1. Ex. P-1 is the contract of service which the respondent, the District Board, Salem, and the plaintiff-appellant entered into for the employment of the plaintiff as the medical officer in charge of a rural dispensary for a' period of three years. The plaintiff was first posted to Elachipalayam as medical officer of the rural dispensary there. On 3rd June, 1941, the services of the plaintiff were terminated (vide Ex. P-4). On appeal to the Government, the plaintiff was reinstated in service on 31st December, 1941. He was out of office between 3rd, June, 1941 and 31st December, 1941.
2. The plaintiff followed up his reinstatement by instituting the suit out of which; this second appeal arises. He claimed Rs. 287-7-0 by way of subsidy from the second defendant, Rs. 338-11-0 by way of damages from the first defendant, the District Board, and, in the alternative, the entire sum of Rs. 626-2-0 as damages from the first defendant, the District Board. The trial Court held that the dismissal of the plaintiff was wrongful; but the learned District Munsiff upheld the first defendant's contention, that the suit was barred by Section 225 of the Madras Local Boards Act as it had been instituted more than six months from the date on which the cause of action arose. The plaintiff's suit was dismissed. At the stage of appeal, the first defendant-District Board accepted the correctness of the finding of the trial Court that the dismissal of the plaintiff was wrongful. The only question that the. learned District Judge considered was whether Section 225 of the Madras Local Boards Act was a bar to the plaintiff's claim. The learned District Judge. agreed with the learned District Munsiff on that issue and the appeal was dismissed. The second appeal has been preferred by the plaintiff and the only respondent in the second appeal is the District Board.
3. The main contention of the learned advocate for the appellant was that Section 225 of the Local Boards Act and the special period of limitation prescribed thereunder did not apply to a suit to enforce contractual obligations incurred under a contract entered into by the District Board and a person like the plaintiff.
4. Section 225 runs:
(1). No suit or other legal proceedings shall be brought against any local Board in respect of any act done or purporting to be done in execution or intended execution of this act or any rule, by-law, regulation or order made under it as in respect of any alleged neglect or default in the execution of this act or any such rule, by law, regulation or order until the expiration of two months next after notice in writing....
(2) Every such proceedings shall, unless it is a proceeding for the recovery of immoveable property or for a declaration of title thereto, be commenced within six months after the date on which the cause of action arose.
The learned District Judge seems to have based his decision in this case, that Section 225 applied to the plaintiff's claim, on Athimannil Muhammad v. Malabar District Board A.I.R. 1938 Mad. 339 Varadachariar, J., observed at page 749 thus:
The real test is whether what is complained of is some act done in pursuance of the statute. In cases where there is no dispute as to the existence of a contract, all further rights and liabilities between the parties are governed by the ordinary law relating to contracts; and it is true enough, in such a case, to say the rights and liabilities of the parties in respect of the contract are matters of ordinary law and not matters governed by the statute. But where, as in the present case, we find that the cancellation of the acceptance of the plaintiff's offer is the necessary result of what the President thought, in accordance with the terms of the Act as he interpreted them, his duty to accept, viz., the highest tender...we cannot say that the question does not relate to an act done under the statute. The right to levy tolls is a special privilege conferred by the statute upon local bodies and, under the terms of Section 106(1), Local Boards are authorised either to manage the collection of the tolls themselves or through their own agency or to lease them out. In either case, what the President as representing the Board does in connection with the leasing out of the right to levy tolls is undoubtedly an act done in execution of his powers or duties under the Act.
The scope of the principles which underlay the actual decision in Athimannil Muhammad v. Malabar District Board (1934) 68 M.L.J. 125 : I.L.R. 58 Mad. 746 was discussed by Beasley, C.J., in Padmanabhuni Narasimhadas v. District Board, Kistna A.I.R. 1938 Mad. 339. Referring to the claim in Athimannil Muhammad v. Malabar District Board (1934) 68 M.L.J. 125 : I.L.R. 58 Mad. 746, Beasley, C.J., observed:
There, the suit was filed...claiming damages on the ground that its President improperly cancelled a contract of lease....The President in performance of what he thought was his duty under the Madras Local Boards Act, as he interpreted the same, accepted a higher offer by another person and the cancellation of the acceptance of the original offer was the necessary result....
The claim Beasley, C.J., had to adjudicate upon was for the recovery of the balance of an amount due to the plaintiff under a contract made with the District Board. Applying the rule which is formulated in Athimannil Muhammad v. Malabar District Board (1934) 68 M.L.J. 125 : I.L.R. 58 Mad. 746, Beasley, C.J., was of opinion that the claim based upon the contract, that is, upon a breach of the contract, was outside the scope of Section 225 of the Madras Local Boards Act. In reaching that decision, Beasley, C.J., relied upon a decision of Venkataramana Rao, J., in G.R.P. No. 1913 of 1934.
