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Nimar Industrial Corporation Private Ltd., Khandwa Vs. Madhya Pradesh Electricity Board, Jabalpur - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtMadhya Pradesh High Court
Decided On
Case NumberFrist Appeal No. 48 of 1963
Judge
Reported inAIR1973MP281; 1973MPLJ846
ActsMadhya Pradesh Electricity Board (Meetings) Regulations, 1951; Evidence Act, 1872 - Sections 114; Electricity (Supply) Act, 1948 - Sections 12 and 24; Specific Relief Act, 1963 - Sections 13
AppellantNimar Industrial Corporation Private Ltd., Khandwa
RespondentMadhya Pradesh Electricity Board, Jabalpur
Appellant AdvocateK.A. Chitaley and ;V.S. Dabir, Advs.
Respondent AdvocateB.L. Seth, Adv.
DispositionAppeal dismissed
Cases ReferredRoyal British Bank v. Turquand
Excerpt:
- - 23,403/- and the board wanted the concurrence of the plaintiff-company to this as well as the other terms contained in ex. d-19, the property was clearly offered for sale to the plaintiff for rupees 23,403/- (rs. 14,971/- was clearly not an acceptance of the price at which the property was offered by the board. he recommended that no separate price may be taken for the tanks, and the land should be valued at the upset price. in the previous case (2) what i would like to point out is that as a concession to the development of a local industry we are parting with this property and that background has to be kept in mind. desouza who endorsed on it the following :since it is concession to the development of a local industry. thereafter the papers were placed before the chairman who.....singh, j. 1. this is an appeal by the plaintiff whose suit for specific performance of a contract for sale was dismissed by the district judge east nimar, khandwa.2. the plaintiff is a private limited company registered under the indian companies act. the defendant is the madhya pradesh electricity board constituted under the indian electricity (supply) act, 1948. the facts leading to the suit giving rise to this appeal are that m/s. jasrup baijnath bahety and sons private limited owned a power house, which included lands and buildings, in khandwa town. they had acquired the. said power house from m/s. abdul hussain haji jiwaji and co. who originally held the licence for supply of electricity. m/s. jasrup baijnath bahety and sons private ltd. surrendered their licence and their licence.....
Judgment:

Singh, J.

1. This is an appeal by the plaintiff whose suit for specific performance of a contract for sale was dismissed by the District Judge East Nimar, Khandwa.

2. The plaintiff is a private limited company registered under the Indian Companies Act. The defendant is the Madhya Pradesh Electricity Board constituted under the Indian Electricity (Supply) Act, 1948. The facts leading to the suit giving rise to this appeal are that M/s. Jasrup Baijnath Bahety and Sons Private Limited owned a power house, which included lands and buildings, in Khandwa town. They had acquired the. said power house from M/s. Abdul Hussain Haji Jiwaji and Co. who originally held the licence for supply of electricity. M/s. Jasrup Baijnath Bahety and Sons Private Ltd. surrendered their licence and their licence was revoked with their consent in 1954. After the revocation of the licence, the entire Khandwa power house with all its lands and buildings was purchased by the Madhya Pradush Electricity Board (hereinafter referred to as the Board). The Board paid the price which was settled by agreement. One G. D. Bagri, who was an employee of M/s. Jasrup Baijnath Bahety and Sons Pvt. Ltd., applied to the Board for purchase of some land and buildings belonging to the old Khandwa power house on the ground that this property was of no use to the Board as it had developed its sub-station for supply of electricity to Khandwa town on Pandhana Road. Later on a company bearing the name 'Nimar Industrial Corporation Private Ltd.' was floated by Shri Bagri of which at therelevant time he was the Managing Director. The sale of the land and the buildings belonging to the old power house was then negotiated for and on behalf of this company.

