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Municipal Committee Vs. Harda Electric Supply Co. (Private) Ltd. - Court Judgment

LegalCrystal Citation
CourtMadhya Pradesh High Court
Decided On
Case NumberFirst Appeal No. 29 of 1959
Reported inAIR1964MP101
ActsArbitration Act, 1940 - Sections 3, 17 and 32; Code of Civil Procedure (CPC) , 1908 - Sections 11; Evidence Act, 1872 - Sections 115; Contract Act, 1872 - Sections 2 and 73; Central Provinces and Berar Municipalities Act, 1922 - Sections 44; General Clauses Act, 1897 - Sections 3(36); Limitation Act, 1908 - Schedule - Article 52; Electricity (Supply) Act, 1948
AppellantMunicipal Committee
RespondentHarda Electric Supply Co. (Private) Ltd.
Appellant AdvocateR.S. Dabir and ;N.R. Kekre, Advs.
Respondent AdvocateS.T. Khirwadkar, Adv.
DispositionAppeal partly allowed
Cases ReferredHadley v. Baxendala
- - the source of supply of water is the anjan (river). there are in all five wells, three in the river bed and two outside -infiltration well and pump well being 75 feet apart. water is pumped from the pump well through an 8' rising main (also called delivery main) to a service reservoir of the capacity of 1,60,000 gallons. if it was contemplated at the time of the execution of the agreement that the municipality, would pump water at the lower heads as well, it would not have agreed to clause 10 being incorporated in the instrument. moreover, it was clearly said in the letter of december 5, 1952 (ex. this raises an interesting question: where it is not the court must do the best it can. thus, the court, or a jury, doing the best that can be done with insufficient material, may have to.....shiv dayal, j.1. this first appeal arises from a suit instituted by the harda electric supply company (private) limited (hereinafter called the company) against the municipal committee, harda (hereinafter called the municipality) for recovery of rs. 50,000/-as damages and for other alternative reliefs. the suit was resisted by the municipality, the additional district judge, hoshangabad, passed a decree for rs. 40,000/-. the municipality has filed this appeal; the company has filed cross-objections.2. the plaintiff's case was that by an agreement dated july 31, 1936, the electro mechanics ltd., bombay, agreed to supply the municipality with electric energy for the purpose of pumping approximately 3 lac gallons of water daily. the agreement was to operate for 25 years. of the terms and.....

Shiv Dayal, J.

1. This first appeal arises from a suit instituted by the Harda Electric Supply Company (Private) Limited (hereinafter called the Company) against the Municipal Committee, Harda (hereinafter called the Municipality) for recovery of Rs. 50,000/-as damages and for other alternative reliefs. The suit was resisted by the Municipality, The Additional District Judge, Hoshangabad, passed a decree for Rs. 40,000/-. The Municipality has filed this appeal; the Company has filed cross-objections.

2. The plaintiff's case was that by an agreement dated July 31, 1936, the Electro Mechanics Ltd., Bombay, agreed to supply the Municipality with electric energy for the purpose of pumping approximately 3 lac gallons of water daily. The agreement was to operate for 25 years. Of the terms and conditions contained in it one was that the water pumped per unit would not be below 1000 gallons on an average 'at the specified head of 130 feet'. By another clause, it was agreed between the contracting parties that the Municipality would pay to the Company two annas per unit of energy consumed. On November 29, 1939, the said Electro Mechanics Ltd., assigned all their right, title and interest in the aforesaid agreement to the plaintiff-Company by virtue of a deed.

In or about the year 1944 the Municipality, by surreptitiously making or opening new tappings and by directly pumping water through them, lowered the pumping head so that the discharge of water per unit increased and the Company was consequently put to loss of income. When the Company became aware of the resultant breach of the agreement, on the part of the Municipality, it protested. After some correspondence, the Municipality, by its resolution No. 4 dated October 15, 1951, agreed to pay to the Company 20 per cent surcharge on the total units consumed every month. This was accepted by the Company. Later on the Municipality resiled from this subsequent agreement for additional payment (hereinafter called the supplementary agreement).

Calling it a concluded contract, the plaintiff-Company claimed a decree for Rs. 12,206/5/3 for the period between 1-4-1950 and 31-3-1953 and Rs. 20,667/8/9 for the period between 1-4-1953 and 30-9-1956, total Rs. 32,873/14/-. Alternatively, it claimed a sum of Rs. 40,000/- on the basis of the right- to enhance rates under the Electricity (Supply) Act, 1948. As a second alternative, the plaintiff claimed a decree for Rs. 48,707/1/3 as damages for loss of income caused by pumping larger quantities of water for fewer number of units. This claim was for the period between 1-4-1950 and 30-9-1956. In addition to this, the plaintiff claimed damages for injury to the machinery and plant due to overloading: Rs. 2,650/1/9 actually expended on repairs and Rs. 9,349/14/3 as compensation for the shortening of life of the pumping eets by wear and tear, total Rs. 12,000/-.

3. The appellant resisted the suit, inter alia, on the ground that no new tappings were made by the Municipality. By the existence and working of the tappings the water head was not appreciably lowered, that is, to 80 or 85 feet, as alleged by the plaintiff. Even if there was any such lowering of the water head, it did not in any way offend against the terms of the agreement; nor did it cause any damage to the plaintiff's pumping sets. The stipulation as to 130 feet head in Clause 10 of the agreement meant and had always been understood to mean that it was the maximum height; there was no restriction for lowering the height to which water would be pumped either to fill up the reservoir or to supply water by direct pumping to some parts of the town. At the most, the total head might have been lowered to 112 or 113 feet only. The plaintiff-Company should have installed 25 BHP instead of 20 BHP motors. The Company was entitled only to the rates fixedin the agreement and to no enhanced rates. Therewas no concluded contract for payment of 20 percent surcharge and if there was any, it was notenforceable against the Municipality.

