Bhagwan Singh vs Rameshwar Prasad Sastri and Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Civil Appeal No. 139 of 1959

Decision Date: 14 April 1959

Coram: P.B. Gajendragadkar, Bhuvneshwar P. Sinha, K.N. Wanchoo

The case titled Bhagwan Singh versus Rameshwar Prasad Sastri and others was decided by the Supreme Court of India on 14 April 1959. The judgment was authored by Justice P. B. Gajendragadkar and was delivered by a bench consisting of Justice P. B. Gajendragadkar, Justice Bhuvneshwar P. Sinha and Justice K. N. Wanchoo. The official citation for the decision is reported in the All India Reporter as 1959 AIR 876 and also in the Supreme Court Reporter Supplement (2) at page 535. The dispute concerned a question of disqualification under the Representation of the People Act, 1951, specifically sections 7(d), 81 and 100(1)(a). The parties were identified as petitioner Bhagwan Singh and respondents Rameshwar Prasad Sastri together with other additional respondents. The matter arose out of the election of the petitioner as a member of the Bihar State Legislative Assembly and the subsequent challenge to his election. The first respondent, who was also a candidate from the same constituency, filed the election petition alleging that the petitioner was disqualified at the time of filing his nomination. The record shows that the petition was argued before the Supreme Court after the matter had been decided by the Election Tribunal and subsequently by the Patna High Court. The principal issue for determination was whether the petitioner’s participation in contracts as Mukhiya of a village Panchayat created a disqualifying interest under the statutory provisions. The Court therefore examined the nature of the contracts, the capacity in which they were entered, and the effect of those contracts on the petitioner’s eligibility for election.

The contracts that formed the centre of the dispute related to community development projects undertaken under the Second Five Year Plan, which prescribed that such works be executed by local agencies such as village Panchayats. The petitioner, Bhagwan Singh, entered into each contract in the prescribed form, and at the time of signing he identified himself by name and indicated that he belonged to the village concerned. According to the preamble, he undertook to construct the development project under the local works programme, to follow the attached estimate, and to contribute fifty percent of the cost in cash and labour. At the conclusion of each contract he signed as Mukhiya, providing his address as that of the Gram Panchayat, thereby indicating that he was acting in his official capacity. The Election Tribunal, after reviewing the evidence, found in favour of the petitioner and dismissed the election petition on the ground that the statutory disqualification did not apply. On appeal, the Patna High Court held that the description given by the petitioner at the time of signing the contracts was not a term of the contract. Consequently, the High Court concluded that this description could not support the petitioner’s contention that he had acted as Mukhiya of the Panchayat. The High Court further observed that the petitioner’s undertaking to execute the works and to be liable for any fine imposed by a local government officer demonstrated personal obligations inconsistent with his claim of agency. The Court thus held that, on a proper construction of the contracts taking into account all the terms and conditions as

Considering the contracts as a whole and placing them in the context of the Second Five Year Plan, the Court observed that when the appellant executed the agreements while describing himself as the Mukhiya of the Village Panchayat, he did so in the capacity of the Panchayat’s agent rather than as a private individual acting in his own personal interest.

The matter before the Court was a civil appeal numbered 139 of 1959, taken on special leave from an order dated 8 January 1959 issued by the Patna High Court in Election Appeal No I of 1958. That High Court order itself arose out of a judgment and order dated 30 November 1957 rendered by the Election Tribunal at Patna in Election Petition No 353 of 1957. The appellant was represented by counsel identified as B. K. P. Sinha and D. P. Singh, while the first respondent was represented by G. C. Mathur and Dipak D. Choudhri, and the third respondent by R. H. Dhebar. The judgment was pronounced on 14 April 1959 by Justice Gajendragadkar. This appeal on special leave originated from an election petition filed by the first respondent (Petition No 353 of 1957) in which he sought a declaration that the election of the appellant as a member of the Bihar Legislative Assembly from the Maner constituency should be set aside as void. In the preceding general election held during February–March 1957 for that constituency, three candidates contested: the appellant, the first respondent and a second respondent. The deadline for filing nomination papers was 29 January 1957, and scrutiny of those papers took place on 1 February 1957. At the scrutiny stage the first respondent raised an objection to the validity of the appellant’s nomination; however, the returning officer dismissed that objection and accepted the appellant’s nomination together with those of the other two candidates. When counting of votes was completed on 3 March 1957, the appellant was declared elected, having secured 9,826 votes compared with 7,526 votes for the first respondent and 49 votes for the second respondent. Following the declaration, the first respondent instituted an election petition under section 81 of the Representation of the People Act, 1951, challenging the appellant’s election on several grounds, each of which was contested by the appellant. The Tribunal, after framing a number of issues based on the parties’ allegations and hearing evidence, found that only a limited subset of the issues raised by the first respondent were pressed at the argument stage, and it decided all of those against the first respondent and in favour of the appellant. Consequently, the Tribunal dismissed the election petition on 30 November 1957. The first respondent then appealed that decision to the Patna High Court, limiting his appeal to a single issue—whether the appellant’s nomination fell within the prohibition of section 7(d) of the Act and consequently whether the nomination had been improperly accepted. On that point, the Tribunal had previously ruled in favour of the appellant.