3. The suit giving rise to this appeal was instituted by the Nimar Industrial Corporation Pvt. Ltd. (hereinafter referred to as the company) against the Madhya Pradesh Electricity Board, Jabalpur, on the allegations that the parties entered into a contract for sale of the land and buildings described in the plaint map by letters A, B, C, D, E, F, G, H, I (portion of the premises of the old Khandwa power house) for a sum of Rupees 14,971/-. It was further alleged that the payment of the entire consideration was made by the company to the Board and that possession was delivered to the company by the Board. It was also stated that only a sale-deed could not be executed. It was prayed that a decree for specific performance of the contract ordering the defendant Board to execute a sale-deed be passed in favour of the company. The defendant Board contested the suit on various grounds. It denied that there was any concluded contract for the sale of the suit property. It also pleaded that the Board had no authority to sell its property and the contract, if any, was ultra vires. It was further pleaded that the price of Rs. 14,971/-, pleaded by the plaintiff was a very low price and the Board, even if it had authority to sell its property, could sell only at the market price and not at a concessional price for the benefit of the plaintiff. It was also pleaded by the Board that under the terms of the lease of the land it could not be sold without the consent of the State Government, and no such consent was obtained. The trial Court substantially accepted all the pleas raised by the Board, except the plea that the price of Rs. 14,971/- was not a fair price for the suit property. This suit was dismissed by the trial Court and it is against this decree that the present appeal has been filed by the plaintiff-company.

4. The first question that arises for consideration in this appeal is, whether there was a concluded contract for sale of the suit property. The correspondence for purchase of the suit property started in January, 1956 and it is not necessary to mention the earlier letters. Suffice it to say that in the letters sent on behalf of the plaintiff-company it was stressed that the company wanted the property for industrial purposes, as it wanted to establish a power-loom shed and to manufacture absorbent and medicated cotton and medicated gauge. It was also stressed in the letters of the company that the suit property was surplus as the Board did not need it for purposes of power house. It was pointed out that the Board had developed a sub-station on Pandhana Road to receive power generated at its Nepa Thermal Station and it was from this sub-station that electricity was being supplied to Khandwa town. On the requestfor purchase of the suit property made by the plaintiff-company, the Board on 18th November, 1956 passed the resolution Ex. D-19 which reads as follows :

'Approved the proposal for the sale of surplus land purchased by the Board from the Khandwa Electric Supply Co. to the Nimar Industrial Corporation on the basis of the valuation made by the S. E. (Civil) as per details enclosed with the agenda.'

The details enclosed with the agenda have not been filed, but the meaning of the resolution can be ascertained from the two subsequent communications of the Board. The first communication in that behalf is Ex. P-5 (also exhibited as D-15) of 26th December, 1956. In this letter the Assistant Secretary of the Board wrote to the plaintiff-company that the Board has decided to transfer the surplus land to the company and that the amount of price, date of possession and the area to be transferred shall be communicated shortly. Thereafter, the details were finalised by the Superintending Engineer of the Board (See Ex. D-32 dated 11th January, 1957) in pursuance of the resolution of the Board and the Secretary of the Board intimated to the plaintiff-company these details by Ex. P-4 (also exhibited as D-3) of 18th January, 1957. The letter reads as follows :

'In continuation to this office letter No. SEC/239/2275 dated 26th December, 1956, intimating the decision of the Board to transfer the surplus land to your Corporation, we have pleasure to inform you that the Board is agreeable to transfer the land to you under the following conditions :

(1) The value of the property to be transferred would be Rs. 20,803/-.

(2) You will have to pay 12 1/2% extra over the above valuation (as decided by Government in a similar case).

(3) You should agree to provide at your cost a compound wall within the premises along the boundaries of the area now being handed over to you, whenever necessary, in order to separate the area occupied by you from that which will be continued to be occupied by the Electricity Board.

(4) You should make your own arrangements for access to the site and passage through the premises retained by the Board will not be permitted.

(5) The total value of Rs. 23,403/-; (Rupees Twenty three thousand four hundred and three only) should be deposited with the Chief Accounts Officer. Madhya Pradesh Elec-tricity Board, Chhindwara Road, Nagpur, after which steps will be taken to draw up a sale deed and hand over the site to you. The cost of the stamp paper and registration charges of the sale deed shall be borne by you.

