Equitable assignment and agency defeated a bank's direct claim against the Government under an express payment arrangement.

An irrevocable power of attorney in favour of a bank, executed under a contract that expressly negated any right or equity against the Government, operated only as an equitable assignment coupled with agency. The arrangement allowed the bank to receive and appropriate payment on behalf of the contractors, but it did not extinguish the contractors' role as principals or confer an independent right on the bank to claim payment directly. Because no separate contract or privity arose between the bank and the Government, the bank could not enforce the debt in its own name. The suit was therefore not maintainable and dismissal was upheld.

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Issues: (i) Whether the irrevocable power of attorney executed by the contractors in favour of the bank amounted to an absolute assignment of the debt due from the Government or only an equitable assignment coupled with agency. (ii) Whether any privity of contract arose between the bank and the Government enabling the bank to enforce payment directly against the Government.

Issue (i): Whether the irrevocable power of attorney executed by the contractors in favour of the bank amounted to an absolute assignment of the debt due from the Government or only an equitable assignment coupled with agency.

Analysis: Clause 9-A of the contract permitted payment to be made to the bank if the contractor desired it, but expressly required the contractor's authorisation and acceptance of the account and further stated that nothing therein would create rights or equities in favour of the bank against the Government. The power of attorney enabled the bank to receive payment and appropriate it towards the contractors' debt, but the contractors still had to present the bills and the Government had to measure and certify the work. The arrangement therefore did not extinguish the contractors' position as principals, nor did it confer on the bank an independent right to claim payment in its own right. At most, the instrument operated as an equitable assignment to the extent permitted by the contract and remained subject to the limits of agency.

Conclusion: The power of attorney was only an equitable assignment coupled with agency and not an absolute assignment; the bank acquired no independent enforceable right against the Government.

Issue (ii): Whether any privity of contract arose between the bank and the Government enabling the bank to enforce payment directly against the Government.

Analysis: A contract can confer enforceable rights only within the framework of its terms. Clause 9-A contemplated payment to the bank as a facility for the contractor, but its proviso negatived any rights or equities in favour of the bank against the Government. No separate contract was made between the bank and the Government, and the contractual arrangement did not disclose any intention to create a direct enforceable obligation in favour of the bank. The bank could receive payment on behalf of the contractors, but the right to enforce the debt remained with the contractors, and the bank could not expand its authority beyond what the contractors themselves could transfer under the contract.

Conclusion: No privity of contract arose giving the bank an enforceable claim against the Government; the bank could only receive payment as authorised agent of the contractors.

Final Conclusion: The bank's claim against the Government was not maintainable, and the dismissal of the suit was upheld.

Ratio Decidendi: Where the underlying contract expressly negates any right or equity in favour of the bank against the debtor, an irrevocable power of attorney authorising receipt of payment creates only an equitable assignment or agency to receive money, not a direct enforceable right against the debtor.

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