4. The trial Judge has found that the Municipality committed breach of the agreement. The supplementary agreement which was initiated under the resolution of the Municipality was binding on it and it was estopped from resiling from it. The plaintiff was entitled to realise 20 per cent surcharge upto 31-3-1953, the amount being Rs. 8,093/8/-. The plaintiff was entitled to charge the defendant at enhanced rates, the amount allowable being Rs. 40,000/-. The plaintiff was alternatively entitled to compensation for damages on account of loss of income to the extent of Rs. 38,707/1/3. The plaintiff was further entitled to Rs. 2,650/1/5 by way of damages for injury to the plant and machinery of the pumping sets. In the result, he passed a decree for Rs. 40,000/-.

5. It is urged by Shri Dabir that the appellant Municipality committed no breach of the agreement; no new tappings were opened; whatever tappings were there on the date of the suit also existed prior to 1936; the agreement was entered into by the parties with open eyes; no question of payment of damages arises; the Municipality was liable to pay only the price of the units of electricity consumed at the agreed rate of Rs. /2/- per unit.

6. The main dispute between the parties turns upon two questions: What was the agreement? Did the Municipality commit breach of it? Clause 10 of the agreement runs thus:

'10. The company shall throughout the terra of this Agreement provide and maintain an adequate supply of Electric Energy to the pump sets in proper and efficient condition. The gallons of water pumped per unit will not be below 1000 (one thousand) on an average at the specified head of one hundred and thirty feet.'

The total head is calculated from the Section head, delivery head and the frictional head. From the level of the water to the centre of the pump is the Section head; from the centre level of the pump to the delivery point is the delivery head; frictional head is due to the friction in the pipes, bends and valves mounted on the pipe. Jamshed Dadachanji (P. W. 4) says:

'Total head is the specified head. Whether we call it total head, specified head or any head, we have to give the total of the items mentioned above.'

The interpretation put by the Company on Clause 10 of the agreement was that the Municipality was bound to take water only at the fixed head of 130 feet and it was the right of the Company to supply water only at that fixed head. The Municipality, on the other hand, construed it to mean that 130 feet head was agreed to be the maximum height so that there was no restriction for anv lower height to which water could be pumped, either to fill up the reservoir or to supply water by direct pumping to some parts of the town. In fact, this Clause was the chief bone of contention. That dispute was, in pursuance of Clause. 14 of the agreement, referred to arbitration. The question referred was:

'Whether the company has a right to supply water only at fixed bead of about 130 feet and not at any lower head, and whether the Municipal Committee is bound to receive water only at that head as stipulated in the water supply agreement dated 31-7-1936.'

The award given by Shri A. C. Choudhary, Advocate, Hoshangabad, was filed in the Court, it is in these terms:

'As per Clause 10 of the water supply agreement of 31-7-1936, the Harda Electric Supply Co., Ltd., has a right to supply water to the Municipal Committee, Harda, at the fixed head of 130 feet and not at any lower head, and the Municipal Committee, Harda, is bound to receive water supply at that head.'

Objections under Section 33 of the Arbitration Act filed by the Municipality were rejected and a decree was passed by the First Civil Judge, Harda, on the basis of the award (Civil Suit No. 54-8 of 1954). The Municipality took an appeal, but it was dismissed. A revision was filed to this Court which we have dismissed today. Municipal Committee Harda v. Harda Electric Supply Co., Private Ltd., Civil Revn. No. 348 of 1959, D/- 30-10-1963 (MP).

7. It is urged, for the appellant Municipality that it is entitled to reopen the question of interpretation of Clause 10 of the agreement in this suit, by way of defence, because the decree founded on the award does not operate as res judicata having been passed by a Second Class Civil Judge who had no jurisdiction to try a suit of the value of Rs. ij.000/-.

In our judgment, this contention is without merit and based on an incorrect approach. It is pot possible to think that the law intends as many decrees to be passed on the basis of the same award as there are categories of Courts. By virtue of Section 3 read with Rule 7 of the Pint Schedule to the Arbitration Act, an arbitration agreement must be deemed to include the following condition:

'An award shall be final and binding on the parties and persons claiming under them respectively.'

That being one of the terms of the arbitration agreement, an action on the original cause is barred. Sec. 17 of the Arbitration Act enjoins the Court to proceed to pronounce judgment and to pass a decree according to the award if the conditions envisaged in that Section are fulfilled. It is open to a party to challenge the award before judgment is pronounced according to the provisions of the Arbitration Act. An award is not open to challenge1 in any other way. No suit lies for a declaration that the award is invalid and ineffective. Once it is filed in Court, the award extinguishes all claims embraced in the submission and is conclusive of the matters which it decides. When the award becomes final, it puts an end to all the controversies between the parties and the points which were taken, either in attack or in defence, cannot be reagitated. A judgment under Section 17 of the Arbitration Act amounts to a judgment by consent and is intended to put a stop to litigation just as much as a decision of the Court after the matter has been fought to the end. For this proposition we can usefully borrow the principle in Sailendra Narayan v. State of Orissa, (S) AIR 1956 SC 346; In re. South American and Mexican Co., Ex parte. Bank of England, 1895-1 Ch 37 and Kinch v. Walcott, 1929 AC 482 (493). An award, apart from anything else, operates as estoppel by judgments.