(6) Pending disposal of the plant and Machinery which are housed in the Engine Shed, the Engine Shed will not be handed over to you; but will be handed over onlyafter the machinery is disposed of. Necessary permission to the purchaser of the Machinery will have to be given for entering the area and removing the plant. Only the area excluding the Engine shed will be handed over and this possession will be given as soon as the value is deposited and the formalities are completed.

2. Please forward your concurrence to the above to enable the Board to take necessary action.'

A reading of the aforesaid letter Ex. P-4 shows that the Board offered to sell the property for Rs. 20,803/-, plus 12 1/2% over this valuation, i. e. for a sum of Rs. 23,403/- and the Board wanted the concurrence of the plaintiff-company to this as well as the other terms contained in Ex. P-4 on which the Board offered to sell the property. It has not been disputed before us that Ex. P-4 was an offer made on behalf of the Board to sell the suit property in pursuance of the resolution Ex. D-19. After receipt of this letter, the plaintiff-company sent its repfy Ex. P-6 (also exhibited as D-4) dated 22nd February 1957. In this letter the company stated that the valuation of Rs. 20,803/-made of the suit property included Rs. 5,995/-as the value of the land and Rs. 1,500/- as the value of six tanks. It was also stated that the Board had not paid anything for the land and the tanks to the previous licensee M/s. Jasrup Baijnath Bahety and Sons and the valuation of these items was included in Civil assets. It was further stated in the letter that there seemed to be no justification for charging the value of the land and the six tanks from the plaintiff-company. It was then stated that the company was agreeable to other conditions. It was lastly said that the company hoped that the Board would not insist upon including the two items of Rs. 5,995/- and Rs. 1,500/- in the assessment of the value of the property and it shall be transferred to it at Rs. 14,971/- which was the value of the property after deducting the two items. The company also enclosed a cheque for Rs. 14,971/- along with this letter.

5. The trial Court held that this letter Ex. P-6 (also exhibited as D-4) did not amount to acceptance of the offer of the Board and it was only a counter offer. In our opinion, this finding of the trial Court is correct. As stated earlier, the Board had offered to sell the property for Rs. 23,403/- (20,403/- plus 12 1/2%). By the letter Ex. P-6 the company did not accept to purchase the property for Rs. 23,403/-, but offered to purchase it for Rs. 14,971/- on the plea that the Board should not charge the price of the land and the six tanks from the plaintiff company as the Board had not to pay for the land and the tanks to M/s. Jasrup Baijnath Bahety and Sons. It is true that the plaintiff-company wrote that it will abide by the decision taken by the Board on its representation, yet it cannot be denied that there was no acceptance by the plaintiff-company of the price of Rs. 23,403/-at which the property was offered for sale by the Board.

Learned counsel for the plaintiff-appellant submitted that by this letter the plaintiff-company only intended to show that there has been a mistake in calculating the price of the property. According to the argument of the learned counsel, it was earlier decided that the property should be sold at the price at which it was purchased by the Board plus 12 1/2% and, therefore, by this letter the plaintiff-company only pointed out the mistake in calculation of the price and there was no question of any counter offer. There is no substance whatsoever in this argument. There is no basis to show that the Board had up to that stage offered to sell the property at the price at which it was purchased by it; plus 12 1/2%. By Ex. P-4 (also exhibited as D-3) which was sent to the plaintiff-company in pursuance of the resolution of the Board Ex. D-19, the property was clearly offered for sale to the plaintiff for Rupees 23,403/- (Rs. 20,803/- plus 12 1/2%). The lelter of the plaintiff-company requesting that the value of the land and the six tanks (Rupees 5995/- and Rs. l,500/-) should not be included in the. price and that the property should be sold to it for Rs. 14,971/- was clearly not an acceptance of the price at which the property was offered by the Board. In the circumstances, the plaintiff's letter Ex. P-6, by which it showed its willingness to purchase the property for Rs. 14,971/-, was merely a counter offer. This letter, therefore, had not the effect of concluding the contract by acceptance of the Board's offer contained in its letter Ex. P-4 (also exhibited as D-3).

