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Regular First Appeal No. 75 of 1953, decided on 1st Decem ber 1959.

Ss. 23 & 73‑Agreement between District Board and building contractor that Board will be entitled to confiscate price of work done by contractor if latter attempted to bribe Board's engineer‑Allegation of such attempt Board not suffering any loss‑Forfeiture clause held void.

S. 74‑Applies to breach of valid contract and not agreement void ab initio.

Punishment twice for same offence‑Not justified.

M. A. Zaidi for Appellant.

Ghias Muhammad and Amir Ahmad for Respondents.

Dates of hearing : 26th November 1959 and 1st December 1959.

This appeal by the District Board, Lyallpur (now substituted by the Collector of the same place under the Basic Democracies Order, 1959), arises out of an action brought by Abdul Jabar (plaintiff) since deceased and substituted by his father Abdur Razzaq (respondent) for the recovery of Rs. 22,000 on account of the price of construction work done by him for the appellant including the building of an Animal Husbandry Dispensary at Jaranwala, metalling of Jaranwala Road, repairs to Jaranwala Civil Hospital and price of the material taken into custody by the appellant etc.

2. It is admitted by the appellant that Rs. 14,770‑6‑0 was due to the plaintiff on account of the aforesaid items of work and price of the material, but it is pleaded that the amount has been confiscated under clause 20 of the contract between the parties for an attempt made by the respondent to pay a bribe of Rs. 300 to the District Engineer, in charge of the works.

3. On the pleadings of the parties the trial Court framed a number of issues all of which need not be reproduced here because arguments before us were confined to the legality of the clause under which the amount owing to the plaintiff .has been confiscated by the appellant. The controversy on this subject is embodied in issues Nos. 3 to 5 which read as follows:

" (3) Whether the plaintiff had attempted to offer Rs. 300 as a bribe to the District Engineer

(4) Whether the District Board had made any enquiry in good faith in accordance with the rules relating to the dispute about the bribery and the matter could not be inquired into in the Civil Court

(5) If either issue No. 3 or issue No. 4 is held proved whether the District Board was not entitled to confiscate the whole of the amount in suit "

Under issue No. 3 it has been held that offer of the bribe by the respondent to the District Engineer was not proved and in coming to this conclusion the learned trial Judge presumed that as the District Engineer was an inexperienced hand and as his objections to the construction of the Animal Husbandry by the respondent on the basis of which he had earlier stopped the construction work were overruled by the Vice Chairman on the very day on which the bribe was alleged to have been offered, the possibility of his having acted maliciously could not be excluded. Issue No. 4 was answered in favour of the plaintiff as admittedly the Chairman of the appellant had held no enquiry into the allegations against the plaintiff and he was not even consulted by the District Engineer before he passed the impugned order Exh. D. 2. Under issue No. 5, clause 20 of the agreement Exh. D. 10 has been found to be penal in character within the purview of section 74 of the Contract Act, and as such, in the opinion of the learned trial Judge, the appellant could have confiscated only a reasonable sum and that too out of the price of the work completed by the plaintiff before the offer of the babe. It may be mentioned that the plaintiff was alleged to have offered bribe of Rs. 300 to the District Engineer on the 18th of November 1951, vide report Exh. P. 1, but the impugned order was made on the 15th of December 1951, and in between the respondent was asked by the District Engineer to expedite the construction work and a substantial part of it completed during this period.

4. After hearing the learned counsel for the parties and perusing the record of the case we have come to the same conclusion as the trial Court on the issues reproduced above though for different reasons. In our opinion, clause 20 of the agreement Exh. D. 10 under which the impugned order has been made is void being voilative of section 73 of the Contract Act and opposed to public policy. Section 73 lays down that, when a contract has been broken, the party who suffers by such breach is entitled to receive compensation for any loss or damage caused to him thereby. Under clause 20 whether any loss has been suffered by the appellant of not, the contactor is to be penalised presumably to eliminate corruption among the official the appellant and to secure better quality of work, for instance in the present case there is no allegation of any loss or damage suffered by the appellant, for the District Engineer did not accept the bribe and reported the matter to the Vice Chairman the moment he saw the envelope containing the currency notes of Rs. 300 lying on his table left there by the plaintiff. The bribe having been refused, there was no question of the District Engineer showing undue indulgence to the plaintiff at the expense of the appellant. What then is the justification in law for confiscating the amount admittedly due to the respondent The learned counsel for the appellant has not been able to point out any to us. Clause 20 of the agreement. Exh. D. 10, which enable the appellant to confiscate the price of the work done by a contractor without suffering any loss, is, therefore, violative of the provision of section 73 of the Contract Act which provides that a party aggrieved by the infraction of a contract is entitled to receive only that much which it has suffered as a loss or damage and no more If there is a contract which enables such a party to receive more t than what is permissible under section 73, it is intended to defeat its provisions and is void under section 23 of the Contract Act Section 74, on which the reliance has been placed by the trial Judge, has indeed no application to the facts of the case because it deals with cases where there is breach of valid contract and not an agreement void ab initio.

5. The impugned clause is open to another more formidable objection. When properly analysed, it purports to confer criminal jurisdiction on the appellant, viz., to punish persons guilty of an offence under section 161, P. P. C. and section 5 of the Prevention of Corruption Act (I1 of 1947). It is within the power of a legislature to create offences, but the authority to impose penalty for their breach is vested in the State. No private person, corporate body or a local body, such as the appellant, can assume this jurisdiction, unless the legislature invests them with the requisite authority to be exercised in accordance with the procedure laid down for trial, subject always to the condition that State is a party to such proceedings. To put it in other words imposing penalty for an offence is part of public law and in its administration State is a necessary party. None of these condi tions is fulfilled in the present case because neither the District Board Act authorizes the appellant to impose the penalty in question, nor it is vouchsafed by the Contract Act or any other law. The assumption of this jurisdiction by the appellant is therefore illegal and renders clause 20 of the contract void.

6 Lastly, the clause subjects a contractor to double penalty, in the first instance by confiscation of the price of his work by the appellant which may run into lacs of rupees and in the second by imposition of a sentence of imprisonment and fine in a trial in a criminal Court under the Pakistan Penal Code or the Prevention of Corruption Act (11 of 1947). This is opposed to the general principle that no one is to be punished twice for the same offence. Clause 20 of the agreement is, therefore, opposed to public policy and as such void under section 23 of the Contract Act.

7. For the reasons given above, we are of the view that the clause under which the sum of Rs. 14,770‑6‑0 owing to the plaintiff has been confiscated by the appellant is illegal and void In view of this finding it is unnecessary to express any considered opinion on the remaining two issues though we must confess that we were not very much impressed by the finding of the trial Court on issue No. 3.

8. In the result we see no force in this appeal and dismiss it with costs.

K.M.A./A.H. Appeal dismissed.

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