8. Section 32 of the Arbitration Act provides that an award cannot be set aside, nor, amended, nor modified nor in any way affected, except in the manner provided in the Act, It can only be set aside by an application under the Arbitration Act. See Jawahar Lal v. Union of India, AIR 1962 SC 378 (381). As we read Section 32, its first part bars a suit, while the second part is comprehensive enough to bar a defence being raised which would be inconsistent with the award. This is clear from the words '..... nor shall any ..... award ..... be ..... in any way affected .....'. To say that the framers of the law intended merely to confine the provisions of this Section as a bar to only fresh suits is to render its second part otiose. If a defence which is inconsistent or repugnant to the award is accepted, the award is bound to be affected. Thus, the only remedy left to a person who is aggrieved by ah award is to have it set aside under the provisions of the Arbitration At,t, To hold otherwise will mean this: You cannot bring a suit on the original cause of action and disregard the award. but you can achieve that end by the back door; you have just to create a situation so that the other side is compelled to commence action against you. and then in your defence you fall back upon the pleas which are rejected in the award. In this view of the matter, the parties are bound by the award and the decree passed on it.

9. As the true interpretation of Clause 10 of the agreement was crucial and the parties had to take recourse to the agreement to establish their respective claims, it was a dispute under or arising out of the agreement and thus within the jurisdiction of the arbitrator. This position was conceded by both the parties. Once the dispute is found to be within the jurisdiction of the arbitrator, the Court cannot enter into the merits of the dispute. See A. M. Mair and Co. v. Gordhandass Sagarmull, 1950 SCR 792 : (AIR 1951 SC 9). Therefore, the award is the last word on the point.

Before us Shri Dabir's argument is that 130 feet was the maximum height agreed to between the parties under the agreement, which gave the Company right not to be required to pump at a head 'higher than 130 feet', but there was not stipulation for water being pumped at a lower head. The award precludes us from entering into this question. The controversy as to the interpretation of Clause 10 of the agreement stands concluded by the award. The Company's right was to supply and the Municipality's obligation was to take water at the fixed head of 130 feet and at no other head. We are presently going to discuss and point out that the Municipality did pump water at lower leads also, and the constituted breach of the agreement.

10. In Harda, the Water Works was completed in 1910 under the supervision of the Public Works Department of the Central Provinces. The source of supply of water is the Anjan (river). There are in all five wells, three in the river bed and two outside -- infiltration well and pump well being 75 feet apart. They are connected by an infiltration gallery. Water is pumped from the pump well through an 8' rising main (also called delivery main) to a service reservoir of the capacity of 1,60,000 gallons. From the service reservoir, water is distributed to all parts of the town through the supply mains varying from 3' to 6' in diameter.

11. The reservoir is 25 feet above the ground and the maximum water level jn it is 17 feet, that is, 42 feet from the ground. The Report on the Completion of the Water Works (Ex. D-135) gives the calculations to arrive at the total head. If water is supplied at the total head of 130 feet, the quantity of water which will be delivered to the reservoir within a period of 12 hours will be 1,60,000 gallons.

12. In their altitudes, different localities of Harda are categorised into three: Kulharda and Subhash wards are situated on the 'highest level'; Azad Ganj and two or three other wards on the 'higher level' and the other localities are on the 'low level' as they are called by both the parties.

13. There is a tapping, 6' diameter, which is also known as 'by pass' beneath the reservoir. It connects the rising main with the supply main and permits supply of water to the town by direct pumping and is also opened when the reservoir is to be cleaned. There is another tapping of 3' diameter, situated at the Chandak Chouraha (crossing of the Bombay and Handia roads) through which water can be directJv pumped from the rising main to the 'highest level' wards. There is a third tapning of 1' diameter in the rising main through which water is supplied to the Hospital. There is a fourth tapping of 1' diameter which supplies water to the plaintiff Company for domestic and commercial uses. There is no dispute about the tatter two tappings. But the whole dispute between the parties centres round the first two tappings to which alone we will refer hereinafter.

14. If the two tappings are open, the 'head' is lowered by 40 or 50 feet. It is stated by Har-banslal Pasi (P. W. 10), who was the plaintiff's Resident Engineer from 1941 to 1954, that the delivery main will not deliver water to the reservoir if the aforesaid tappings are open. P. Section Paranipe (D. W. 2) also says that the total head would be less if water is supplied through the 'by pass'.

15. The plaintiff-Company asserted that these two tappings were newly made or opened surreptitiously in or about the year 1944 and it started protesting when it became aware of the Municipality directly pumping water through these tappings. Harbanslal Pasi (P. W. 10) says that he came to know that the Municipality instead of allowing water from the pump going direct into the reservoir at a head of 130 feet was diverting that water at a lower level into the water supply mams laid up in the town and that he detected these two diversions in October, 1944. The Municipality, on, the other hand, contended thai these tappings had always been in existence and functioning. What we and is that the bypass tapping is mentioned even iu the .Report of 1910 on the Completion of the Water Wonts. As regards the other tapping the evidence of Kishan Narayan Bandawala (D. W. 4) is clinching. He says that in November 1935. he came to Harda as a representative of the Electro Mechanics Ltd. and remained in their service till 1939. In March, 1936, one engineer with Mr. Padbidri, Managing Director of the Company, went to Hoshangabad-Harda. They visited the pumping house and the river where the pipe of the rising main was visible. Then they came near the crossing of the Bombay and Handia roads and, there they saw a valve from where direct supply of water was given from the rising main to Kujharda ward. Then they were shown the bypass. The Company's contention that the Municipality made new tappings in or about 1944 is, therefore, not correct, and it must be held not only that the tappings existed even on the date of the agreement, but also that the Electro Mechanics Ltd., entered into the agreement with the knowledge of these tappings.