The Court observed that although the tribunal had found in favour of the appellant, the High Court overturned that finding and accepted the plea of respondent 1. Consequently, the High Court allowed the appeal filed by respondent I and, on 8 January 1959, declared that the election of the appellant was void pursuant to section 100(1)(a) of the Representation of the People Act. The appellant’s nomination had been challenged on the ground that, at the date of his nomination, he possessed an interest in a contract for the execution of works that were undertaken by the Government of Bihar, a circumstance that falls within section 7(d) of the Act. The Court recognised that the statute makes it clear that any person who has an interest in a government contract for the execution of any work is disqualified from being a member of the State Legislature concerned. The appellant, however, denied that the disqualification under section 7(d) could be applied to him. He argued that the contracts that were the subject of the controversy had not been undertaken by the Bihar Government but by the Central Government, and he further contended that he had not entered into those contracts in his individual capacity. Rather, he claimed that he had acted in the capacity of Mukhiya of the Jeorakhan Tola Gram Panchayat. The tribunal and the High Court had taken opposite views on both of these points, and the Court noted that these two questions were the only matters that required determination in the present appeal. The Court explained that if the appellant could successfully demonstrate that he had entered into the questioned contracts not as an individual but on behalf of the Panchayat over which he presided, it would become unnecessary to examine whether the works covered by the contracts had been undertaken by the Government of Bihar. The Court therefore set out to consider first the nature of the contracts and the circumstances of their execution.

The Court identified five contracts that were the subject of the dispute. All five contracts related to the execution of works that formed part of a local development programme envisaged under the Second Five‑Year Plan prepared by the Government of India. The existence of the contracts was proved by five documentary exhibits labeled Exhibit 16‑A through Exhibit 16‑E. The first contract concerned the construction of a road connecting Beyapore and Jeorakhan Tola; the second related to the building of the Beyapore Middle Elementary School; the third provided for a dispensary at Jeorakhan Tola; the fourth dealt with the erection of a Gram Panchayat building; and the fifth involved the digging of a well within the same village. The appellant admitted that none of these contracts had been completed at the time his nomination was filed. In assessing the appellant’s claim that he had acted as Mukhiya of the village Panchayat when he entered into the contracts, the Court held that it was necessary to consider the background of the scheme under which the works were undertaken. The Court referred to the Second Five‑Year Plan, published by the Planning Commission in 1956, which showed that the programme of starting these works was treated as an element of the cooperative movement. The Commission, in its recommendations, had urged that the States should sponsor and actively assist the organization and development of Village Panchayats as a means of encouraging community participation in rural development projects.

In the scheme the Village Panchayats were regarded as an essential component of the programme intended to foster a corporate spirit in rural areas, because it was believed that such a structure would encourage the rural community to take an active interest in the development programmes of their villages. The purpose of the programme, which was to operate in regions that had not yet been reached by the National Extension Service, was to enable village communities to carry out works that would benefit the locality, primarily by using their own labour. The Planning Commission realised that the combined resources of all the States would be far short of the amount required to implement the Plan, and therefore it recommended that large transfers of resources be made from the Central Government to the States. In connection with this recommendation, the Commission concluded that out of the Rs 200 crores sanctioned for the financial year 1957‑58, Rs 12 crores would be required by the Centre for schemes that were undertaken or directly sponsored by the Community Project Administration, while the remaining Rs 180 crores would form the balance to be allocated to the States. Consequently, the basic idea underlying the Plan was to evoke a popular response to the community projects undertaken in pursuance of the Plan and to leave the execution of the various works adopted under the Plan to popular local agencies such as the Village Panchayats. This policy was emphasised by the Secretary of the Planning Commission in a communication addressed to all State Governments, numbered PC/Pub/52/53 and dated 11 August 1953 (H. 1). That communication listed seven categories of work that were considered most suitable for assistance and stipulated that the local contribution, whether in cash, kind or through voluntary labour, together with any contribution that the State Government or a local body might make, should amount to at least fifty percent of the total cost of each work. The intention behind this requirement was to spread the benefit of the projects over as wide an area as possible and to as many people as possible. Accordingly, the State Governments were requested to arrange for a detailed scrutiny of the schemes before they were accepted and to make adequate provisions for their proper execution. They were also instructed to nominate a liaison officer for each district or other suitable unit, whose role would be to monitor the execution of the works and to maintain any initial accounts that might be necessary. The communication made detailed provisions concerning financing and accounting procedures to be followed and required the State Governments to submit progress reports from time to time. It appears that the Government of India was aware that the District Boards, whose primary responsibility was to sponsor these undertakings, would find the projects beyond their financial capacity; hence it accepted the Planning Commission’s recommendation to contribute fifty percent of the cost of each scheme on the condition that the remaining half be raised by the District Board or by the public who would benefit, either in cash or through voluntary labour. The five contracts that are the subject of the present dispute were related to community projects of the kind envisaged by this programme.