5. Varadachariar, J., himself, who delivered the judgment in Athimannil Muhammad v. Malabar District Board (1934) 68 M.L.J.125 : I.L.R. 58 Mad. 746 held in Sivasankaram v. Taluk Board, Penukonda : AIR1936Mad945 :
The provision for notice in Section 225 as well as the enactment of a shorter period of limitation are co-extensive except as regards suits for immoveable property. There is always a distinction between the cases in which notice is necessary under Section 235 and the cases in which notice is not necessary. Where on the allegations in the plaint, the suits do not arise out of anything done by the Board in the discharge of a statutory duty, the suits are maintainable without issue of notice and are not barred by limitation under the special provisions of Section 225.
In that case, the claim was for re-imbursement under an arrangement agreed to by the Taluk Board of Penukonda to pay the plaintiff the expenses incurred by him in certain contemplated proceedings. The claim was on the basis of a breach of the contract.
6. It may be recalled that in. Athimannil Muhammad v. Malabar District Board (1934) 68 M.L.J. 125 : 58 Mad. 746 it was a statutory right that the President exercised-a statutory liability that he discharged in entering into a contract of lease for the collection of tolls. The contract, Varadachariar, J., had to consider in Sivasankaram v. Taluk Board, Penukonda : AIR1936Mad945 was obviously not such a contract; nor is the contract, Ex. P-1 we have to consider in these proceedings such a contract. True under Schedule V, Rule 1(A)(h) of the Local Boards Act, the President had a right to maintain dispensaries. But, in the maintenance of dispensaries, if he chose to employ a medical officer and chose to enter into a contract with him it might be ultimately to discharge his liability and exercise the right conferred upon the President by Clause (h) of Rule 1(A) of Schedule V. But such a contract was only incidental to the discharge of that liability and the exercise of that right by the President. The contract itself was not entered into in the exercise of any specific direction to that effect in the statute. In District Local Board, Poona v. Vishnu Raghoba I.L.R. (1932) Bom. 67, Patkar, J., pointed out with reference to a similar contract that ' the performance of the contract is only incidental to the statutory powers of the Local Board.' That, it seems to me, is the real distinction. Where the contract is entered into in the direct exercise of a statutory power by the President it would come within the scope of Section 22.5. That was what was really decided in Athimannil Muhammad v. Malabar DistrictBoard (1934) 68 M.L.J. 125 : 58 Mad. 746. But where the contract is only incidental to the exercise of a statutory power, the claim based upon such a contract will not be hit by the special statutory restrictions embodied in Section 225 of the Local Boards Act. That was really the basis on which Sivasankaram v. Taluk Board, Penukonda : AIR1936Mad945 and Padmanabhuni Narasimhadas v. District Board, Kistna : AIR1938Mad239 , were decided and it was on analogous principles that District Board, Poona v. Vishnu Raghoba I.L.R. (1932) Bom. 67, was decided. It is unnecessary to go further back and refer to Municipal Council, Kumbakonam v. Veeraperumal Padayachi (1914) 28 M.L.J. 147 or Mayandi v. McQuhae I.L.R. (1878) Mad. 124.
7. The learned District Judge referred to Ivaturi Veera Subramaniam v. President, District Board, Narasapur : AIR1941Mad733 but that did not deal with a claim based upon any contract. It was a fatal accident that was complained of and that constituted the basis of the claim. The contention of the learned Advocate for the appellant that the learned District Judge misconstrued the scope of Athimannil Muhammad v. Malabar District Board (1934) 68 M.L.J. 125 : 58 Mad. 746 is well-founded. The learned District Judge's attention does not appear to have been drawn to Sivasankaram v. Taluk Board, Penukonda : AIR1936Mad945 .
8. I reverse the finding of the learned District Judge and also that of the learned District Munsiff on the question of limitation. The decree of the lower appellate Court is set aside and the appeal is remanded for disposal afresh. The other questions for determination will have to be dealt with.
9. The learned advocate for the respondent pointed out that Clause 13 of Ex. P-1 barred by itself a suit where the final decision had been given on the questions at issue between the parties, that is, the plaintiff and the first defendant, by the Government. Whether that contention is well-founded or not will also be one of the points for the lower appellate Court to decide.
10. The second appeal is allowed and the appeal is remanded to the lower appellate-Court for disposal in the light of the observations made above. Costs in this appeal will abide the result and will be costs in the cause.
11. The court-fee paid on the memorandum of the second appeal will be refunded.
12. C.M.P. No. 2093 0f 1949.-This is an application to admit additional evidence in the second appeal. It does not, however, arise. The appellant, if so advised may apply to similar effect when the appeal comes on for hearing afresh before the lower appellate Court.
13. The petition is dismissed.