1. We are of opinion that the Subordinate Judge is in error in holding that the suit is barred under Section 261, Madras Act IV of 1884, The cases contemplated in that section are suits for compensation and for damages and the principle is to allow public bodies time for tender of amends to the parties so as to avoid litigation. See S. A. No. 319 of 1892 Agling v. Narayana Chetti 3 M.L.J. Rep.12 and cases quoted therein; also Chunder Sikhur Bundopadhya v. Obhoy Churn Bagchi I. L.R. 6 C 8, and Kalidas v. Vallabhdas I. L. R 6 B 80.
2. Upon the second point we are of opinion that the penalty prescribed by the muchilka of 22nd March 1887 is one which cannot be enforced since the contract renders the penalty altogether irrespective of the importance of the breach. See Soper v. Arnold, 37 Ch.D 96 and Lachman Das v. Chater I. L. R. 10 A 29. The contract does not fall within the exception to Section 74 of the Indian Contract Act, since the bond was not given under the provisions of any law for the performance of any public duty or act in which the public are interested. No doubt the public are in a sense interested in the proper lighting of the Municipal town; but the contract is not one for which any special provision is made in the Municipal Act and cannot be placed in a different category to a contract made with any private individual.
3. The resolution of the Municipal Council of July 25th, 1888, was therefore ultra vires. We must set aside the decree of the Subordinate Judge and decree in plaintiff's favor for Rs. 424-2-5 with costs in both courts.