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Sitaram Gupta and ors. Vs. Corporation of Calcutta - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtKolkata High Court
Decided On
Case NumberSuit No. 2322 of 1949
Judge
Reported inAIR1956Cal18
ActsCalcutta Municipal Act, 1923 - Sections 67, 67(1), 68, 68(5), 401 and 538; ;Transfer of Property Act, 1882 - Section 53A; ;Contract Act, 1872 - Section 196; ;Specific Relief Act, 1877 - Section 54; ;West Bengal Premises Rent Control Temporary Provisions Act, 1948 - Section 2(8)
AppellantSitaram Gupta and ors.
RespondentCorporation of Calcutta
Appellant AdvocateA.K. Sen, Adv.
Respondent AdvocateB.C. Dutt, Adv.
DispositionSuit dismissed
Cases ReferredChaturbhuj Vithaldas v. Moreswar Parashram
Excerpt:
- .....statute says that all contracts must be made by the mayor or the deputy mayor in the prescribed form. the corporation has no power to enter into contracts except in the form prescribed and through persons mentioned in sections 67 and 68 of the act. the corporation, therefore, cannot by delegation enlarge the power of the delegatee to enter into contracts in any form as the delegatee may choose to do. a delegator cannot delegate to the delegatee any power which the delegator himself does not posses.23. in the leading case of -- 'young and co. v. mayor and corporation of royal leamington spa' (1883) 8 ac 517 (d) the municipal corporation of royal leamington spa duly authorised their engineer and surveyor mr. jerram to enter into contract with an outsider for completing the works for.....
Judgment:

Bose, J.

1. This is a suit for a declaration that the plaintiffs are the tenants of one shop-room and two ledges in stall No. 2 of Block P of the College Street Market, Calcutta, and they are entitled to remain in possession thereof as such tenants, for an injunction restraining the defendant, its servants and asents from in any way interfering with the plaintiffs' possession of the said shop and the said ledges and for specific performance of an agreement to allot and let out the said shoproom and the said ledges to the plaintiffs.

2. Mr. B C. Dutt, the learned counsel for the defendant, has raised two preliminary issues as to the maintainability of this suit. The issues are:

1. Is this suit maintainable in the absence of notice under Section 538 Calcutta Municipal Act, 1923?

2. Have the plaintiffs any cause of action against the defendant?

It is agreed that I shall decide these preliminary issues first and for the purpose of these issues the farts alleged in the plaint are admitted

3. The case of the plaintiffs as laid in the plaint is that the plaintiffs are occupying since 1933 one shoproom and two ledges in stall No. 2 of Block F of the College Street Market. Calcutta. The stall consists of one shoproom and three ledges The College Street market belongs to the Corporation of Calcutta and Is managed through the Superintendent of the said market.

The said stall was permanently allotted and leased by the Corporation in 1933 to one Mohammed Jamal Khan and Baijnath Shaw in consideration of payment of an initial rent of Rs. 450/- and daily rent of Rs. 2/8/- in respect of the said entire stall No. 2 in Block F. Md. Jamal Khan and Baijnath Shaw immediately thereafter sublet the shoproom and two of the ledges to the plaintiffs, and the other ledge to one Kali, Charan Gupta.

The Corporation was at all material times aware of the subletting to the plaintiffs but never objected thereto and continued to receive and accept, rents from Md. Jamal and Baijnath and also granted trade and other licences in the names of the plaintiffs in respect of the said stall. Although during the communal riots of August 1946 the plaintiffs were prevented from occupying the said stall and carrying on business there, they regularly paid all rents in respect thereof to Mohd. Jamal and Baijnath and since January 1948 they deposited all rents with the Rent Controller upon Mohd. Jamal and Baijnath refusing to accept rents from the plaintiffs.

Thereafter the said Mohd. Jamal and Baijnath failed and neglected to pay rents to the Corporation whereupon the Corporation through the Superintendent demanded the rent from the plaintiffs. Notwithstanding the fact that the plaintiffs had deposited all rents due from them with the Rent Controller, they offered to pay all arrears of rent due from Mohd. Jamal and Baijnath if the Corporation allotted and leased the said shoproom and ledges directly to the plaintiffs.

