Mulamchand v State of Madhya Pradesh
Rule established
Where a contract is void for non-compliance with Article 299, no action lies on the contract and there can be no estoppel or ratification. But the party who has performed may recover the value of the benefit conferred under Section 70 of the Indian Contract Act, 1872, on a quasi-contractual basis.
Facts
- The appellant entered into an arrangement with the State under which he was to perform work and supply goods.
- The arrangement did not comply with the constitutional requirements as to the form of government contracts, then contained in Art.299(1) and its statutory predecessors.
- The appellant nevertheless performed, and the State received and enjoyed the benefit of what was done and supplied.
- When payment was sought, the State resisted on the ground that no valid contract had come into existence.
- The appellant argued in the alternative that even if the contract were void, the State could not retain the benefit without paying for it, and that it was in any event estopped by its conduct in accepting performance.
Issue
- Whether a party who has performed under a contract void for non-compliance with Art.299 has any remedy, and on what basis.
Held
- No suit lies on the contract, and the Court confirmed that there can be no estoppel against the constitutional provision and no ratification of a void contract, since the requirement exists for the protection of the public. But the party is entitled to restitution. Where a person lawfully does something for another, or delivers something to him, not intending to act gratuitously, and the other enjoys the benefit of it, the latter is bound to compensate him under Section 70 of the Indian Contract Act, 1872. The claim so founded is quasi-contractual: it does not depend on the existence of a contract, and its measure is the value of the benefit actually received and enjoyed, not the contract price and not damages for breach.
Ratio Decidendi
Section 70 rests on the prevention of unjust enrichment and operates precisely where there is no enforceable contract, so the invalidity of the contract is not an obstacle to it but the occasion for it. To allow the State to keep the benefit of supplies while pleading its own officer's failure to observe a formality designed for the State's protection would convert a safeguard into an instrument of injustice. At the same time, confining recovery to the value of the benefit preserves the discipline of Art.299, because the party gains nothing he would have gained under a valid bargain, such as profit on the transaction.
How to use it in an exam
- The essential companion to Bhikraj Jaipuria v Union of India 1962. Together they give the complete answer: no claim on the contract, but restitution for benefit received.
- Be precise about the measure of recovery, which is where most answers go wrong. The claimant recovers the value of the benefit conferred, not the contract rate as such, and certainly not loss of profit.
- Note the three ingredients of S.70 and check each on the facts: the act must be lawful, it must be done without intention to act gratuitously, and the other party must have enjoyed the benefit.
- Remember what remains excluded: estoppel cannot be pleaded against Art.299, and there is no ratification and no implied contract with the Government.
- In a problem where the Government has taken delivery and used the goods, or has inspected and put a completed work to public use, the enjoyment of benefit is easily established and this is the remedy to advise.
Source
Source: AIR 1968 SC 1218; (1968) 3 SCR 214; the essential companion to Bhikraj Jaipuria, supplying the restitutionary remedy; citation and bench checked against Indian Kanoon and reported sources, audit of 12 August 2026
This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.