16. But the proof of the existence of the tappings does not furnish a complete answer. It is incontestable that the Municipality did pump water through these tappings for providing water to the 'highest' and the 'higher level' wards of the town at certain intervals of the day. It is admitted in the written statement that to the highest level localities of the town water was supplied by direct pumping and that water was also supplied to the town by direct pumping through the bypass tapping by opening the bypass valve, Gaya Prasad (D. W. 3) says that the localities included in the highest level were supplied with water from the rising main directly through the tapping at the Chandak Chouraha; localities included in the higher level were supplied partly from the rising main through the bypass and partly from the reservoir. Apart from certain annual reports of the Municipality, to which our attention was invited by Shri Khirwadkar, it is in the evidence of Ramlal (D. W. 5) that the valve of the bypass was kept open from 6 a.m. to 0-30 a. m. and again from 1-30 p.m. to 6 p. m. and that this was kept open even when water was supplied to the 'lower lever or to the 'higher level' localities from 4-30 a. m. to 6 a. m. The tapping near the Bombay-Handia roads was kept open from 4-30 p. m. to 6 p. m. for supplying water to the 'highest level' wards.

17. As we have already pointed out, consequent upon the direct pumping of water through these tappings, the 'head' was bound to be lowered. In other words, the Municipality had in fact pumped water at lower heads during those hours. If the award is the last word on the main, and the real dispute, viz., that the Municipality was bound to take water only at the fixed rate of 130 feet and at no other head, it must be held that the Municipality committed breach of the agreement when it extracted waVr at lower heads also. If it was contemplated at the time of the execution of the agreement that the Municipality, would pump water at the lower heads as well, it would not have agreed to Clause 10 being incorporated in the instrument. Once the Municipality agreed to take water at the fixed head of 130 feet only -- and that is the award -- it was under an obligation not to open these tappings and draw water through them at any time. Breach of Clause 10 of the agreement, therefore, consisted in drawing water at the heads lower than the specified head of 130 feet. That being so, the Company is entitled to damages from the Municipality.

18. This brings us to the question of quantum of damages which should be awarded against the Municipality. The Company lays its claim, first of all, on the basis of the Municipality's Resolution No. 4, dated October 15, 1951, to pay 20 per cent surcharge subject to certain conditions stated in that resolution. The appellant-Municipality's first attack on this part of the claim is that there was no 'concluded contract'. In our opinion, this contention cannot be accepted. A copy of the said resolution (Ex. P-6) was sent to the Company with a letter, dated October 24, 1961, (Ex. P-5). signed by the Secretary of the Municipality. This constituted a 'proposal'. The Company accepted it by its letter, dated January 23, 1952, (Ex. d-1) with which was enclosed a draft of the contemplated supplementary agreement which was in accord with the said resolution of the Municipality. The condition imposed in the resolution were also accepted by the Company.

19. It is true that in its letter of acceptance (Ex. P-15o), dated December 5, 1951, it was said that the acceptance was 'subject to ratification for continuation of the same after the return of our Managing Director, Shri E. M. Cassinath from the European tour by March 1951' and that it was being provisionally accepted. But by a subsequent letter (Ex. P-154), dated February 26, 1952, the Company informed the Municipality that Shri Cassinath would be in Harda on the 28th of that month, to sign the agreement. Thus, the acceptance was ratified. Before the ratification, the Municipality did not withdraw or revoke its proposal. Moreover, it was clearly said in the letter of December 5, 1952 (Ex. P-150):

'In our opinion, the resolution on the part of the committee and our acceptance as laid down in this letter is sufficient for both the parties to act upon this arrangement. The question of executing an agreement on stamp paper will be taken tip, if so required after the return of our Managing Director, Shri E. M. Cassinath.

It is hoped that we will be duly intimated at a very early date that the arrangement as accepted by us above will be immediately acted upon.'

It was an argument that the contract was not concluded because it was not reduced to writing and was not executed and that that was a condition precedent. Reliance was placed by the appellant's counsel of New Mofussil Co., Ltd. v. Shanherlal, AIR 1941 Bora 247, where it was held that a contract Is not complete until the contemplated agreement is drawn up and signed. But this decision was reversed in Shanker Lal Narayandas v. New Mofussil Co., Ltd., AIR 1946 PC 97. The correct position of the law is that wherever a writing is contemplated or agreed, it will depend upon the agreement whether it was a condition precedent or not. See AIR 1962 SC 378 (supra). Nothing has been placed before us from the correspondence between the parties to conclude that the writing of an agreement was a condition precedent.

20. Shri Dabir then challenges the contract as unenforceable at law for non-compliance with the requirements of Section 44 of the C. P. and Berar Municipalities Act, 1922. It enacts:

'44. (i) Contracts made by or on behalf of a committee other than the sale or purchase of moveables and contracts of service with servants shall be in writing and shall be signed by the president or vice-president and by the secretary:

Provided that --

(1) the committee may make bye-laws providing for the delegation of its powers of making or signing any contract or class of contract to one or more of its members or to the secretary;

(2) subject to any law for time being in force, any contract whereof the value or amount does not exceed fifty rupees may be made orally.

(2) No contract entered into otherwise than in conformity with the provisions of this Section shall be binding on the committee.'

It is quite clear to us that the infirmity lay in the fact that although the Secretary signed the covering letter with which was enclosed a copy of the resolution, it was not signed either by the President or the Vice-President. The contract will, therefore, be invalid and inoperative if it falls within the purview of Section 44 of the Municipalities Act. See Bhikraj v. Union of India, AIR 1962 SC 113; H.S. Rikhy v. New Delhi Municipality, AIR 1962 SC 554 and Young and Co. v. Corporation of Royal Leamington Spa., 1883-8 AC 517. When the statute lays down a manner in which a thing must be done, it must be done in that manner or not at all. The Supreme Court said in Hari Vishnu v. Ahmad Ishaque, (S) AIR 1955 SC 233:

'When the law prescribes that the intension should be expressed in a particular manner, it can be taken into account only if it is so expressed. An intention not duly expressed is, in a Court of law, in the same position as an intention not expressed at all.'