The Corporation through the said Superintendent duly accepted the said offer and agreed and undertook to allot and lease the shoproom and the ledges to the plaintiffs at a rent of Rs. 2/8/- per diem. In performance of the said agreement the plaintiffs on or about 25-12-1948 paid to the Corporation through the said Superintendent the entire amount of the arrears of rent being the sum of Rs. 2462/12/- and the Corporation through the said Superintendent accepted the said amount and granted a receipt therefor.

The plaintiffs thereafter tendered the rents at the agreed rate through the said Superintendent but the latter put off the acceptance of such rent from time to time. Thereafter on, 25-6-1349 the said Superintendent with certain employees of the Corporation attempted to oust the plaintiffs forcibly from the shoproom and the ledges in breach of the said agreement and undertaking but was prevented from doing so by the members of the general public.

The Corporation threatened to evict the plaintiffs in breach of the said agreement and undertaking and so it is necessary that it should be restrained by an injunction. The plaintiffs are ready and willing to pay rent to the Corporation and to perform their part of the said agreement but the Corporation is denying and is interested to deny the validity of the said agreement and the right of the plaintiffs to remain in occupation of the said shoproom and the ledges.

4. The sum and substance of the case therefore is that the plaintiffs are in ordination of a municipal stall as sub-tenants of two persons who are the stall-holders under the Corporation. The Corporation through the Superintendent of the market agreed to allot or let out the stall to the plaintiffs directly at a certain rent and the plaintiffs paid a sum of money in consideration of such agreement. The Corporation ia backing out of tine said agreement and in breach of its obligation is threatening to evict the plaintiffs from the said stall.

5. The object of the suit is to enforce specific performance of the agreement and prevent the breach of the obligation created by the agreement by asking for an injunction for the purpose,

6. Section 538, Calcutta Municipal, Act (3 of 1923) is as follows:

(1) No suit shall be instituted against the Corporation or any municipal officer .....in respect of any act purporting to be done under this Act or under any rule or byelaw made thereunder, until the expiration of one month next after written notice has been delivered or left at the Municipal office or the residence of such officer..... stating.

(a) the cause of -action

(b) the name and residence of the intending plaintiff and

(c) the relief which he claims.

(2) Every such , suit shall be commenced within four months next after the accrual of the cause of action and the plaint therein shall contain a statement that a notice has been delivered or Heft as required by Sub-section 1. Then follow Clauses (3) and (4) but it is not necessary to set them out here. Clause (5) is material and is as follows:

(5) Nothing in the foregoing sub-sections shall apply to any suit instituted under Section 54, Specific Relief Act, 1877.

7. It is contended by Mr. B. C. Dutt the learned counsel for the defendant that the cause of action as laid in the plaint ia in respect of acts purported to have been done under the Act and so the notice contemplated by Sub-section (1) of Section 538 should have been given before the suit was filed.

8. Mr. Dutt has referred to Section 392(1) Sub-clause (b), Section 401 Clauses (a), (b) and (c) and Section 498 Calcutta Municipal Act and has submitted that as the acts of the municipal officers which are complained of in the plaint, relate to acts done by the Corporation under these sections, a notice is essential.

9. Mr. Dutt further submitted that the suit filed is not one which is contemplated by Section 54, Specific Relief Act and so the exemption clause being Clause (5) of Section 538 does not apply.

10. Mr. A. K. Sen the learned counsel for the plaintiffs has on the other hand contended that the suit filed is such a suit and hence no notice is required to be given.

11. Section 54, Specific Relief Act is as follows:

'Subject to the other provisions contained in or referred to by, this Chapter, a perpetual injunction may be granted to prevent the breach of an obligation existing in favour of the applicant whether expressly or by implication.

When such obligation arises from contract, the Court shall be guided by the rules and provisions contained in Chap, n of this Act.

