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The Corporation of Madras Vs. S.A. Khan and ors. - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1947Mad447; (1947)2MLJ120
AppellantThe Corporation of Madras
RespondentS.A. Khan and ors.
.....that an agreement shall be made and the agreement which that section visualised was a tenancy agreement in as much as the word 'rent 'is used in respect of the sum to be paid by the stall-holder for the use of the stall. the interests of each stall-holder can well be said to be the same, save of course their interests are in respect of different stalls......of its members or for ' one or other of them, would do so only as an agent for the stall-holder or stallholders. the association is a party to the suit, purporting to represent the interests of all stall-holders, the object being that a judgment in its favour would in effect be a judgment in favour of all the stall-holders. order 1, rule 8 of the code provides that where there are numerous persons having the same interest in one suit, one or more of such persons, may, with the permission of the court, sue or be sued, or may defend, in such suit, on behalf of or for the benefit of all persons so interested. a person or entity can only sue or be sued in a representative capacity provided that the person or entity has the same interest as those on whose behalf he or it seeks to make the.....

Frederick William Gentle, C.J.

1. Plaintiffs Nos. 1 to 9 in the suit are stall-holders in the Moore Market, Madras. This is a public market in which there are altogether about 300 stalls and stall-holders. It is owned by the Corporation of Madras, the defendant in the suit. The stall-holders carry on various trades and businesses and sell their wares to the members of the public. Plaintiffs Nos. 1 to 9 allege that they were tenants of their respective stalls prior to September, 1944. It is not in dispute that they were stall-holders prior to that date ; but the Corporation disputes that they were tenants but alleges that they were mere licensees. The tenth plaintiff is an association, the members of which are stall-holders in the Moore Market, including plaintiffs Nos. 1 to 9, and the association seeks to represent in the suit the entire body of all stall-holders.

2. It is beyond doubt that prior to the year 1936, each stall-holder entered into an agreement with the Corporation through its Commissioner, who is the authority directed by Section 80 of the Madras City Municipal Act to make agreements on its behalf During the trial the first plaintiff produced an uncompleted printed form of agreement, which is the Corporation's own form, and said he had, in the first instance, entered into a contract with the Corporation upon one of those forms. During the trial two completed forms of agreement were exhibited, Ex. P-1 (a), dated the 22nd July, 1931, and Ex. P-28 dated the 5th October, 1937, the latter is an agreement with the third plaintiff. Whatever the exact position of the several plaintiffs may be and the difference, if any, between the position of one plaintiff and the Corporation as compared with that of another plaintiff and the Corporation, it is manifest that the suit was tried and conducted upon the basis that the interests of each of plaintiffs Nos. 1 to 9 originated under an agreement in the form which I have mentioned ; and also, that the merits were considered solely from the aspect of the plaintiffs' interests having commenced and originated pursuant to agreements of the sort indicated. This is quite clear from the observations of the learned trial Judge who said that the only issue which he had to decide was whether the Corporation could levy distress for recovering not only the old rates of fees which the plaintiffs were, under their contracts with the Corporation, liable to pay but also the excess amounts claimed by the Corporation under notices which they had served upon the plaintiff-stall-holders. I have mentioned this because during the argument, an endeavour was made to distinguish between the positions of several plaintiffs and others in order to manifest that some of the plaintiffs may not be able to call in aid the effect of the provisions of the agreement. But when the observations of the learned Judge, to which reference has just been made, were pointed out, the argument regarding a distinction between the position of any plaintiff, was not pursued.

3. The agreement contains the following relevant provisions. It is made between the Corporation and the individual or firm therein called ' the tenant '. It provides that the Corporation agreed to let and the tenant to take a specified stall at a stated rent from the date of the agreement. It was expressly agreed that the tenancy could be determined by either party giving to the other one month's notice of intention to terminate. The payment which the tenant was required to make is described as rent. It was further agreed that if the tenant made default in payment of rent or failed to perform any stipulation on his part or to observe or conform to all the rules and regulations from time to time made by the Corporation with regard to the stall, it should be lawful for the Corporation to re-enter upon the stall and thereupon the demise should absolutely determine. The agreement does not provide for an increase in the rent reserved during its currency.