6, It has then to be seen whether the Board thereafter accepted the counter offer of the plaintiff-company contained in Ex. P-6 (also exhibited as D-4) to purchase the suit property for Rs. 14,971/-. After the receipt of this letter, the matter was examined by the Superintending Engineer of the Board who put up a note dated 15th April 1957. In this note the Superintending Engineer indicated that the valuation earlier made of the property to be sold to the plaintiff-company included the value of the land at Rs. 10,900/-per acre and the tanks at Rs. 1,500/-. It was also pointed out that the rate of valuation of the land at Rs. 10,900/- per acre was fixed after local enquiry. It was further stated that it has been ascertained from the Tahsildar that, the upset price of the land would be about Rs. 1,364/- for 0.55 acre which is the extent of the land proposed to be sold. The Superintending Engineer then indicated that the tanks were not separately valued when the property was purchased from M/s. Jasrup Baijnath Bahety and Sons. He recommended that no separate price may be taken for the tanks, and the land should be valued at the upset price. It appears thereafter that when this note was placed before Shri N. P. Shrivastava, the Chairman of the Board, he discussed the matter with theSuperintending Engineer and noted as follows on 20th April, 1957 : (Ex. D-33)

Discussed with S. E. (Civil). There is one point which I want to emphasize and that is the premium which this company will have to pay afresh to the State Govt. when the land (Nazul) is used for any manufacturing process on being diverted from its present use. I would therefore suggest that either the upset price and cost of tanks be charged or instead 12 1/2% extra as was done under the orders of the State Govt. in the previous case

(2) What I would like to point out is that as a concession to the development of a local industry we are parting with this property and that background has to be kept in mind.

(3) Also possession of some part of the sheds in the rear may be delivered as the company is reminding every day that it wants to set up its business in the premises during this cotton season.

(4) F. M. & T. M. should see about the revision of the price calculation.'

Sd/- N. P. Shrivastava

20-4-1957

A reading of the above note will show that the Chairman was of opinion that as the land was Nazul land the company will have to pay fresh premium when it will use the land for any manufacturing process. He, therefore, suggested that either the upset price of the land and cost of tanks be charged or instead 12 1/2% extra on the valuation be charged as was done in a previous case under the orders of the State Government. He further pointed out that it has to be kept in mind that this property was being parted with as a concession to the development of a local industry.

7. The note of the Chairman was then placed before the Finance Member Shri M. L. Desouza who endorsed on it the following :

'Since it is concession to the development of a local industry. I have no comments.'

Sd/- M. L. Desouza,

22-4-1957

The papers were then sent to the Technical Member Shri K. R. Minocha who also signed on the note Ex. D-33 on 7th May, 1957. He did not make any endorsement. Thereafter the papers were placed before the Chairman who endorsed the following :

Discussed with S. E. (Civil) and Secy. 12 1/2% be charged instead of land price and tank valuation and order should issue accordingly.'

Sd/- N. P. Shrivastava.

8-5-1957

7-A. All the above endorsements of the Chairman and the Members of the Board constitute one document exhibited as D-33. It is not disputed that at that time the Board consisted of Chairman Shri N. P. Shrivastava and two Members, namely Shri M. L. Desouza (Finance Member) and Shri K. R. Minocha(Technical Member). A perusal of Ex. D-33 which has substantially been quoted above, goes to show that the proposal of the Chairman that either the upset price of the land and tanks be charged or instead 12 1/2% extra on the valuation of the property (minus land and the tanks) be charged as price for sale of the property (including the land and the tanks) to the plaintiff, was taken to be approved by the Board. The Chairman, thereafter, discussed the matter with the Superintending Engineer and the Secretary and ordered in conformity with the decision of the Board that 12 1/2% be charged instead of price of the land and tanks. In pursuance of the order of the Board, the Superintending Engineer by letter dated 18th May, 1957 (Ex. P-10) intimated to the plaintiff as follows :

'The total value of the portion of the premises of the old Khandwa Electrical undertaking to be transferred to your concern works out to Rs. 13,308/-.

