BSNL v. Vihaan Networks Limited; O.M.P. (COMM) 405/2023
In the recent judgement of the High Court of Delhi, a crucial legal question regarding the entitlement to reasonable remuneration for work performed in the absence of a contract was addressed. This judgment rendered by the Hon’ble Court emphasized that the absence of a contract should not deprive a party of reasonable remuneration for the work they have performed.
This case involved a dispute between Bharat Sanchar Nigam Ltd and Vihaan Networks Ltd. Vihaan Networks Ltd had conducted additional work on a building owned by Bharat Sanchar Nigam Ltd. The parties had conflicting oral agreements concerning the additional work, which the Hon’ble High Court ultimately did not accept. Vihaan Networks Ltd contended that they were entitled to compensation based on prevailing market rates for the work done by them. Even if they failed to prove an express agreement in that behalf, the court may still award them compensation under Section 70 of the Indian Contract Act, 1872.
The Hon’ble Court relied on the doctrine of quantum meruit, which states that 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.
The court also made reference to the judgment in M.C.D. v/s. Ravi Kumar, in which a similar issue had been considered, wherein the court had maintained that the absence of a contract would not deprive the contractor from a reasonable remuneration for the work performed.
This ruling of the Delhi High Court reaffirms the principle that parties who perform work for others have the right to compensation for the value of their services, even when there is no formal agreement or contract outlining additional tasks, and furthermore, emphasizes the importance of the doctrine of quantum meruit and Section 70 of the Indian Contract Act in determining the entitlement to compensation for work performed when a formal agreement or contract is absent.
Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate
Connect with Mr. Bhatt on Linkedin: https://www.linkedin.com/in/adit-ravishbhatt/
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