4. In September, 1944, the Corporation served upon each of the plaintiffs Nos. 1 to 9 a notice stating that under Section 301(2) pf the Madras City Municipal Act, the Standing Committee (Taxation and Finance) at its meeting held on the 30th August, 1944, determined that a specified fee per mensem should be levied for the stall in his occupation and that with effect from the 1st November, 1944, the revised rate per mensem of fee would be levied ; and he was called upon to pay the fee. In default, he was told, he would render himself liable to eviction.

5. By the determination, or resolution, referred to in the notice, the Standing Committee purported to increase the monthly payment of the sum specified as rent in the stall-holder's agreement. The enhanced fee was not paid and on the 27th June, 1945, the Commissioner of the Corporation, purporting to exercise statutory authority, distrained for the recovery of the amount sought to be obtained at the enhanced rate from the first plaintiff alone. It would seem that this distraint was by way of a test, so that the correctness of the Corporation's action could be examined. The plaintiffs challenged the validity of the increase and the distraint and in the suit they claimed (1) a declaration that the demand for enhanced rent and the act of realisation of, and the threat to realise, the enhanced rent by distraint were illegal and ultra vires of the statutory powers of the Corporation ; and (2) an injunction restraining the Corporation, its servants, agents or representatives from levying any distraint or exercising any of its coercive powers for the realisation of the enahnced fee.

6. The suit was tried by Kunhi Raman, J., who in his judgment, expressed the opinion that the stall-holders were not tenants but were only licensees in respect of the stalls occupied by them and that the Corporation had no right to levy distress in respect of any enhancement in the fee so long as the plaintiffs had not agreed to pay the enhanced rates ; the increased rates demanded could not be described as fees payable by the licensees, but damages would be the more appropriate expression. On a proper construction of Section 301 it seemed, to the learned Judges that such damages could not be collected by levying distress ; the special remedy conferred upon the Corporation to collect the amount of the fee in the same manner as property tax had only reference to the fee which the plaintiffs had agreed to pay. The learned Judge granted the declaration and the injunction sought in the suit. This appeal is by the Corporation against the learned Judge's decision.

7. Reference can now be made to the relevant provisions of the Madras City Municipal Act.

Section 4. The Municipal authorities charged with carrying out the provisions of the Act are:

(a) a council,

(b) standing committees of the council,

(c) a commissioner.

Section 6. There shall be six standing committees of which the fourth is Taxation and Finance.

Section 80. Every contract shall be made on behalf of the Corporation by the Commissioner and the council-in that way may enter into and perform all such contracts as it may consider necessary for carrying into effect the provisions of the Act.

Section 99 If the council by a resolution determines that a property tax shall be levied, such tax shall be levied on all buildings and lands within the city.

Schedue IV. Rule 21. If the amount due on account of any tax is not paid within fifteen days from the service of the notice or bill, the Commissioner may recover by distraint under his warrant and sale of the moveable property of the defaulter.

Section 301(2). The Commissioner may in any public market charge and levy any one or more of the following fees at such rates as the standing committee may determine and may place the collection of such fees under the management of such persons as may appear to him proper or may farm out such fees on such terms and subject to such conditions as he may deem fit-

(b) fees for the use of shops, stalls, pens or stands in such markets ;

(3) Such fees shall be recoverable in the same manner as the property tax.

Section 302(1) No person shall, without the permission of the Commissioner, or if the fees have been farmed out, of the farmer, sell or expose for sale any animal or article within any public market.

(2) Any person who contravenes Sub-section (1) ... or who commits default in payment of the fees leviable under Section 301 may after three clear days' notice be summarily removed from such market by any municipal officer or servant and any lease or tenure which any person may possess may be terminated for such period and from such date as the Commissioner may determine....