2. It will be seen that in view of the fact that 12 1/2% is being charged over the above amount, the value of the land has not been taken into consideration. The tanks also have been excluded as they were originally not included in the building assets.

3. The total amount now payable by you on account of the value of the property to be transferred to you (including 12 1/2%) thus works out to Rs. 14,971/-. No further amount is therefore payable by you.'

We have already stated that the plaintiff company had sent a cheque for Rs. 14,971/-along with its letter dated 22nd February, 1957 (Ex. P-6). This cheque was accepted by the Superintending Engineer, and, therefore, nothing remained to be paid by the plaintiff-company to the Board on account of the price of the suit property. Possession was also delivered to the plaintiff-company of the property as is clear from the documents Exs. P-47 and P-48.

8. According to the contention of the plaintiff-company, its counter offer contained in Ex. P-6 for purchasing the suit property for Rs. 14,971/- was accepted by the Board by Ex. D-33 and the decision of the Board was communicated by the Superintending Engineer by letter Ex. P-10. The contention of the Board on this aspect of the matter is that from Ex. D-33 no decision of the Board can be inferred as to acceptance of the counter offer of the plaintiff-company for sale of the suit property for Rs. 14,971/-.

9. The first point argued in this connection by the learned counsel appearing for the Board is that none of the Members of the Board noted their approval or agreement to the proposal of the Chairman and. therefore, their agreement to the Chairman's proposal made in Ex. D-33 cannot be inferred. In our opinion, there is no merit in this point. When decisions are taken by circulation, it is not necessary that every member should note in express term that he agreesto the proposal. If a member signs the proposal without any comment or showing his dissent, it would be taken that he has agreed to the proposal. Shri Desouza and Shri K. R. Minocha signed the proposal of the Chairman when the papers containing the proposal of the Chairman were sent to them without any comments or showing their dissent. This must lead to the inference that the proposal made by the Chairman was assented to by the other members.

10. It was then argued by the learned counsel that even if it may be taken that the proposal of the Chairman contained in Ex. D-33 was assented to by the other members, as the decision was not taken in any meeting of the Board, it cannot bind the Board. According to the learned counsel, every decision on behalf of the Board has to be taken in the shape of a resolution passed in a duly convened meeting and it is only in case of routine and urgent matters that decisions can be taken by circulation. Reference in this connection was made to regulation 18 of the Madhya Pradcsh Electricity Board (Meetings) Regulations 1951 which reads as follows :

'18. Routine and urgent matters may be considered between meetings of the Board by circulation of relevant papers amongst the members of the Board and if they agree upon a decision unanimously it shall have the effect of a decision taken at a meeting of the Board and shall thereupon be entered into the Minute Book accordingly. In case there is no unanimous agreement of members in any matter, the particular point shall be referred to the Board in its next meeting.'

10-A. The defendant-Board is constituted under Section 5 of the Electricity (Supply) Act, 1948. As provided in Section 12 of the Act, it is a body corporate having perpetual succession and a common seal, with power to acquire and hold property. It can also sue in its name and can also be sued.

Section 14 of the Act provides for meetings of the Board. Tt enacts that the Board shall hold ordinary meetings at such intervals as may be provided in the regulations and a meeting may be convened by the Chairman at any other time for the transaction of the urgent business. Power to make regulations is conferred on the Board by Section 79 of the Act. Amongst other matters regulations may be made to provide for (Clause (b) of Section 79) the summoning and holding of meetings of the Board, the times and places at which such meetings shall be held, the conduct of business thereat and the number of members necessary to constitute a quorum. It is in the exercise of this power that the Madhya Pradcsh Electricity Board (Meetings) Regulations, 1951 were made by the Board. It is provided in regulation 3 that the Board shall ordinarily meet once a month for the transaction of business. Regulation 10 provides that the quorum for a meeting of the Board shall be two, so long as the numberof members is three, and shall be increased by one for every addition of two members to the Board.