21. But a contract for sale or purchase of moveable is outside the purview of Section 44 of the Municipalities Act. This raises an interesting question: Is electricity 'moveable' property? The term 'moveable' is not defined in the Municipalities Act. In the General Clauses Act, 1897, the expression 'immoveable property' is defined in Section 3(26) to 'include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth', while 'moveable property' is defined in Section 3(26) to mean 'property of every description, except' immovable property'. 'Electricity' cannot be called 'immovable property' as defined in Section 3(26). All that is to be seen is whether electricity is property. In common parlance it could be said 'that electricity is neither 'movable' nor 'immovable' property. But the term: property 'in Jurisprudence has a very wide connotation; it includes all property whether corporeal or incorporeal. As Salmond (Jurisprudence, Eleventh Edition, p. 156) says:

'Corporeal property is the right of ownership in material things; incorporeal property is any Other proprietary right in rem. Incorporeal property is itself of two kinds, namely (i) Jura in re aliena and (2) jura in re propria,'

While dealing with the various types of property, Salmond further says (p. 461):

'The subject-matter of a right of property is either a material or an immaterial thing. A material thing is a physical object, an immaterial thing is anything else which may be the subject-matter of a right.'

Paton in his Text-Book of Jurisprudence (Second Edition, p. 408) states:

'The' term 'property' has a bewildering variety of uses. Firstly, it sometimes means ownership or title and sometimes the res over which ownership may be exercised.'

Austin defined things, not being persons, as are sensible or perceptible through the senses --permanent objects in the sense that they are perceptible repeatedly. In common usage of the word, a thing must have a certain element, of permanence -- as emphasized by Austin -- in order to distinguish a thing from a fact or an event, and, secondly, it must have a certain element of physical unity'. The legal use is even broader than that of popular speech. Pollock, in his First Book of Jurisprudence, p. 130, says that 'A thing is, in law. some possible matter of rights and duties, conceived as a whole and apart from all others, just as, in the world of common experience, whatever can be separately perceived is a thing.' Dealing with this topic, Paton gives a broad classification of things. He says (p. 409-410):

'Unfortunately, however, legal usage is not consistent, and there are really many different elements of thought. A thing may mean:

1. A thing in the material sense which is corporeal and tangible and has an organic or physical unity, e. g., a horse or a block of marble.

2. A thing which is corporeal and tangible, but consists of a collection of specific things, e. g., of flock of sheep.

3. A thing which exists in the physical world but is not material in the popular sense, e. g., 'electricity'.

(underlining (here into ' ') is ours)

4. A thing which is neither material, corporeal, nor tangible but is an element of wealth, e. g., a copyright or a patent.....

5. A thing which is not material and which is not directly an economic asset or element of wealth, e. g., reputation .....'

On these authorities and Paton's clear statement, electricity must be held to be a 'thing' and, therefore, a 'property'.

22. By the way, we may make a mention of Section 39 of the Indian Electricity Act, 1910, which enacts that

'whoever dishonestly abstracts, consumes or uses any energy shall be deemed to have committed theft within the meaning of the Indian Penal Code .....'.

Although there is a possibility of argument that this Section creates only a legal fiction so as to include 'energy' in the term 'property' for the purposes of 'theft' as defined in the Penal Code, 'it can also be said that this Section was enacted for the removal of doubt. All this discussion leads us to the conclusion that 'electricity' is movable property' within the meaning of Section 3(36) of the General Clauses Act and, therefore, a contract for sale or purchase of electricity is dutside the purview of Section 44 of the Municipalities Act.

23. It is then urged for the appellant that the supplementary agreement is not for 'sale or purchase'. This contention is untenable. Under the agreement of 1936, which fixed the rate per unit of electricity, the Municipality was bound to pay the price of the electricity consumed by it. By the supplementary agreement, an addtional price was agreed to be paid by it. It was, then, a contract for the 'purchase of electricity'.

24. But there is an unsurmountable hurdle in the Company's way to obtain a decree on the basis of the supplementary agreement. As soon as the plaintiff's contention that it was an agreement for the purchase of movable property is given effect to, Article 52 of the Limitation Act is attracted and the Company is entitled to recover surcharge for three years only, immediately preceding the suit. The suit was instituted on October 15, 1956, so that the claim of surcharge prior to October 15, 1953, was barred by time. Now, the word 'goods' occurring in Article 52 of the Limitation Act is not defined in it; it has been defined in Section 2 of the Sale of Goods Act 1930, thus:

'Every kind of moveable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.'

We are not concerned here with the second part of this definition. But so far as the first part is concerned, that definition can be applied to the Limitation Act being in pan materia and in so far as it is not repugnant to the said Act. In Firm Attar Singh Sant Singh v. Amritsar Municipality, AIR 1938 Lah 338, Dalip Singh, J. had to consider a case of a municipal committee which supplied electric current to the defendant. The voltage of the current supplied was 440 but the meter was one that reported only 220 volts. In order therefore to get a correct reading of the current supplied the reading indicated by the meter should have been doubled and the committee issued instructions to their employees to double the reading of the meter by their Inspector before sending in the bill to the defendant. By some mistake or negligence on the part of the employees of the committee actual bills sent were only for the single reading without doubling the 'reading'. When the mistake was discovered, the committee sued for the balance of the bill not charged for or paid by the defendant. There, it was held that the case was covered by Article 52, and not by Article 96, of the Limitation Act.