8. On behalf of the Corporation Dr. V. K. John contended that Section 301(2) and Section 302(2) read together enable the standing committee to determine from time to time the fees payable by stall-holders in respect of stalls in the market and to increase such fees at any time without reference to, or agreement with, the stall-holders and empower the Commissioner to levy the amount of such fees and, if not paid, to recover them by distraint and to remove the stall-holders summarily from the market after three clear days' notice of such an intention. If that contention is correct, then the Corporation, acting through its Standing Committee and Commissioner can at any time increase the amount payable by a stallholder in respect of his occupation of the stall in the market and upon non-payment levy distraint upon his goods and evict him from the market in a summary manner If that be correct, then considerable and unsual powers have been given to the Corporation by the City Municpal Act.

9. Section 301(2) was amended by Section 147 of the Madras City Muncicipal (Amendment)' Act, 1936. Prior to the amendment it provided as follows:

The Commissioner, with the approval of the standing committees may charge such rents and fees as he may think fit for the use of such markets, or the right to expose goods for sale therein and for the use of any shop, stall, pen or stand therein and may, subject to the same approval, let on lease, or farm the stallages, rent and fees leviable therein as aforesaid, or any other portion thereof for any period not exceeding one year at a time.

10. The earlier sub-section empowered the Commissioner, subject to the Standing Committee's approval, to charge rent for the use of stalls. The word ' rent' implies and presupposes a letting on lease. , The section also empowered the Commissioner, with a like approval, to let on lease stallages, that is to say, space for or the right to erect stalls in the market. In my view, the original sub-section clearly conferred power upon the Commissioner, subject to the approval mentioned, to let on lease stalls and also to let on lease space and right to erect stalls. There seems to be no doubt that the latter provision was a convenient one so that the Corporation might part with the whole or a considerable part of the Moore Market to a contractor at an omnibus rent and he, in his turn, could recoup himself and make profits by sub-letting stalls to stall-holders.

11. Other sections in the Act empower the Corporation to levy and charge tax, duty and fee in respect of property (Section 99) carriages and animals (Section 116), carts (Section 124), timber (Section 129), advertisements (Section 129-A), companies (Section 110) and others. In each of these instances the sections confer the power to tax but they also provide the maximum amounts which can be imposed. There is no maximum prescribed either in the original or in the amended Section 301(2), regarding the rents or fees to be charged and levied from the stall-holders. One of the main alterations effected by the amendment was to reverse the order of things so far as the fixing of the amount was concerned. Orginally the Commissioner himself fixed the rent or fee but the fixing required the approval of the Standing Committee. Since the amendment, the Committee determines the amount where upon the Commissioner is authorised to charge and levy that sum. Since the section does not prescribe a maximum, it is not surprising that the letting of the stalls by the Corporation should have been accomplished by an agreement with stall-holders. The original section, in my view, clearly contemplates that an agreement shall be made and the agreement which that section visualised was a tenancy agreement in as much as the word ' rent ' is used in respect of the sum to be paid by the stall-holder for the use of the stall.

12. The agreement was made by the Commissioner, pursuant to the power conferred upon him by Section 80 of the Act, and also the special power conferred by Section 301(2). Although the agreement does not mention that the approval of the Standing Committee had been obtained with regard to the amount of rent reserved, such approval must be presumed to have been obtained. The contractual relationship created by the agreement was to continue until terminated by one party or the other giving one month's notice. Such notice, it is common ground, was never given prior to the resolution by the Standing Committee in 1944 and the serving of the notice upon each stall-holder that the amount payable in respect of his stall had been increased. Whether the agreement amounts to a lease or tenancy or was for the payment of a fee by the licensee, to my mind, matters not The rights given by the agreement to the stall-holder were to continue until the agreement was determined, and during its subsistence he was under an obligation to pay the amount which it specifies. It has been pointed out that, there is no provision in the agreement for the amount payable being increased during the time that the agreement subsisted ; apart from any statutory enactment enabling any increase to be made, a purported increased amount is neither payable nor recoverable.

