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Municipal Board Vs. L. Moradhuj - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1940All340
AppellantMunicipal Board
RespondentL. Moradhuj
Excerpt:
- - it may be that their lordships were referring when they spoke of a 'defendant' to the particular facts of the case before them but there can be no doubt that they intended to hold that the rights arising out of the principle of part performance are those only which are conferred by the section, and a perusal of the section will clearly show that no rights are conferred at all on the transferor but only on the transferee. i would like to refer to some remarks made in the house of lords in h. i am satisfied that the plaintiff is not entitled to any decree on the basis of the lease upon which he sued and that he is also not entitled to any benefit under the provisions of section 53-a, t......with the plaintiff, but that was not sufficient under the u.p. municipalities act, to create a contract binding on the board. the term of the agreement was that the board should pay rs. 25 a month as rent for these two plots, that is, it would pay a sum of rs. 300 in the financial year. the relevant provision of section 97, u.p. municipalities act, is that every contract made by or on behalf of a board whereof the value and amount exceeds rs. 250 shall be in writing and every such contract shall be signed by the chairman, or a vice-chairman and by the executive officer or a secretary. this agreement though reduced to writing was not signed by either the chairman or a vice-chairman and it was therefore not binding upon the board because there is an express provision in section 97 and.....
Judgment:

Allsop, J.

1. This second appeal arises out of a suit in which the plaintiff claimed a sum of money on account of rent under an alleged contract between him and the Municipal Board of Etah. It appears that the officers of the Board agreed to take two plots of land on lease from the plaintiff to use as a motor stand. The matter was placed before the Board and a resolution was passed that the contract should be entered into and that the Secretary of the Board should sign the contract. The Secretary consequently signed an agreement with the plaintiff, but that was not sufficient under the U.P. Municipalities Act, to create a contract binding on the Board. The term of the agreement was that the Board should pay Rs. 25 a month as rent for these two plots, that is, it would pay a sum of Rs. 300 in the financial year. The relevant provision of Section 97, U.P. Municipalities Act, is that every contract made by or on behalf of a Board whereof the value and amount exceeds Rs. 250 shall be in writing and every such contract shall be signed by the Chairman, or a Vice-Chairman and by the Executive Officer or a Secretary. This agreement though reduced to writing was not signed by either the Chairman or a Vice-Chairman and it was therefore not binding upon the Board because there is an express provision in Section 97 and a contract executed otherwise than in conformity with the other provisions of the Section shall not be binding on the Board.

2. Learned counsel for the respondent has referred to Sub-section (2), Clause (b) of Section 97 which says that a contract of this nature may, instead of being signed by the Chairman or a Vice-Chairman and by the Executive Officer and a Secretary, be signed by any person or persons empowered under sub-ss. (2) or (3) of Section 96. This Section says that the sanction of the Board by a resolution is required in the case of every contract involving a value or amount exceeding Rs. 1000 in the case of a contract by the Board of a city and Rs. 250 in every other case and that any contract other than a contract so described may be sanctioned by a resolution of the Board or by a committee of the Board empowered in this behalf by a regulation or by any one or more than one officer or servant of the Board so empowered. A city is defined in the Municipalities Act as an area with a population of more than one hundred thousand people. Nobody would contend that Etah is a city. It follows therefore that the contract with which we are concerned was one which required the sanction of the Board by a resolution under Section 96 and it was not one of those other contracts which could be entered into by a committee of the Board or by any officer or servant of the Board. It follows therefore that it was not a contract which could be signed by any person or persons empowered under sub-ss. (2) or (3) of Section 96. There can be no doubt that the contract was not binding on the Board and consequently no decree can be passed against the Board for rent upon the terms of the contract.

3. Learned counsel has suggested that the contract may not be binding but that the Board took possession of the land and that it is liable upon the principle of part performance as set forth in Section 53-A, T.P. Act. Their Lordships of the Privy Council in Probodh Kumar Das v. Dantmara Tea Co. Ltd. 0043/1939 have held that the right conferred by Section 53-A is a right available to the defendant to protect his position and that the Section is so framed as to impose a statutory bar on the transferor but confers no active title on the transferee. It may be that their Lordships were referring when they spoke of a 'defendant' to the particular facts of the case before them but there can be no doubt that they intended to hold that the rights arising out of the principle of part performance are those only which are conferred by the Section, and a perusal of the Section will clearly show that no rights are conferred at all on the transferor but only on the transferee. It may be that the latter could enforce his rights as a plaintiff if the transferor did some wrongful act in contravention of the terms of the Section, but it is quite clear that the transferor cannot enforce any rights at all. In the case before me the plaintiff is the transferor and he cannot base any claim upon the provisions of the Section.