In Naini Tal Hotel Co. Ltd. v. Municipal Board, Nainital, AIR 1946 All 502, the plaintiff sued the defendant for a certain sum of money on account of electric energy supplied to the defendant for a period of nearly five years, incorrect bills having been submitted throughout this period owing to a mistake having been made by the meter reader. It was contended on behalf of the plaintiff that Article 96 and not Article 52 of the Limitation Act applied to the case. One of the grounds for this contention was that electric energy was not 'goods'. This contention was negatived and it was held that electric energy was 'movable property' and, therefore, 'goods' within the meaning of Article 52 of the Limitation Act. The decree was confined to a period oi three years prior to the institution of the suit. Our view finds support from these two decisions. Accordingly, in the instant case the plaintiff Company is entitled to the surcharge agreed to between the parties under the supplementary agreement only for a period of three years next preceding the suit.

25. Now, adverting to the supplementary agreement, we find that the Municipality agreed to pay surcharge only for a period of three years specified therein, that is. for 1950-51, 1951-52 and 1952-53. It is conceded before us that the 'year' was from 1st April to 31st March. Thus, the Municipality had agreed to pay surcharge only for three years ending 31st March 1953. The entire claim for surcharge which was payable under the agreement was barred by time. It is nobody's case that that agreement was extended for any period after March 31, 1953.

26. Shri Khirwadkar endeavoured to persuade us to exclude the period which was spent in the arbitration proceedings. We are unable to accept this argument because, apart from anything else, the only question which was referred to arbitration was regarding the interpretation of Clause (10) of the agreement. The claim on the basis of the supplementary agreement or its validity was not referred to arbitration. The conclusion is that the Company was not entitled to any decree on the basis of the supplementary agreement. There was an infructnous attempt before us when it was urged that Article 52 of the Limitation Act is applicable to 'goods': but electricity is not 'goods'. That argument recoils against the Company and only transfers the claim from frving pan to fire, became then Section 44 of the Municipalities Act is offended against.

27. Before we pass on to the next point, we have to mention Shri Khirwadkar's argument that the supplementary agreement, even if not enforceable as such, created an estoppel against the Committee. This argument does not appeal to us in view of the settled proportion of the law that where a statute imposes a duty by a positive action, estoppel cannot prevent it. Estop-pel is only a rule of evidence which can be invoked under soecial circumstances, but is not available to relate a party from the obligation to obey the statute. The duty of each party is to obey the law. This was the dictum in Maritime Electric Co. Ltd. v. General Dairies Ltd., AIR 1937 PC 114. See also Southened-sea Corpora-tion v. Hadgson, 1961-2 All ER 46. where it has beep laid down that estoppel cannot be raised to hinder the exercise of statutory discretion conferred on a public authority. The Supreme Court negatived the contention as to estoppel in AIR 1962 SC 554 (supra) and pronounced the law in these terms :

'It is also convenient here to notice the argument that the committee is estopped by its conduct from challenging the enforceability of the contract. The answer to the argument is that where the statute makes a specific provision that a body corporate has to act in a particular manner, and in no other, that provision of law being mandatory and directory, has to be strictly followed.'

28. We shall now consider the alternative claim of the Company founded on the provisions of the Electricity (Supply) Act, 1948. Shri Khirwadkar relies on Clause (1) of the Sixth Schedule to that Act, which enables a licensee to so adjust his rates for the sale of electricity, whether by enhancing or reducing them, that his clear profit in any year of account shall not, as far as possible, exceed the amount of reasonable return. This argument is obviously misconceived in view of the third proviso to that clause. It peremptorily requires a notice in writing of not less than sixty clear days of the intention to so enhance the rates to be given to the State Government and to the Board. It is conceded that such a notice was not given.

Learned counsel's argument that the question of notice is between the Company and the Government, so that the Municipality is not entitled to raise any objection on that account, is untenable. The statute lays down the requirement as a condition precedent and unless it is fulfilled rates cannot be enhanced.

29. This brings us to the second alternative, viz., that the plaintiff is entitled to loss of income in consequence of the direct pumping at lower heads. To meet this part of the claim it is vehemently argued for the Municipality that under the agreement the Company is not entitled to any additional price over and above the fixed rate for the actual number of units of electricity consumed. That argument, in our opinion, is not open to the defendant when it has been found that it committed breach of the agreement and that as a consequence of drawing water directry through the tappings, the Municipality pumped larger quantity of water for fewer units of electricity. This part of the plaintiff's claim must be allowed.

30. We are now confronted with the question of assessment of damages. The undoubted law is that damages must be proved by the plaintiff. It must satisfy the Court both as to the fact of damage and as to its amount when It claims substantial damages. At the same time, when it is clear that some substantial loss has boon incurred, the fact that the assessment is difficult because of the nature of the damage is no reason for awarding no damages or merely nominal damages. Chaplin v. Hicks. 1911-2 KB 786, is the leading case on the problem of certainty. There. Vaughan Williams, L.J. : said :

'The fact that damage cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages.'

And in Biggin and Co. Ltd. v. Permanite Ltd., 1951-1 KB 422 at p. 438, Devlin, J. says:

'Where, precise evidence is obtainable, the Court naturally expects to have it. Where it is not the Court must do the best it can.'

The principle that difficulty of proof does not dispense with the necessity of proof (see Aerial Advertising Co. v. Batchelors Peas, Ltd., 1938.2 All ER 768 at p. 796, per Atkinson, j.) cannot be strictly applied here. Even if applied, all that can be expected is reasonable certainty. The word 'reasonable'' is really the controlling one. Bowel, L. J., said in Ratcliffe v. Evacs, 1892-2 QB 5H (532-33) :

'In all actions accordingly on the case where the damage actually done is the gist of the action, the character of the acts themselves which produce the damage, and the circumstances under which these acts are done, must regulate the degree of certainty and particularity with which the damage done ought to be stated and proved. As much certainty and particularity must be insisted on, both in pleading and proof of damage, as is reasonable, having regard to the circumstances and to the nature of the acts themselves by which the damage is done. To insist upon loss would be to relax old and intelligible principles. To insist upon more would be the vainest pedantry.'