When the defendant invades or threatens to invade the plaintiff's right to or enjoyment of property, the Court may grant a perpetual injunction in the following cases (namely):

(Clauses (a) and (b) are not material);

(c) where the invasion is such that pecuniary compensation would not afford adequate relief;

(d) where it is probabte that pecuniary compensation cannot be got for the invasion.'

12. Mr. Sen argues that the plaintiff's caw falls within Clauses (c) and (d) of Section 12, Specific Relief Act (which is in Chap. II), read with the Explanation appended to that section, under which a presumption arises that a breach of a contract to transfer immovable property cannot be adequately relieved by compensation ia money.

It is submitted that the agreement to allot or lease the stall is a contract to transfer immovable property and is specifically enforceable and so a perpetual injunction can be granted, under Section 54, Specific Relief Act.

13. Mr. Dutt has argued that in respect of these stalls in the municipal market only a license is granted under Section 401, Calcutta Municipal Act. The license does not create any interest in the stall in favour of the stall-holder and so an agreement to grant a license Is not a contract to transfer immovable property and so such an agreement is not specifically enforceable.

14. It has, however, been held by me in the case of -- 'Shew Shewak Bajpai v. Corporation of Calcutta,' which was an application under Article 226 of the Constitution that a license granted to a stall-holder to occupy a stall in a municipal market is not a bare license but it is a license coupled with an interest (See Matter No. 94 of 1951, judgment delivered on D/- 28-8-1951 (Cal) (A).

15. These are, however, matters relating to the merits of the case. The frame of the suit is for a perpetual injunction under Section 54, Specific Relief Act. The prayers for declaration and for specific performance are mere surplusage. If the plaintiffs had simply asked for an injunction as in prayer (b) of the plaint without asking for reliefs, as in prayers (a) and (c) of the plaint, still the suit would have been maintainable.

16. Mr. A. K. Sen has also Pointed out that Section 538, Calcutta Municipal Act does not apply to suits arising ex contractu.' Mr. Sen has drawn my attention to the case of 'Bando and Co. Ltd. v. Corporation of Calcutta' : AIR1939Cal614 , which held that the section did not apply to a suit brought to recover money alleged to be due under contracts for work done and materials supplied.

17. This case of 'Bando and Co. Ltd. V. Corporation of Calcutta,' (B) has been followed by Gentle J. and has been applied, to a suit in which the plaintiff claimed 'inter alia' arrears of salary against the Corporation of Calcutta, on the ground that the claim arose out of a con-tract or agreement by the Corporation to pay such salary. (See -- 'Jatindra Nath v. Corpora-Won of Calcutta' : AIR1945Cal144 .

18. In my view the suit as framed is maintainable in the absence of notice under Section 538, Calcutta Municipal Act.

19. It has also been contended by Mr. B. C. Dutt that the agreement to allot or lease out the stall as pleaded in the plaint not being in accordance with the requirements of Section 67 read with Section 68, Calcutta Municipal Act the agreement is not enforceable in law and therefore the plaintiffs have no cause of action against the defendant and the suit as framed is not maintainable.

20. Sections 67 and 68 we as follows:

Section 67 (1) The Corporation may enter into and perform all such contracts as they may consider necessary or expedient for carrying into effect the provisions of this Act,

(2) With respect to the making of such contracts the following provisions shall have effect, namely:

(a) Every such contract shall be made on behalf of the Corporation by the Mayor or Deputy Mayor;

(b) No contract shall be made by the Mayor or Deputy Mayor unless the same is previously sanctioned by the Corporation;

(c) No contract involving an expenditure exceeding two and a half lakhs of rupees shall be made by the Mayor or Deputy Mayor unless the same is previously sanctioned by the Corporation and the Provincial Government.

(d) The foregoing provisions of this section shall apply to every variation or discharge of a contract as well as to an original contract.

Section 68 (1): Every contract made by the Mayor or Deputy Mayor on behalf of the Corporation shall be entered into in such manner and form as would bind the Mayor or Deputy Mayor if such contract were made on his own behalf, except that the common seal of the Corporation shall be used (where necessary) ; and every such contract may in like manner and form be varied or discharged.

(2) Need not be set out.