On 27 February 1954 the Bihar Government issued a letter (H.2) instructing all District Local Boards to assist the execution of these projects and to provide all facilities and cooperation to district officers in carrying out the programmes, without charging any remuneration. The intention was that when Village Panchayats sponsored works under the programmes, they should encourage the community to contribute both labour and money. Consequently, the works would benefit the entire community and any savings realized from executing the contract would accrue to the Village Panchayat, which was normally expected to act as the sponsoring body. Against this background the Court needed to determine whether the contracts had been executed by the appellant in his individual capacity, as argued by respondent I. Alternatively, the appellant claimed that the contracts were executed in his capacity as Mukhiya of the Village Panchayat. Four contracts, exhibited as Exhibits 16A, 16C, 16D and 16E, were all similarly executed, while Exhibit 16B, pertaining to the construction of the Beyapore M.E. School, was worded differently. Both the Election Tribunal and the High Court agreed that Exhibit 16B had been executed by the appellant as Secretary of the Beyapore Madhyamik Vidyalaya. They further concluded that the appellant possessed no personal financial interest in that contract. The Election Tribunal held that the remaining contracts shared substantially the same character as Exhibit 16B. In contrast, the High Court found that those contracts were entirely different and that the appellant had personally executed them. The Court therefore needed to decide whether the High Court’s assessment of the appellant’s personal execution of the contracts was correct. The Court decided to treat Exhibit 16A as representative of the remaining four contracts for the purpose of analysis. The material terms of this contract numbered eight, and each term was presented in the prescribed format. At the beginning of the contract the appellant identified himself by name, stated that he belonged to the village of Jeorakhan Tola, and described his profession as cultivation. The preamble indicated that the appellant undertook to carry out the construction of the development project under the local works programme, as specified in the attached estimate. He also agreed to perform the work subject to the terms and conditions contained in the contract. Furthermore, the appellant committed to contribute fifty percent of the total cost in the form of cash and labour contributions. At the conclusion of the contract the appellant signed as Mukhiya and provided his address as Jeorakhan Tola Gram Panchayat. The High Court ruled that the description supplied by the appellant at the time of signing was not a term of the contract. Consequently, the High Court held that this description could not support the appellant’s claim that he had executed the contract as Mukhiya of the Panchayat.

The Court noted that the High Court had distinguished the present contract and the three related contracts from the school contract identified as Exhibit 16‑B. In the school contract the appellant described himself as “Secretary, Madhyamik Vidyalaya” both at the beginning of the document and again at the point where he signed it. The Court held that the distinction drawn by the High Court between these two groups of contracts was not justified. It saw no reason to regard the description given by the appellant of his status at the time of signing as being outside the contract itself. The Court also observed that the contract had been accepted by an officer who signed in the capacity of S. D. O., Dinapore, and that the officer’s designation at the time of acceptance indicated the character in which the officer was receiving the contract. By the same reasoning, the Court said, the description provided by the appellant of his own status and character when he signed the contract should be taken to show the character in which he executed it. The High Court, the Court further explained, had concluded that clauses 4 and 7, by which the appellant undertook a liability to execute the contract as required and to pay any fine imposed by a local government officer in case of default, demonstrated personal obligations inconsistent with the appellant’s claim that he had entered into the contract as Mukhiya of the Village Panchayat. The Court found that argument to be without merit. It pointed out that if those two clauses necessarily required the contract to be executed by an individual, the same clauses also appeared in the school contract, yet the High Court had held that the school contract had been executed by the appellant not in a personal capacity but as Secretary of the Madhyamik Vidyalaya. Consequently, the Court said that excessive reliance on those clauses could not support the view that the contract was executed personally by the appellant. Additionally, the Court observed that the High Court had not properly considered the contractual term whereby the contracting party agreed to contribute fifty percent of the cost of the work in cash or labour. The Court explained that this term made the contracting party a sponsoring agent of the contract and obligated it to bear half of the cost. It found it difficult to accept the suggestion that the appellant, in his individual capacity, agreed to contribute fifty percent of the cost in cash or labour, because a person undertaking a building contract normally expects a profit and would not agree to bear half of the expense. The Court concluded that the clause clearly indicated that the sponsorship of the contract was effected by the Village Panchayat, which, through its Mukhiya, undertook to contribute fifty percent of the cost either in cash or in labour. Consistently