The following statement of the law in n Halsbury (Simonds), para 394, is very useful:

'A distinction must be drawn, however, between cases where the difficulties are due to uncertainty as to the causation of damage, where questions of remoteness arise, and cases where they are due to the fact that the assessment of damages cannot be made with any mathematical accuracy. Lack of relevant evidence may make it impossible to assess damages at all as where the extent of the loss is dependant upon too many contingencies, and in such cases, where liability is established nominal damages only may be awarded. Where it is established, however, that damage has been incurred for which a defendant should be held liable the plaintiff may be accorded the benefit of every reasonable presumption, as to the loss suffered. Thus, the Court, or a jury, doing the best that can be done with insufficient material, may have to form conclusions on matters on which there is no evidence, and to make allowance for contingencies even to the extent of making a pare guess;'

The accepted rule in the modern law of damages is to be found in the judgment of Alderson B. in the Court of Exchequer In the case of Hadley v. Baxendala, 1854-9 Ex 341 at p. 354:

'Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.'

31. Having these principles, which are in accord with Section 73 of the Contract Act, in view, we must find out the amount of reasonable damages to which the plaintiff is entitled. In the very nature of a case such as the one we am dealing with, it is difficult to assess the pecuniary loss with exactitude.

32. But before we come to the calculations we have to deal with the question for what period is the plaintiff entitled to damages on that basis. As already pointed out, the Municipality did extract larger quantity of water for fewer number of units by direct pumping at lower heads. In essence, the plaintiff is only getting additional price of electricity supplied by it. This part of the plaintiff's claim is, for reasons already stated, governed by Article 52 of the Limitation Act, so that it is only for the period of three years next preceding the institution of the suit that the Company would be entitled to a decree. It would make no substantial difference if the residuary Article 115 of the Limitation Act, which applies to all actions ex contractu were pressed in service. The plaintiff is, however, entitled to the exclusion of two months for statutory notice. The suit was commenced on October 15, 1956, so that it is entitled to additional price of electricity consumed between August 15, 1953. and October 15, 1956.

33. We have found the following calculations as a good and workable basis for assessing the damages. (After calculation. His Lordship proceeded : )

By adding up the total loss as above, the plaintiff is entitled to Rs. 5911/-.

34. It is an argument that the Company cannot claim any additional charge after having wil-lingly continued to supply electricity in spite of the tappings functioning. What we find is that the Company started protesting from as back as 1944. There is a fasciculous of correspondence between the parties The Company's contention is that it was warned and deterred against discontinuance of electric supply. (Ex. P-37, dated 16-10-1944, from the Company to the Municipality; Ex. D-13, dated 30-12-1944, from the Municipality to the Company; Ex. D-I4, dated 31-12-1944, from the Municipality to the Company; Ex. P-38, dated 5-1-1945, from the Mnni-cipality to the Company; Ex. p-151, dated 20-1-1945, from the Company to the Chief Engineer, Public Works Department, C. P. Nagpur; Ex. P-I53, dated 31-5-1945, from the Company to the Chief Engineer, Public Works Department, Nagpur; Ex. P-44. dated 21-3-1953, from the Company to the Municipality.) Harbanslal Pasi (P. W. 10), who was the Resident Engineer, says that he actually stopped the working of the pumps from 1-4-1953, whereupon, the Additonal Deputy Commissioner, Harda, intervened and asked the plaintiff to continue pumping in order to avoid Inconvenience to tne people of Harda. Gayaprasad (D. W. 3), who was the then Secretary of the Municipality, says that when the plaintiff stopped to supply water on 1-4-1953, he approached the Government officers with a request to ask the plaintiff to restore the supply. The Municipality itself in its letter dated 30-12-1944, (Ex. D-13) (supra) warned the Company in these terms :

'Please note that the matter is of public, convenience and safety and avoidance on the part of the Company will be dealt with accordingly.' See also the last paragraph of Ex. D-14, dated 31-12-1944 (Supra), Again in its letter (Ex. D-15), dated 16-1-1945, (supra), the Municipality wrote to the Company : 'The matter concerns the working of an essential utility service and concern and the violation of the agreement will be very serious for'which your Company would be responsible.'

Having all this in view, we reject the Municipality's contention.

35. There remains to be considered the plaintiffs's claim for damages to the machinery and plant. In short, its case is that because of the lowering of the head as a result of direct pumping through tappings, there was overloading. The plaint and machinery became damaged and the life of the pumping sets was also shortened. The Municipality's contention is that the fault lay at the door of the Company itself because it installed a 20 B.H.P. motor when the expert advice at the very inception had been for installing a 25 B.H.P. motor. Shri Dabir lays emphasis on Ex. D-25, dated 29-5-1936, which is a letter from the Electro Mechanics LM. addressed to the Electrical Adviser, C. P. Government, on the subject of agreements with the Harda Municipality. There it is said :

'.....We obtained these details from well known pump makers who specify a 25 B.H.P, Motor to deliver 3 lacs gallons in 15 hours against a total head of 130 feet. This would mean about 18.5 units per hour for 20,000 gallons or approximately 1000 gallons per unit which we trust you will find in order.'