13. Mr. John contended that this agreement must be deemed to have incorporated in it the provisions of Section 302(2) as enacted from time to time, and those provisions being incorporated, the Corporation acting through the Standing Committee can increase the amount payable by the stall-holder as and when it was determined and without terminating the agreement. The original section, before the amendment, makes no mention of increase or decrease or variation in the rents or fees to be charged. It states that such rents or fees will be charged as the Commissioner thought fit. The amended section is also silent regarding an alteration or increase ; it merely enables the fees to be charged or levied at such rates as the standing committee may determine. I find nothing in the section which expressly contemplates that the Commissioner or the Standing Committee, as the case may be, having fixed a particular rate with the stall-holders and, as in the case of plaintiffs Nos. 1 to 9, an agreement being made for that rate to be paid, the amount can be increased because of any provision in Section 301(2) either before or after the amendment.

14. Dr. John argued that the wording of those sections enables the Standing Committee to exercise the powers under the sections at any time, and he referred to Section 13 of the Madras General Clauses Act, 1891, in support of his contention. That section provides that where an Act confers a power or imposes a duty, then the power may be exercised and the duty shall be performed from time to time as occasion requires. Dr. John argued that the Standing Committee was entitled at any time to alter the rate of fee to be paid, inasmuch as it can exercise the power conferred by Section 302(2), as indicated in Section 13 of the General Clauses Act. That argument involves, so far as I can see, that there is something contained in the amended section, by which agreements which were existing at the time of the amendment, could be considered vitiated or terminated or rescinded, whatever expression may be most fitting.

15. Dr. John's argument, in that respect, emphasised that the amended subsection empowers the Commissioner to ' charge,' and ' levy 'a fee. 'Charge' it was argued, has the peculiar technical meaning one would give it in a taxation statute ; and 'levy' has a somewhat similar meaning, and the use of both those words enables the Corporation to impose at any time any fee which it likes. Dr. John referred to the several taxation sections in the Municipal Act, pointing out that in each of them the word ' levy ' is used. It is strange to see that the word 'charge' is omitted. The provision of Sub-section (3) of Section 301 enabling the fee to be recoverable in the same manner as property tax does not, in my view, make the fee for a stall a tax which is analogous to property tax. All that the sub-section does is to give a special right of recovery, and nothing more, the right of recovery being in addition to the ordinary methods which are open to the Corporation.

16. The meaning of the word ' charge,' as used in the original Sub-section (2) of Section 301, was considered in In the matter of Moore Market Stall-holders and Section 45 of the Specific Relief Act, Application No. 901 of 1930 and is discussed in the judgment of Eddy, J., the judgment unfortunately not having been reported. In the course of his observations the learned Judge said that the word ' charge ' in that sub-section in his opinion meant 'fix;' With respect I agree with that observation and I would go further and say that the word ' charge ' in the amended section bears a similar meaning and does not bear the technical meaning which is given to it in a section of a taxing Act. I do not think that the word 'levy' in the amended section carries the matter any further. In my view, 'charge and levy ' in the amended section means no more than 'fix and recover.' I am unable to see that the amendment, and the wording of the section as it now reads, either expressly or by any implication, has the effect of terminating the existing contracts between the Corporation and stall-holders which were in force at the time the amendment of the sub-section was made in 1936. All that the sub-section, as now amended, does is to authorise a fee to be charged and levied in accordance with the decision of the Standing Committee. True it is that the Standing Committee can fix any fee it likes, but regard must be had to the contractual relationship existing between the Corporation and a stall-holder and the necessity of it being terminated Before his fee, or rent as it was called in the agreement, can be increased

17. The contractual relationship which existed by virtue of the agreement was not terminated by the amendment of the sub-section and in the absence of termination of that relationship that agreement continued. If the Corporation was minded to increase the amount payable by a stall-holder in respect of his stall, the first step to be taken was to terminate the existing contractual relationship. Having done that, then the higher fee or rent could be demanded If the stall-holder refused to pay, then he would have to vacate ; if he did not, he could be evicted so as to make room for another person to pay the increased charge. Unless and until the existing agreement was terminated, the stall-holder in my view was entitled to remain, provided he paid the sum reserved in his agreement. He could not be required to pay, and there could not be recovered from him, an amount in excess of that reserved in the agreement. The purported increase of the fee without terminating the previously existing contractual relationship was not legal, and the excess was not recoverable.