According to the general policy of the development plan, the Village Panchayat acted as a sponsoring agent and anticipated that villagers would provide labour, thereby supplying the required fifty percent of the cost of the proposed work. The Court held that, when the contract was examined in the context of the overall plan and all of its conditions were considered together, it was clear that the appellant, who was the Mukhiya of the Village Panchayat, signed the contract in his official capacity as an agent of the Panchayat rather than in a personal capacity. This conclusion was supported by the records maintained by the Village Panchayat concerning these contracts, which included the minutes of various Panchayat meetings, the budgets that had been adopted, and the resolutions that had been passed at different times in relation to the contracts. Respondent 1 had alleged that the entire set of records had been fabricated for the purpose of the present litigation. The Election Tribunal, however, made a definite finding against respondent 1 on this allegation. The Tribunal examined the oral testimony presented by the appellant and other witnesses to establish the authenticity of the records, and it scrutinised the entries themselves on their own merits. In doing so, the Tribunal noted that several exhibits bore the signatures and approvals of the District Panchayat Officer on successive occasions, which reinforced the credibility of the documents. Consequently, the Tribunal concluded that it was implausible to accept the suggestion that every individual who had signed the records had colluded with the appellant merely because he occupied the position of Mukhiya. The judgment of the High Court indicated that it was not prepared to overturn the Tribunal’s finding. Nevertheless, the High Court made certain observations that suggested it was reluctant to give the records any substantive weight. It quoted the judgment as stating that “the papers do not inspire much confidence and cannot be relied upon in proof of the facts disclosed by them.” The Court considered it regrettable that, despite a serious allegation of fabrication having been categorically rejected by the Election Tribunal, the High Court did not express a clear and unambiguous finding on the matter. The oral evidence presented by the appellant in support of the records, together with the other material circumstances considered by the Election Tribunal, appeared not to have been fully appreciated by the High Court. The High Court did, however, note two defects in the records. It observed that the accounts had not been audited in accordance with rule 20 of the Bihar Gram Panchayat Account Rules, 1949, and that the cash balance had not been maintained as required by rule 8 of the same regulations.

The record was alleged to have been kept by the Mukhiya in the nearest Post Office Savings Bank or in any recognised Co‑operative Bank or a Government Treasury in the name of the Panchayat as required by rule eight. The Court noted that the two defects pointed out by the High Court—namely, that the accounts had not been audited as required by rule twenty of the Bihar Gram Panchayat Account Rules, 1949, and that the cash balance had not been kept by the Mukhiya in the prescribed bank or treasury—could undoubtedly suggest that the Panchayat officers, including the appellant, had not acted properly and had failed to comply with the obligations imposed by those rules. Nevertheless, the Court found it difficult to understand how those two defects could have a material and direct bearing on the question of whether the record had been fabricated. The Court observed that if the High Court intended to hold that the record had in fact been fabricated, it should have examined the relevant evidence and the surrounding material circumstances more carefully and should have made a definite finding on that point. The Court further stated that to say the record bore only the signatures of the appellant and his clerk and to draw an adverse inference from that fact was, “in our opinion”, an incorrect approach to the issue. The Court explained that if the appellant was the Mukhiya he was bound to sign the record, and the clerk was bound to write it; therefore, that circumstance could not by itself be treated as suspicious. After a careful examination, the Court saw no reason why the well‑considered finding of the Election Tribunal on this issue should not be accepted. Consequently, the Court assumed that the Panchayat record produced by the appellant was not shown to have been fabricated. The Court also observed that the High Court appeared to have accepted that the record demonstrated an understanding between the appellant and the Village Panchayat regarding the financial obligations involved in executing the impugned contracts. The High Court’s judgment quoted, “It might well be that the loss or the profit was ultimately to be borne or pocketed by the Gram Panchayat itself”, but added that this “does not take away the effect of the contract itself which on the face of it was entered into by the appellant himself”. The Court held that if the Panchayat agreed to bear the loss or to take the profit flowing from the performance of the contract, that clearly supported the appellant’s case that he had executed the contract as the Mukhiya of the Panchayat. The arrangement referred to by the High Court, if genuine, would be wholly inconsistent with the case advanced by respondent I that the contract had been executed by the appellant personally. The High Court also held that the appellant had not raised this specific case either before the returning officer when his nomination was challenged or in the present proceedings when he filed his written statement. The appellant had unequivocally stated in his reply that he had no interest in any contract undertaken by the State Government. According to the 69 High Court, his failure to add the further particular that the contract had been executed by him on behalf was seen as an afterthought, a point that the Court did not find persuasive.