4. Learned counsel for the respondent has also urged that his client should get a relief against the Board under the provisions of Section 65, Contract Act. He has referred me to an unreported case of this Court, First Appeal No. 429 of Bishen Dayal v. Dist. Magistrate of Bulandshahr, First Appeal No. 429 of 1933 decided on 7th January 1937 which is based on a decision of their Lordships of the Privy Council in Har Nath v. Inder Bahadur Singh (1922) 9 AIR PC 403. It was at one time held in some cases that the provisions of Section 65, Contract Act, did not apply to a Municipal Board because of the wording of the Section which says:

When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it.

5. It was said that this Section applied only to agreements which were not void or known to be void in their inception. Their Lordships of the Privy Council in the case to which I have referred discussed this matter and came to the conclusion that an agreement discovered to be void is one discovered So be not enforcible by law and that the language of the Section would include an agreement that was void in that sense from its inception as distinct from a contract that becomes void. It may therefore be that Section 65, Contract Act, is in some circumstances applicable to Municipal Boards, although in order to recover compensation from a Board it would be necessary to show that the Board as such had derived benefit and it may be that there is a distinction between contracts known and contracts not known by the parties to be void at their inception. The Courts below appear to me however rather to have overlooked the point that a Municipal Board is a statutory body appointed to look after the interests of the people in the locality who pay municipal taxes and other dues and the fact that some of its members or the majority of its members or its officers have acted in some unfair way is no reason for holding the Board liable unless their conduct under the statute binds the Board. It must be remembered that the Board is the representative of those who pay taxes and other dues and that it is unfair to pass a decree against the Board as such unless there is either a valid contract which binds the Board or the Board as such has acquired some benefit on behalf of those whom it represents.

6. It would not therefore be right to say in the present case that the Board must pay compensation for the use of the land at the rate at which some of its members or officers agreed to pay rent, since the agreement is not binding on the Board. I would like to refer to some remarks made in the House of Lords in H. Young & Co. v. Mayor and Corporation of Royal Leamington Spa (1883) 8 AC 517. It was pointed out in a similar situation arising out of an English Act that the Legislature had made provision for the protection of rate-payers, shareholders and others, who must act through the agency of a representative body, by requiring the observance of certain solemnities and formalities which involved deliberation and reflection. The English rule was that a contract had to be under seal. Lord Bramwell remarked that the importance of the seal was that it gave time for deliberation and reflection, as it continually happened that carelessness and indifference on the one side, and the greed of gain on the other, caused a disregard of these safeguards, and improvident engagements were entered into. He also pointed out that it had been urged that the decision in that case was a hard one on the plaintiffs who might not have known the law, but that they and others must be taught the law which could only be done by its enforcement.

7. In the present case the most the plaintiff could claim would be the payment of money which the Board had obtained from the owners of motor-lorries who were allowed to park their vehicles on the land and who paid dues for so doing, but I do not think that I should allow the plaintiff a relief of this kind at this stage. The suit was instituted in January 1937 and at that time there was no claim for anything except the rent due under the contract. The plaintiff never raised the issue that the Board had obtained profit from the use of the land and never produced any evidence to prove that any profit had accrued. It is now more than three years since the suit was instituted and I do not think it is right that the plaintiff should at this stage be allowed to produce fresh evidence in order to obtain a relief which he did not originally claim. I am further influenced in deciding that no relief should now be granted by the fact that it does not appear that the plaintiff suffered any positive loss in the sense that he would have used this land for some other purpose if it had not been used by the officers of the Board and that he would have acquired some other profit from it. I am satisfied that the plaintiff is not entitled to any decree on the basis of the lease upon which he sued and that he is also not entitled to any benefit under the provisions of Section 53-A, T.P. Act. I consider that he might possibly have obtained some restitution from the Board under the provisions of Section 65, Contract Act, if he had made that claim in his suit, but I think it is too late now to give him a decree which is not justified by any evidence already upon the record. I therefore allow the appeal and dismiss the suit with costs throughout. Leave to appeal under the Letters Patent is allowed.


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