11. It will be seen from the provisions of the Act and the regulations that the Board, which is a Corporation, can act only by resolution passed in a Board meeting. It. is only in case of 'routine and urgent mailers' that decisions may be taken by circulation of relevant papers amongst the members as provided in regulation 18. Learned counsel for the plaintiff-company contended that the expression 'routine and urgent matters' as used in the Regulation, must be construed to mean 'routine matters and urgent matters' by reading the word 'and' disjunctively. According to the learned counsel for the defendant-Board the expression 'routine and urgent matters' should be construed to mean 'routine matters which are urgent' and not merely urgent matters. It is not necessary to decide which of the two rival contentions on this point is correct, because, in our opinion, the proposal submitted by the Superintending Engineer of the Board for modification of the price at which the suit property was offered for sale to the plaintiff-company and for acceptance of the counter offer of the company was neither a routine matter nor urgent matter which could be considered merely by circulation. A routine matter is one which comes up in the regular course and which is to be mechnanically disposed of without requiring any discussion or deliberation. Urgent matter is one which demands prompt action. The question of sale of property like the suit property is not a matter which very often arises and it cannot be mechanically disposed of. The property was offered to the plaintiff-company at Rs. 23,403/- in pursuance of the Board's resolution (Ex. D-19) passed on I8th November 1956 in a Board meeting. The acceptance of the counter offer of the plaintiff-company to sell the property at Rs. 14,971/- as recommended by the Superintending Engineer and the Chairman needed reconsideration and modification of the Board's earlier resolution. The points to be considered were : (1) whether the valuation of the land should be done at the rate of Rs. 10,900/- per acre which was the rate fixed earlier after local enquiry, or whether it should be valued at the upset price of Rs. 1,364/- intimated by the Tahsil-dar; (ii) whether the valuation of the land and tanks be included in the price of the property; and (iii) whether only 12 1/2% extra should be charged over the valuation of the rest of the property as price for the entire property. These points required discussion and deliberation and, therefore, the question of acceptance of the counter offer and the modification of the original resolution of the Board could not be decided as routine matter bv circulation. It is also clear that there was no urgency in the matter. No prompt action, so far as the Board was concerned was required and the matter could have beenheld up to be considered in the monthly meeting of the Board. It would be noticed that the counter offer of the plaintiff-company (Ex. P-6) is dated 22nd February, 1957 which must have been received by the Board within a few days thereafter. The Superintending Engineer put up his note in this counter offer on 15th April, 1957, i.e. after nearly 1 1/2 months. The Chairman considered the note of the Superintending Engineer on 20th April, 1957. The other members signed the note on 7th and 8th May. 1957. It will thus be seen that the question whether the counter offer made by the plaintiff-company by its letter Ex. P-6 should be accepted or not was promptly considered by the Board and the manner in which it was dealt with clearly shows that there was no urgency about it, so far as the Board was concerned. We are, therefore, of opinion that the decision taken by the Board by circulation to sell the suit property to the plaintiff-company for Rupees 14,971/- was in contravention of the regulation 18. Tt is well settled that a corporation can do corporate acts only at a corporate meeting, unless a special method is authorised by its constitution; (See The Conservators of the River Tone v. Ash, (1829) 109 ER 479 p. 490 and Halsbury's Laws of England, Third Edition, Vol. 9, p. 46). In case of companies it has often been held that the Board of Directors must act collectively in a Board meeting, unless authorised otherwise by the Articles; (See D'Arcy v. The Tamar, Kit Hill, and Callington Rly. Co., (1866) LR 2 Ex Ch 158 and Haycraft Gold Reduction and Mining Company. In re., (1900) 2 Ch 230). The same principle must apply in the case of the defendant Board which is a statutory corporation. Except in the cases falling under Regulation 18, the members of the Board must meet in order to exercise the powers of the Board so that they may hear each other's views, debliberate and then decide. For these reasons, Ex. D-33, a decision taken by circulation which does not fall within the ambit of Regulation 18, cannot be held to be decision of the Board and it must be held that there was no valid acceptance of the counter offer made by the plaintiff-company.