(3) The common seal of the Corporation shall remain in the custody of the Secretary to the Corporation and shall not be affixed to any contract or other instrument except tn the presence of a Councillor or an Alderman who shall attach his signature to the contract or instrument in token that the same was sealed in his presence.

(4) The signature of the said Councillor or Alderman shall be distinct from the signature of any witness to the execution of such contract or instrument.

(5) A contract not executed as provided in this section shall not be binding on the Corporation.

21. Mr. Dutt submits that the case as laid in the plaint is that the Corporation through the Superintendent of the Market agreed and undertook to allot and lease out the stall to the plaintiffs.

As the agreement was not through Mayor or Deputy Mayor and is not in the form prescribed by Sections 67 and 68 of the Act and as Section 67 (1) embraces within its scope all contracts considered necessary or expedient for carrying into effect the provisions of this Act, the agreement in suit is invalid and is not binding on the Corporation by reason of Section 68 Clause (5) of the Act.

22. In answer to his contention Mr. Sen submitted that this power of entering into the contracts as given in Ss, 67 and 68 of the Act can be delegated under Section 12 of the Act to the Executive officer who in his turn can re-delegate it to a Municipal Officer and if such power is delegated, the delegatee can enter into a contract or agreement in any form he likes. I am unable to accept this contention.

The Statute says that all contracts must be made by the Mayor or the Deputy Mayor in the prescribed form. The Corporation has no power to enter into contracts except in the form prescribed and through persons mentioned in Sections 67 and 68 of the Act. The Corporation, therefore, cannot by delegation enlarge the power of the delegatee to enter into contracts in any form as the delegatee may choose to do. A delegator cannot delegate to the delegatee any power which the Delegator himself does not posses.

23. In the leading case of -- 'Young and Co. v. Mayor and Corporation of Royal Leamington Spa' (1883) 8 AC 517 (D) the municipal Corporation of Royal Leamington Spa duly authorised their Engineer and Surveyor Mr. Jerram to enter into contract with an outsider for completing the works for supplying the district with water. Mr. Jerram as Engineer Agent and servant of the Corporation and acting within and according to his duties, power and authorities as such, employed Young and Co. to execute, carry out and complete the works which had been left unfinished by another contractor Mr. Powis.

The work was duly executed and the Corporation made some payments, but as the Corporation refused to pay the balance of the claim, Young and Co., instituted an action. The defence was that the contract of employment was not under the common seal of the Corporation and so the contract was not enforceable. The House of Lords held that the contract was not binding on the Corporation and dismissed the action. The Judgments of the Law Lords are highly instructive and each one of the judgments may be read with profit.

24. Similarly in the case of -- 'Mohammad Ebrahim Molla v. Commissioners of the Port of Chittagong' : AIR1927Cal465 , the Port Commissioners of Chittagong through their Proxy the Port Officer of Moulmein entered into an agreement with the defendant's constituted attorney, to let out a steam tug for certain salvage operations. Sections 28 and 29, Chittagong Port Act required contracts to be made by Chairman in the manner prescribed in the said two sections, but as the agreement in question was not made by the Chairman and was not in the prescribed form it was held to be invalid.

25. It was not held in these two cases nor did anybody even suggest in course of argument that because the agreements were being entered into by the Agents and not by the Corporation itself, the Agents could enter into the agreements in any form they liked.

26. Apart from this it appears to me that the nature of the power or provision contained in Sections 67 and 68 is such that it is incapable of delegation in any other manner. It is the Mayor or Deputy Mayor alone who can enter into contracts.

Even if the power of entering into contracts is delegated, the delegatee must get the contract made in the form prescribed in Sections 67 and 68 of the Act. This contention of Mr. Sen therefore fails.

27. The next contention of Mr. A. K. Sen is that the power of the Corporation to charge stallages, rents or fees or the power to farm stallages, rents and fees in respect of stalls in! a municipal market is derived from Section 401, Calcutta Municipal Act. This section is an independent section and is not controlled by Sections 67 and 68 of the Act, and so an agreement or contract to let out or allot a stall need not be in the form or manner contemplated or prescribed by Sections 67 and 68 of the Act.

