1. In this appeal the Court is called upon to interpret the provisions of Section 69, Madras District Municipalities Act, 1920, as amended by the Act of 1933. At a public auction held in 1927 at the instance of the Municipal Council of Dharapuram the respondent purchased the right of collecting the tolls to be levied on all vehicles entering the municipal area during the year commencing 1st April 1927. His bid was Rs. 47,800, which he agreed to pay in 12 equal installments on the 15th of each month. He further agreed to pay a penalty of Rs. 2 per diem for every day in respect of which he was in default in payment. He did not however observe the conditions of the contract. His payments were irregular and he did not complete them. Altogether he paid to the Municipal Council a sum of Rs. 37,820-3-0, which meant that he was in default to the extent of Rs. 9,979-13-0, apart from the penalties for which the contract stipulated. Nothing turns on the question of the validity of the penalty clause. The suit out of which the appeal arises was filed to recover a sum of Rs. 12,025-13-0, made up of the Rupees 9,979-13-0 and Rs. 2,046, claimed by way of penalty.
2. Having purchased the right of collecting the tolls, a contract was drawn up and executed by the respondent, whose signature was witnessed by the Vice-Chairman of the Municipal Council and by two other members. The Vice-Chairman and the two members merely signed the document as witnesses to the signature of the respondent. This appears from the document itself, but the matter is put beyond all controversy by the evidence of Abdul Karim Sahib, the Chairman of the Council, who admitted that they had merely signed as witnesses. Sub-section (l) of Section 69 of the Act provides that every contract made by, or on behalf of, a Council whereof the value or amount exceeds Rs. 100 shall be in writing and except in the case of contracts made under the provisions of Sub-section (3) of Section 68 (with which we are not concerned), shall be signed by two Municipal Councillors. Sub-section (2) says that a contract executed or made otherwise than in conformity with the provisions of the section shall not be binding on the Municipal Council. The trial Court held that Section 69 had not been complied with because the contract had not been executed by two members of the Council, and we are asked to say that this decision is wrong. The Council sued on the contract and it was conceded by the learned advocate who appeared in support of the appeal that if the document was not signed in accordance with the provisions of the section the appellant Council was out of Court. He however maintained that it was in fact signed in accordance with the section. Before turning to the authorities, I will refer to Section 68 which has also some bearing on the question under discussion. That section inter alia provides that in respect of a contract whereof the value or amount exceeds Rs. 1,000, the sanction of the Council should be obtained before the contract is made. There is no evidence that the Council here ever approved of the terms of the contract and no evidence to show that the three members who witnessed the contract were ever authorized to sign it. It was not even proved that the three members referred to knew the nature of the document. The learned advocate for the appellant relies on a dictum of Lord Eldon in Coles v Trecothick (1804) 9 Ves 234 Lord Eldon there said:
It is true that where a party, or principal or person to be bound, signs as, what he cannot be, a witness, he cannot be understood to sign otherwise than as principal.
3. This dictum was not accepted by Lord Denman C.J. in Gosbell v. Archer (1835) 2 Ad E. 500 After quoting the words of Lord Eldon, Lord Denman C.J. proceeded to observe:
But I think that remark open to much observation. A witness might be drawn into transactions which he did not contemplate, and of which he was ignorant. That would be a great step to take; no such decision has been actually made; and, if it had, I should pause, unless I found it sanctioned by the very highest authority, before I hold that a party attesting was bound by the instrument.
4. It seems to me that the criticism of Lord Denman is well founded. If a person has signed a document merely as a witness and this is expressed on the face of the document, I fail to understand how he can be deemed to have appended his signature in another capacity. The question is really one of evidence as was pointed out in (1883) Young v. Schulder (1883) 11 Q.B.D. 661. In the course of the judgment in that case, Lord Esher (then Brett M.E.) said:
But the questions whether a person has signed his name at the foot of a document, and if so, foe what purpose, are questions of evidence, and any evidence on the subject which does not contradict the document is admissible.
5. Here the evidence is that the three members of the Council signed as witnesses and in no other capacity. There was no intention to sign as executants on behalf of the Council, and as it is common ground that they signed merely as witnesses, it cannot be said that the document was executed by them on behalf of the Council. The Calcutta High Court expressed the same opinion in Chairman, South Barrackpore Municipality v. Amulya Nath Chatterjee (1907) 34 Cal 1030 There the document was signed by the Chairman and was witnessed by two Commissioners who did not sign it as contracting parties, which the law required them to do before the document could be sued upon.
6. It having been decided that the Council was not able to sue on the contract, it was agreed by the parties that the suit should proceed and be decided on the basis of a quantum meruit. The matter was then referred to a Commissioner to record evidence and report whether anything was due by the respondent to the Council. He reported that as the respondent had received a sum of Rs. 37,096-1-8 and had paid to the Council Rs. 37,820-3-0, there was nothing due by him. No attempt was made by the Council, either before the Commissioner or in Court, to show that the respondent had in fact received more than this sum or Rs. 37,096-1-8, but stress was said on the failure of the respondent to produce a certain book of account. Although the criticism here appears to have been well founded, the failure to produce he book is not sufficient to entitle the Municipal Council to a decree against the respondent. The Council ought to have placed before the Court evidence on which it could form an estimate of what was due by the respondent to the Council. They did not do so and the learned trial Judge rightly held that they were not entitled to recover anything. The learned trial Judge directed the parties to bear their own costs. This decision has also been challenged, but again no adequate reason has been given for varying it. The appeal therefore fails arid must be dismissed with costs.