18. Dr. John sought to rely upon Sub-section (2) of Section 302 in support of his argument. He pointed out that under that sub-section any person who committed default in payment of fees leviable under Section 301, may, after three clear days' notice, be summarily removed from the market and any lease or tenure, which that person, had, may be terminated. Firstly the reference in the sub-section to the termination of the stall-holder's lease or tenure makes it manifest that the Act contemplated a right of some tenure by the stall-holder of a stall in the Moore Market, and, if he had a tenure, one would expect to find for a term for the payment of a stipulated sum. But that sub-section cannot be availed of save when there is default in respect of fees 'leviable' under Section 301. The fees which are leviable under that section must be those which can be enforced against the person who is sought to be affected by Sub-section (2) of Section 302. When an increased fee is sought to be charged which is not legally recoverable, then it is not a fee which is leviable under Section 301, and consequently it is not a fee in respect of which, for non-payment, Sub-section (2) of Section 302 can be utilised.

19. In my opinion the Standing Committee was acting beyond its powers in August, 1944, when it sought to increase the amounts payable by stall-holders and, similarly, the Commissioner was so acting when he sought to distrain upon the goods of the first plaintiff for non-payment. The standing committee exceeded its powers by purporting to increase the amount payable by the stall-holders at a time when, by the contract between them and the corporation, a lesser amount was payable. The purported increase was not one which was recoverable. It must follow that it was not leviable and the Commissioner was not entitled to utilise the machinery, which he did, for its recovery by distraint. In my opinion, plaintiffs Nos. 1 to 9 were entitled to succeed in the suit and to obtain the declaration and the injunction which they sought.

20. The tenth plaintiff is an association which is registered under the Societies Registration Act, 1860. That registration substantially creates it into a legal entity. The members of this association are all stall-holders. The interests of each stall-holder can well be said to be the same, save of course their interests are in respect of different stalls. The association has in no way the same interests in the Moore Market and the stalls there as its members. The association may have as its object the furtherance of the interests of the stall-holders, but that does not give the association any interest in the stalls themselves. It seems to me that, at the most, the association, if it conducted any business on behalf of its members or for ' one or other of them, would do so only as an agent for the stall-holder or stallholders. The association is a party to the suit, purporting to represent the interests of all stall-holders, the object being that a judgment in its favour would in effect be a judgment in favour of all the stall-holders. Order 1, Rule 8 of the Code provides that where there are numerous persons having the same interest in one suit, one or more of such persons, may, with the permission of the Court, sue or be sued, or may defend, in such suit, on behalf of or for the benefit of all persons so interested. A person or entity can only sue or be sued in a representative capacity provided that the person or entity has the same interest as those on whose behalf he or it seeks to make the representation. That is not so in the present instance. An association of persons who are all interested in the same matter does not make the association similarly interested. When a representative suit is sought to be prosecuted, firstly the circumstances must fall under the requirements of Order 1, Rule 8 of the Code. Secondly under Order 3, Rule 2 of the Original Sides Rules of this Court an application must be made by a Master's summons to obtain an order in that respect. No such procedure was followed in the present instance. In my view the tenth plaintiff does not represent all the stall-holders so as to enable a decree to be passed in favour of all of them. It must follow that the suit is only one as between plaintiffs Nos. 1 to 9 and the Corporation. It is not one as between the Corporation and all other stall-holders.

21. In the decree, which will be drawn up, it must be made clear the extent to which the effect of it will apply, if already that has not been done. The decree will be solely in favour of plaintiffs Nos. 1 to 9. Save in respect of the representative character of the tenth plaintiff, in my view, this appeal must be dismissed with costs.

Happell, J.

22. I agree.

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