In other words the Corporation can enter into an agreement to allot or let out a stall orally or in any other form. Mr. Sen further argues that the power or the act of entering into an agreement to allot or let out a stall, is a power or act which is incidental or ancillary to the power or act of letting out a stall and so such a power is to be implied in the power of letting out a shall as comprehended in Section 401 of the Act.

Consequently the agreement can be entered into in any manner or form and in disregard of the provisions of Sections 67 and 68 of the Act. As a branch of this, contention Mr. Sen also argues that Section 401 being a special provision dealing with the particular matter of allotment or letting out of stalls, and Sections 67 and 68 being general provisions dealing with contracts generally, the general provision must according to the rule of interpretation of statutes, yield to the particular provision.

28. I am unable to accept this contention as correct.

29. As I have pointed out already, Section 67 (1) includes within its scope, contracts of every description which are; necessary or expedient for carrying into effect the provisions of the Act. The Corporation can enter into and perform all such contrasts.

The persons who will enter into the contracts and the formalities which are required to be observed for making the contracts are specified in this section. Any variation or the discharge of the contracts will also have to be in the prescribed manner and form as in the case of original contracts. Clause (5) of Section 68 states that a contract not executed as provided in Section 68 shall not be binding on the Corporation. Thus Sections 67 and 68 are imperative in character and they are of application to all contracts entered into by the Corporation.

30. If it held that in respect of the different functions to be performed by the Corporation under the various sections of the Act, the manner of performance may be different, then that will have the effect of introducing an element of uncertainty into the carrying out of the functions and duties of the Corporation and in the conduct of its business.

It will make the position of the Corporation Insecure and will provide greater opportunities for the Corporation being defrauded by those of its employees who may turn out to be unscrupulous and dishonest.

31. It is a matter of common knowledge that under Section 401, Calcutta Municipal Act, the Corporation grants licenses to persons, for occupying stalls in the market, and charges stallages or rent for such occupation. There are prescribed forms for such licenses. Section 498 of the Act shows that licenses are to be signed by the Executive Officer. It is thus clear that licences and contracts are treated differently in the Act.

The contracts are to be made by the Mayor or the Deputy Mayor. So if a license is granted it may be in a different form. But if the Corporation is sought to be bound by any agreement or contract, it must be in the form prescribed by Sections 67 and 68 of the Act. I do not think that it was ever intended that for carrying out the provisions of Section 401 or the other sections of the Act, it would be open to the Corporation or its officers to enter into contracts or agreements in any form as they liked; for in that case there was no necessity of enacting a general provision like Section 67 or Section 68 of the Act.

Chapter V of the Act in which the two Sections 67 and 68 find place, is headed 'Conduct of business'. In other words in conducting its business, the Corporation is to enter into contracts in the form prescribed in the two sections.

32. A somewhat similar argument as addressed by Mr. Sen, was addressed in the case of -- 'Chairman South Barrackpore Municipality v. Amulya Nath' (34 Cal 1030 (F) at p. 1033 2nd and 3rd paragraphs) but it was negatived. It was sought to be established in that case that Section 34 of the Act in question, which empowered the Municipality to sell or lease out its lands, wad an independent section, and it was not controlled by Section 37 of the Act which provided for the entering into and making of contracts by the Municipality and prescribed their forms. This contention, however, did not find favour with the Court (page 1033).

33. Mr. Sen also submitted that the plaintiffs, having performed their part of the agreement by paying money in consideration of the agreement, are entitled to enforce the agree-ment is not in the prescribed form. Mr. Sen referred to -- 'Lawford v. Billericay R. D. Council' (1903) 1 KB 772 (G), in support of his proposition.

34. It is true that In English Common law, exceptions were engrafted to the effect, that where a contract was performed or executed, or in cases of urgency where it was impossible to affix the seal of the Corporation or in small matters of very frequent occurrence, the contract though not under seal, would be binding upon the Corporation.

