175(3) of the Government of India Act, 1935, the same was void and cannot be enforced, however, at the same time, if money is deposited and goods are supplied or if services are rendered in terms of the void contract, the provisions of Section 70 of the Indian Contract Act may be applicable and where a person has lawfully done something for other not intending it to be done gratuitously and the other person enjoys the benefit thereof then such other person shall become liable to make compensation to the former in respect of, or to restore, the things so done or delivered.

 IN THE HIGH COURT OF DELHI

O.M.P. (Comm) 405/2023, IA Nos. 19196/2023 and 19198/2023

Decided On: 03.10.2023

Bharat Sanchar Nigam Ltd. Vs. Vihaan Networks Ltd.

Hon'ble Judges/Coram:

Sachin Datta, J.

Citation: MANU/DE/6799/2023.

Read full Judgment here: Click here.

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Whether the contractor is entitled to get the payment for work allegedly executed by it even if no concluded contract came into existence?

It is highlighted at the cost of repetition that works in question had been undertaken by the Claimant for which it has incurred the expenditure. This was done at the instance of USOF/BSNL. Had the work been finally awarded, the Claimant would have recovered the amount of expenditure. Since that is not done, the Claimant would be entitled to the expenditure incurred in view of the provisions of Section 70 of the Contract Act, which reads as under:

"70. 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."{Para 114}

115. This provision incorporates the doctrine Quantum Meruit. According to contract law, quantum meruit is a doctrine that states there is an inferred promise to pay a fair amount for work and the materials provided, even without a lawful, enforceable agreement between the parties. A party who carries out a worthwhile service for another party normally participates in a written, legally binding agreement or contract before fulfilling the service, especially when the party providing the service is in the business of executing that service."

 Likewise, the conclusion that the respondent/claimant was entitled to reimbursement of expenses incurred by it notwithstanding absence of a concluded contract was predicated upon Section 70 of the Contract Act which incorporates the doctrine of quantum meruit. The said view is not liable to be interfered, particularly on the touchstone of Section 34 of the A & C Act, 1996. (Para 28)

 IN THE HIGH COURT OF DELHI

O.M.P. (Comm) 405/2023, IA Nos. 19196/2023 and 19198/2023

Decided On: 03.10.2023

Bharat Sanchar Nigam Ltd. Vs. Vihaan Networks Ltd.

Hon'ble Judges/Coram:

Sachin Datta, J.

Citation: MANU/DE/6799/2023.

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Whether principle of quantum meruit is applicable in case of contractual relation?

Having heard the learned counsel for both sides, one neat
question arises before this Court, which is, whether, when parties are governed by contract, a claim in quantum meruit under Section 70 of the Indian Contract Act, 1872 [“Contract Act”] would be permissible.
Section 70 of the Contract Act reads as under:
“70. Obligation of person enjoying benefit of nongratuitous
act.—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.”
This Section occurs in Chapter V of the Contract Act, which chapter is
headed, “of certain relations resembling those created by contract”.
There are five sections that are contained in this Chapter. Each of
them is posited on the fact that there is, in fact, no contractual
relationship between the parties claiming under this Chapter. For
example, under Section 68, if a person incapable of entering into a
contract is supplied necessaries by another person, then the person
who has furnished such supplies becomes entitled to be reimbursed
from the property of the person so incapable of entering into the
contract. Section 69 also deals with a case where a person has no
contractual relationship with the other person mentioned therein, but
who is interested in the payment of money which the other person is
bound by law to pay, and who, therefore, pays it on behalf of such
person. Such person is entitled to be reimbursed by the other person.
Under Section 71, again, the finder of goods spoken of is a person
who is fastened with the responsibility of a bailee as there is no
contractual relationship between the finder of goods and the goods
which belong to another person. Equally, under Section 72, a person to
whom money has been paid or anything delivered by mistake or
coercion must repay or return it, or else, such person would be unjustly
enriched. Here again, there is no contractual relationship between the
parties. It is in this setting that Section 70 occurs.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.1766 OF 2019

MAHANAGAR TELEPHONE NIGAM LTD. Vs  TATA COMMUNICATIONS LTD.

R.F. NARIMAN, J.
Dated:February 27, 2019.

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Whether contractor can claim payment for extra work done by him due to change in nature of work?

 The High Court took note of clause 11 of the contract dated 12.02.1992 which states that the contractor is not authorized to do any extra work or make any alteration without the previous consent in writing of the respondent. High Court set aside the findings recorded by the trial court holding that the parties are governed by the terms of the written contract and any variation with the terms of the agreement was required to be done strictly adhering to clause 11 of the contract. While saying so, the High Court brushed aside the admission by DW-1 that extra work was done by the appellant and the High Court was not right in ignoring the same to hold that the admission of DW-1 cannot have the effect on the contractual obligation of the parties. It is to be pointed out that the respondent has not raised the plea relying upon clause 11 of the contract. Further, by perusal of Ex.P2 dated 20.12.1991, a letter addressed by the appellant to the respondent informing the respondent about the extra work which needs to be done and the fact that PW-4 was engaged by the respondent to prepare the new design for the work, it is evident that the respondent was aware of the fact of the change in the nature of work and that there is alteration in the work done by the appellant. When the evidence and material clearly depict the change of nature of work involved and when the extra work to be done was also admitted by DW-1, parties cannot be expected to go for a revised agreement/contract. Moreover, having regard to the fact that the work was to be completed within a specified time-frame, the parties cannot be expected to go for a second round of negotiation and reframe the terms and conditions of the work. While so, the High Court was not right in placing reliance upon clause 11 of the contract to reverse the findings of fact recorded by the trial court.

15. So far as the claim of the appellant that it suffered loss due to loss of stock of material, PWs 1 and 3 have stated that they have stocked the material of worth about rupees six lakhs at the work site. The appellant also produced several letters (Exs. P5, P6 and P7) by which the appellant has informed the respondent that there was no progress in the work and that the building material are lying waste. Apart from these letters, the appellant has also produced photographs (Exs. P18 to P28) to substantiate their claim that the building material like bricks, size stones and other materials were stocked at the work site. Even though the appellant has claimed rupees six lakhs on account of loss of the material stocked, as the appellant had not produced any bill relating to purchase of material nor produced authentic trip sheet, the trial court rightly awarded rupees one lakh only on account of loss of building material. As noticed earlier, based on the evidence of PWs 1 and 3 and other documents, the trial court has awarded amount on various other heads viz., the amount payable in respect of:- (i) extra earth work; (ii) embankment work; (iii) extra soiling work; (iv) extra bed concrete work and (v) extra stone masonry work. The amount so awarded by the trial court under various heads is based on evidence and material on record.

Supreme Court of India

Venkatesh Constrn.Co vs Karnataka Vidyut Karkhane ... on 20 January, 2016

Bench: T.S. Thakur, A.K. Sikri, R. Banumathi

REPORTABLE

 CIVIL APPEAL NOS.       461-462  OF  2016
 (Arising out of SLP (C) Nos.29680-29681 of 2010)

Citation;(2016)4 SCC119

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