The Court noted that the appellant’s failure to specify in his written statement that the contract had been executed on behalf of the Panchayat was a mere after‑thought and did not, in the Court’s view, constitute a substantial defect. The Court said it could not discern any persuasive force in the criticism that this omission should prejudice the appellant’s case. The real issue, the Court explained, was the proper construction of the contract itself. The Court emphasized that the manner in which a document is interpreted cannot be adversely affected simply because a party did not articulate a more precise plea in a statement of defence. The Court was satisfied that, when the contract is read as a whole, it clearly shows that the appellant signed and executed it in his capacity as the Mukhiya of the Village Panchayat. Consequently, the Court held that the alleged imperfection in the plea contained in the written statement could not alter this conclusion.

The Court then turned to the High Court’s reliance on Section 6 of the Bihar Panchayat Raj Act (Act 7 of 1958), which requires that a contract intended to be executed on behalf of a Panchayat be signed in the name of the corporate body. The Court observed that the Gram Panchayat, as defined in the notification under sub‑section (1) of Section 3, is indeed a body corporate possessing perpetual succession, a common seal and the authority to contract in its own name. However, the Court accepted the High Court’s finding that even if the contract were invalid for not being executed in the corporate name, such invalidity would not affect the substantive issue raised under Section 7(d) of the Act. The Court cited the decision in Chatturbhuj Vithaldas Jasani v. Moreshwar Parashram [1954] S.C.R. 817, noting that the High Court had correctly rejected the appellant’s argument that an invalid contract precluded any interest under Section 7(d). Accordingly, the Court held that the question of whether the contract was executed by the appellant personally or as Mukhiya could not be resolved by invoking the contract’s alleged invalidity. The Court concluded that all four contracts under dispute were executed by the appellant in his official capacity as Mukhiya of the Village Panchayat, just as he had previously executed the school contract as Secretary of the Vidyalaya. Therefore, Section 7(d) could not be applied against him. In light of this finding, the Court found it unnecessary to determine whether the works were undertaken by the Government of Bihar or the Central Government. Accordingly, the appeal was allowed, the High Court’s order was set aside, the tribunal’s order was restored, respondent I was ordered to pay all costs to the appellant, and the Election Commission was directed to bear its own costs. The Court also recorded that, after hearing the appeal on 2 April 1959, it had announced its intention to allow the appeal and to deliver the judgment thereafter, and that the present judgment was delivered in accordance with that order. Appeal allowed.

Earlier, the Court had announced that it intended to allow the appeal and that a detailed judgment would be prepared and handed down at a later stage. The present judgment is now being delivered in direct compliance with that earlier order, thereby fulfilling the Court’s commitment to render its decision after due consideration. Having examined the arguments and the record, the Court finds that the appellant’s position is supported by the applicable legal provisions and the factual findings presented. Consequently, the Court affirms that the appeal is allowed and that the order of the lower tribunal is to be reinstated in its entirety. In addition, the Court directs that respondent I shall bear the costs incurred by the appellant throughout the proceedings, while each party shall bear its own costs before the Election Commission. Accordingly, the appeal is now formally allowed, the judgment has been issued by the Court, and the matters involved are considered concluded in accordance with the Court’s order. The Court’s decision thereby restores the position of the appellant as it stood before the impugned order and provides full relief as sought in the appeal. All parties are directed to comply with this judgment immediately, and any further procedural steps shall be undertaken in accordance with the prevailing rules of court.