35. But it has been held that where a contract with a Corporation has to be executed in a particular form, but the statutory provisions regarding the agreement have not been complied with, the agreement is invalid and not binding on either party, notwithstanding that there haa been part performance of the contract.

In other words where a company or public body is incorporated or established by Statute for special purposes only and is altogether the creature of statute law, the prescription for its acts and contracts are imperative and essential for their validity (Maxwell).

36. In the case of (1883) 3 AC 517 (D) already referred to, the common law exceptions were sought to be enforced, but the House of Lords refused to import such exceptions in the face of the express provisions of a Statute (See pages 523, and pages 524 (last paragraph) to 525 where the case of -- 'Church v. Imperial Gas Light and Coke Co.' (1883) 6 Ad and El 846 at p. 861 (H) was referred to.

37. The Calcutta High Court has also held that the English Common Law exceptions have no operation where the Statute mandatorily requires contract to be under seal or in a prescribed form. The case of (1903)-1 K. B. 772 (G), has been distinguished on the ground that in that case the requirements as to the 'contract were not statutory but under the common law.

(See -- 'Mathura Mohan v. Ram Kumar' 43 Cal 790 at 813-814, 818 (hot) to 820 : AIR 1916 Cal 136 (I); 'Mahomed Ebrahim v. Commissioners for the Port of Chittagong' 54 Cal 189 at 208 (bot) to 215; AIR 1927 Cal 415 (J) and the case of --'Akshoy Kumar Bannerjee v. Tollygunge Municipality' 46 Cal WN 393 (K).)

38. Mr. Sabyasachi Mukherjee the learned, junior of Mr. Sen also argued that the words 'not binding on the Corporation' in Clause (5) of Section 68 of the Act show that the contract is not binding only on the Corporation but the other party can enforce it if it so chooses. This argument is without substance. (See -- 'Raman Chetti v. Municipal Council of Kumbakonam' : AIR1927Cal465 ). The agreement is not binding on either party.

39. Mr. Sen also submitted that the Corporation having accepted the payment of money made by the plaintiffs, there has been ratification of the contract by the Corporation and so the contract is binding. I have already pointed out that a contract not made in strict compliance with the requirements of Statute creating the Corporation, is null and void and it is an elementary principle that a void contract cannot be ratified. (See -- 'Ezekiel Co. v. Annoda Charan Sen' 36 Cal LJ 109 at pages 119 (bot.) to 120 : AIR 1923 Cal 35 (M).)

40. Mr. Sen referred to the decision of the Supreme Court in the case of -- 'Chaturbhuj Vithaldas v. Moreswar Parashram' : [1954]1SCR817 , in support of his argument that ratification is permissible in the facts and circumstances of this case.

41. In that case before the Supreme Court, a contract with Government was in question, and the Supreme Court, upon construction of Article 299(1) of the Constitution, found that the contract was not void and so came to the conclusion that ratification was possible. The case before me is a case of a contract with a Corporation whose powers are strictly circumscribed by Statute. The contract in the present case alleged to be entered into through the Superintendent is in excess of the powers of the Corporation and cannot be ratified.

42. The Federal Court has observed that there is distinction between contracts with Government and its officials and the contracts with Corporations created by Statutes. -- 'J. K. Gas Plant . v. Emperor' AIR 1947 PC 38 at p 41 (O), where after quoting a passage from Maxwell and after dealing with it, the Federal Court observed 'We are however by no means satisfied that this criterion must be strictly applied to an Act passed to establish the Government of a Dominion or in this case India'.

43. In my view Section 21 Clause (f) Specific Relief Act applies to this case and the contract or agreement in suit is not therefore specifically enforce-able and consequently no injunction under Section 54 Specific Relief Act can be granted.

44. The plaintiffs also cannot take advantage of any of the provisions of the Rent Control Act 1948 as a 'stall' in a municipal market does not come within the definition of 'premises' as; given in Section 2(8) of the Act.

45. In the result, this preliminary objection succeeds and this suit is accordingly dismissed. The plaintiffs must pay to the defendant the costs of the suit on Scale No. 2 including reserved costs if any. Certified for two counsel.


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