12. Learned counsel for the plaintiff-company then contested that the question whether a matter considered by the Board by' circulation was routine and urgent is nof justiciable. No authority was cited in support of this submission. All that can be said is that when a decision is taken on a matter by circulation, it may be presumed that the matter was either routine or urgent. But then this prima facie presumption may be shown to be wrong. So far as the instant case is concerned, all the material facts have been brought on record and it is quite clear that the matter considered by circulation was neither routine nor urgent and, therefore, it should have been considered in a Board meeting and the decision arrived at by circulation of the papers is invalid.

12-A. It was then argued that a third party like the plaintiff-company can proceed on the assumption that internal proceedings of the Board were regular and the plaintiff cannot be made to suffer on account of any defect in the internal proceedings of the Board. It is true that a person dealing in good faith with a corporation or its agent is not bound to see that private internal regulations for the corporation are duly carried out; (See Halsbury's Laws of England, 3rd Edition Vol. 9, p. 66). But the person invoking this rule, which is known as the rule in Royal British Bank v. Turquand, (1856) LJQB 317, has to show that he relied on the ostensible authority and that he was not put on inquiry; [Street. The Doctrine of ultra vires p. 38-8]. The plaintiff-company must be presumed to have notice of the provisions of the Electricity (Supply) Act, 1948, and the regulations made by the Board under the Act. Section 13 of the Act provides that all orders and decisions of the Board shall be authenticated by the signature of the Chairman or any other member authorised by the Board in this behalf and all other instruments issued by the Board shall be authenticated by the signature of such member or officer of the Board as may in like manner be authorised in this behalf. We have not been shown that the Superintending Engineer (Civil) or the Assistant Engineer who dealt with the plaintiff in the matter of sale of the property had any real or ostensible authority to act on behalf of the Board. It was the Superintending Engineer who accepted the cheque of Rs. 14,971/-as part payment of the price on 2nd March, 1957 (Ex. P-8) and it was he who later by Ex. P-10 dated 18th May, 1957 communicated that the price worked out to Rs. 14,971/-and nothing remained to be paid. Possession was delivered to the plaintiff by the Assistant Engineer of the Board; (See Exs. P-47 and P.48). None of these documents bear any seal of the company. As sale of immoveable property is not a normal business of the Board and as the officers with whom the plaintiff company dealt had no real or ostensible authority to act on behalf of the Board, the plaintiff-company should have enquired whether there was any Board resolution or not for the sale of the property at Rs. 14,971/-more so when the Board had earlier in a Board Meeting decided to sell the property at Rs. 23,403/-. Had the plaintiff like a prudent person enquired, it would have known that no resolution had been passed in a Board Meeting for the sale of the property at Rs. 14,971/-. Having regard to the circumstances of the case, we are of opinion that the plaintiff has failed in making out a case for application of the rule in (1856) 25 LJQB 317 (Supra).

13. Another point argued by the learned counsel for the defendant Board relating to the validity of Ex. D-33 is that the decision was reached merely as a matter of concession to the plaintiff-company withoutgiving any importance to the interests of the Board. There is justification for this argument. It will be recalled that according to the previous resolution (Ex. D-19), the Board offered to sell the property at Rs. 23,403/-. The main consideration if not the sole, in reducing this price to Rs. 14,971/- was that the property was to be sold to the plaintiff as a concession to the development of a local industry. The Chairman clearly referred to this consideration in his note in Ex. D-33 wherein he said that 'what I would like to point out is that as a concession to the development of a local industry we are parting with this property and thai background has to be kept in mind.'