This point arose between the parties before they finalised the draft agreement. In the letter dated 5-10-1935 (Ex. D-123), from the office of the Electrical Adviser, C. P. Government, to the Secretary Municipal Committee, Harda, offering remarks in the draft agreement, it is said in paragraph 5 :

'Clause 11 of the agreement: -- There is very likelihood that in case of excessive consumption as shown by the meter reading, there may be a dispute regarding the efficiency of tse pumps. To avoid such disputes it is necessary that a guarantee should be given by the company that the gallons of water pumped per unit will not be below..... (a certain agreed figure should be given).''

These remarks were forwarded by the Municipality to the Electro Mechanics Limited with its letter dated 18-10-1935 (Ex P-I27). By his letter dated 13-6-1936 (Ex. D-I26), the Electrical Adviser C. P. Government, wrote to the Municipality that the Electro Mechanics was prepared to guarantee 1000 gallons per unit vide Clause (10) of the draft agreement for pumping and that on the basis of this figure the cost of 3,00,000 gallons pumped daily for the whole year would be about Rs. 13,700/- at 2 annas per unit.

36. Why 20 B.H.P. motor was installed and how it was to the benefit of both the parties becomes amply clear from the letter dated 18-9-1936 (Ex, P-108) from Worthington Simpson Ltd. to the Electro Mechanics. There it is said :

'Duty :-- 340 Imperial gallons per minute 134 feet total head from all causes 1430 M.P.M. (revolutions per minute) 73% working barrel efficiency. 18.9 B.H.P, absorbed by working barrel, The pump would be drieven by : One:-- 20 B.H.P. 400 Volts, 3 Phase, 50 Cycles.....'

This should be read with the graph (Ex. P-107).The whole thing is explained by Jamshed Dada-chanji (P. W. 4), who was the Consulting Engineer.He says :

'Looking at the graph (part of Ex. C.9), I say that it will take about 19.4 B.H.P. for pumping water at a specified head of 130 feet and it will pump roughly about 355 to 360 gallons per minute. It will consume about 14.55 units per hour. If a 20 B.H.P. motor is purchased then for this particular pump it will certainly serve the purpose,'

It is thus patent enough that if the Company had installed a 25 B.H.P. motor, then the Municipality would have had to pay for 18.5 units per hour for 20,000 gallons. With 20 B.H.P. motor, the Municipality had to pay for 14.55 units for 21600 gallons. Thus there was a saving of the price of four units for the Municipality.

37. The installation of 20 B.H.P. motor was. advantageous to the Municipality also because otherwise, it would have consumed more units of electricity even at the specified head of 130 feet than what it consumed at that head with a 20 B.H.P. motor. It must, therefore, be held that the Company is not disentitled to damages just because it used a 20 B.H.P. motor. The Municipality, if it had not committed the breach of the agreement by drawing water at heads lower than the fixed head of 130 feet, it was certainly not its concern whether the Company ran into losses or earned profits; then, it was only liable to pay the price of the electricity consumed at 2 annas per unit.

38. Another argument of Shri Dabir is that the Company is not entitled to damages, since there could be no overloading because of the existence of relays, so that as soon as the engine became overloaded, the relays would stop the motor. Reliance is placed on the statement of Harbanslal Pasi (P. W. 10). It was said in Ex. P-108 (supra) that there would be three electro magnetic overload relays, two of which would have time element and the third would be instantaneous. The witness. (P. W. tO) says :

'The overload time lags are usually adjusted to operate at 20 to 30 per cent overload above the full load and current whereas the instantaneous overload relays are adjusted to operate at nearly 200 per cent of the full load 'current of the motor. No volt relays operate when the electrical pressure falls much below the normal electrical pressure, that is to say, about 40 to 50 per cent below the normal electrical pressure.'

From this evidence we find that because of the relays overloading was not instantaneously prevented. Moreover, the potential efficiency was bound to fall. This is also seen from the characteristic curve (Ex. P-107). Thus, even though, the pumps did not completely stop, if there was constant lowering of the total head continuous damage must have occurred to the motors.

39. It was also argued for the appellant that the Company suppressed its log books, otherwise, the actual difference could have been calculated. This argument is not correct. The better evidence as to the pumping hours and the energy consumed is found in the annual reports of the Municipality. Moreover, no adverse presumption can be drawn against the plaintiff because the Municipality did not give any notice for the production of those documents. Furthermore, it is quite clear from the statement of Khambata (P. W. 11) that the log books were actually brought by him in the Court, so that they were available to the defendant for cross-examination- He says 'I have brought energy register and the log books of the plaintiff's office today.' All this aside, the log books only recorded the number of hours for which the pump worked and not how the head were lowered.

40. This is clear from the statements of Har-banslal Pasi (P. W. 10). Relying on the statement of Keshava Shriniwas (P. W. 1), Kartar Singh (P. W. 2), Section N. Maudawala (P. W. 5), G. J, Dave (P. W. 6), and Keshava Kanare (P. W. 7), the trial Judge has found that the Company had to expend Rs. 2,650/- in repairs in the years 1953 and 1954. We do not think that the Company is entitled to recover the whole of this amount as damages due to overloading because there is normal wear and tear also. In our opinion, the Company should be allowed Rs. 1,000/- on this account.

41. The total amount which the Company is found entitled to is Rs. 6,911/- (Rupees six thousand nine hundred and eleven) (i.e.; Rs. 5,911 / - plus Rs. 1,000/-).

42. We do not see that this is a fit case for awarding interest to the Company.

43. In the result, the appeal is partly allowed. The cross-objections are dismissed. Thedecree passed by the trial Judge is varied. Theplaintiff-Company is held entitled to a decree forRs. 6, 911/- (Rupees six thousand nine hundredand eleven). We allow proportionate costs to eachof the parties, in both the Courts, according toits success under this judgment. The decreepassed by the trial Judge shall be modified accordingly.

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