The finance Member also assented to the proposal of the Chairman merely on this consideration. He specifically said that 'since it is concession to the development of a local industry I have no comments.' The industries which the plaintiff-company wanted to start were manufacture of absorbent and medicated cotton and medicated gauge. These industries bear no connection with the object for which the Board has been constituted and the duties of the Board as provided in the Act. Under Section 24 of the Act the Board has been given the power to pay subscriptions to any association for the promotion of the common interests of persons engaged in the generation, distribution and supply of electricity. The Board has also the power under the same section to contribute such sums as it thinks fit to the funds of any recognised society the object of which is to foster the development and use of electricity or promotion of knowledge and research in respect of electricity or electrical appliances. It is clear from the provisions of the Act that the Board has no authority to sell its property at a concessional price to a person on the ground that it will advance the cause of a local industry which is unconnected with the generation, distribution and supply of electricity. Reading Ex. D-33 as a whole, there is no manner of doubt that the Board reduced the price of the property from Rupees 23,403/- to Rs. 14,971/-, essentially on the consideration that its sale at a concessional price will lead to the development of a local industry which the plaintiff-company proposed to start. In our opinion, this consideration was wholly irrelevant for selling the Board's property at a reduced price.

It was contended by the learned counselfor the plaintiff-company that there is no evidence to show that the real price of the property sold at from time was more than Rs. 14,971/-. In our opinion, there is no merit in this contention. It is cle;ir from the counter offer Ex. P-6 itself that the plaintiff would have purchased the property at Rupees 23,403/- had the Board insisted upon it. The price of land was ascertained at the time when the first resolution of the Board was passed by making local enquiry and therewas no justification when decision Ex. D-33 was taken to hold that the value of land as determined earlier on the basis of local enquiry was incorrect. Admittedly, the tanks were valued at Rs. 1,500/-. The result of the decision of the Board (Ex. D-33) was that practically nothing was taken as price for transfer of the land and tanks. We are, therefore, of opinion that by accepting the plaintiff's counter offer the members of the Board agreed to sell the Board's property at a concessional price which was less than its real valuation and in doing so they exceeded their powers. This is, therefore, an additional ground to hold that the decision taken by the Board by Ex. D-33 was invalid.

14. It was also argued by the learned counsel for the defendant-Board that the Board has no power whatsoever to sell its property and the act of selling the property was ultra vires. We are not inclined to accept this contention. We have already said that the Board is a statutory corporation which can acquire and hold property. Although no express power regarding alienation of property has been conferred upon the Board, it is, we think, implicit that the Board can sell any property not reasonably necessary to enable it to transact its business. Every corporation has such an implied power; (19 Corpus Juris Secundum p. 650). Indeed, if that were not so, it would not be possible for the Board even to sell any property which is unserviceable and which has become almost useless for the purpose of the Board. The property in suit was described in the resolution of the Board (Ex. D-19) as surplus land. This indicates that the Board considered that the property was not reasonably necessary for its business. The statement in the Board's resolution that the property was surplus is evidence against the Board and in the absence of any other material we must hold that the property was surplus as it was not necessary for transacting its business. It is not disputed before us that electricity was not being supplied to the Khandwa town from the old power house of which the suit property forms a part and the Board has developed a sub-station at a different place for supply of electricity to the town. This fact also supports the statement in the resolution of the Board that the suit property was surplus.

15. It was further argued that the lease of the land from the Government contained a clause that it cannot be transferred without the consent of the Government and, therefore, any contract for selling the land was invalid. This contention cannot also be accepted, because a condition of this nature cannot make the contract invalid. The only effect of such a requirement is that the decree for specific performance, if passed, has to be subject to the approval of the State Government to be given on the application of the defendant.

16. We may lastly mention that the trial Court held that there was no proof that it was the property in suit which was offered for sale by the Board by its resolution Ex. D-19. So far as this point is concerned learned counsel for the Board has conceded before us that there is no dispute about the identity of the property and it was the suit property described in the plaint map that was offered for sale by the Board by its resolution Ex. D-19.

17. As a result of the above discussion, our conclusion is that there was no concluded contract between the parties for the sale of the suit property which could be enforced.

18. The appeal fails and is dismissed with costs.


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