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Mohamed Ebrahim Molla Vs. Commissioners for the Port of Chittagong - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKolkata
Decided On
Reported inAIR1927Cal465,103Ind.Cas.2
AppellantMohamed Ebrahim Molla
RespondentCommissioners for the Port of Chittagong
Cases ReferredAhmedabad Municipality v. Sulemanji Ismalji
Excerpt:
- 1. this appeal arises out of a suit by the port commissioners of chittagong to recover rs. 27,768-12-0 as hire of a steam tug, from the defendant, under the following circumstances:it appears that the defendant purchased a steamer, war puffin, which had been stranded on a reef, and engaged one mr. aiken and another person for salvage operations. mr. aiken, on the 2nd april 1920, wired to the port officer, chittagong:can you send powerful tug-boat to the mouth of moulmein river to tow steamer war puffin to rangoon? if so, state terms, tug required as soon as possible before the 10th april, reply urgent.2. the port officer, chittagong, on the 3rd april replied:terms rs. 1,500 per day from date tug leaves chittagong till date she returns chittagong. the additional cost of insurance of tug.....
Judgment:

1. This appeal arises out of a suit by the Port Commissioners of Chittagong to recover Rs. 27,768-12-0 as hire of a steam tug, from the defendant, under the following circumstances:

It appears that the defendant purchased a steamer, War Puffin, which had been stranded on a reef, and engaged one Mr. Aiken and another person for salvage operations. Mr. Aiken, on the 2nd April 1920, wired to the Port Officer, Chittagong:

Can you send powerful tug-boat to the mouth of Moulmein river to tow steamer War Puffin to Rangoon? If so, state terms, Tug required as soon as possible before the 10th April, Reply urgent.

2. The Port Officer, Chittagong, on the 3rd April replied:

Terms Rs. 1,500 per day from date tug leaves Chittagong till date she returns Chittagong. The additional cost of insurance of tug for voyage, also all pilotage fees and port dues at Moulmein and Rangoon.

3. After some correspondence about the terms, the defendant's attorney, Mr. Aiken, on the 8th April wired to the Port Officer:

Your telegram 3rd instant. Terms accepted. Tug required here 13th instant morning. Confirming by letter also through the Port Officer. Moulmein, on your behalf who will telegraph you.

4. On the same day the Port Officer, Rangoon, wired to the Port Officer, Chittagong:

Agent War Puma request me to sign agreement on your behalf for services of tug Gekko in accordance with terms stated in your wire to them dated 3rd. Will do so if you approve and forward agreement to you.

5. The Port Officer, Chittagong, replied:

Please sign agreement. Gekko sails noon to day and should arrive Moulmein 12th. Inform War Puffin.

6. An agreement was accordingly executed by Lieutenant-Commander Gordon, the Port Officer, Moulmein, on behalf of the Port Officer, Chittagong, and the defendant, Mohamed Ebrahim Holla, by his attorney, Mr. Aiken, on the 9th Apiil 1920. The agreement runs as follows:

To all to whom these presents come greeting: Whereas Mahomed Ebrahim Molla, Esq., Merchant, Rangoon, Burma, is desirous of obtaining the services of a sea-going tug to assist in the salvage operations on4 the Sections War Puffin now lying stranded on the Longstpne's Reef at Amherst, Lower Burma and whereas the Port Officer Chittagong, by a telegram dated at Chittagong on the third day of April 1920, has agreed to hire the tug Gekko being the property of the Port of Chittagong and under his jurisdiction, for the sum of Rupees fifteen hundred per diem from the date the said Gekko leaves the port of Chittagong until the date of her return to the said port and whereas the said Port Officer requires that the cost of the insurance during the period of the tug's absence from the Port of Chittagong, together with the cost of all port dues and pilotage incurred during the said absence shall be defrayed by the hirer, now it is hereby agreed as follows;

(1) The said Mohamed Ebrahim Molla, hereinafter known as the hirer, by his lawful attorney, J. W. Donaldson Aiken, of Rangoon, agrees to hire the said sea-going the Gekko on the terms and conditions as above specified from the said Port Officer, Chittagong, together with all her proper equipment, tewing gear, etc, for a period sufficient to perrorm the salvage works above mentioned.

(2) The Port Officer, Chittagong, hereinafter known as the lessor will use his utmost endeavours to ensure that the said Gekko will arrive at the scene of the above-mentioned salvage operations on or before Tuesday, the thirteenth day of April 1920, at Amherst, Lower Burma, together with all necessary equipment, towing gear, fuel, lubricating oil, crew, etc., and the said Gekko will be thereafter at the disposal of and under the instructions of the said attorney saving and excepting such instructions as the officer in command of the said Gekko may consider as calculated to endeavour the safety of the said tug.

(3) The hirer agrees by his attorney to pay to the less or the rates and commitments hereinbefore specified and undertakes to exercise all reasonable care to ensure the safety of the vessel aforementioned, and the lessor on his part agrees to render all possible help and assistance of which the said Gekko is capable without unduly endangering the safety of the vessel.

In witness whereof the said Mohamad Ebrahim Molla, by his attorney, and the said Port Officer, Chittagong, by his proxy, Commander B. Gordon R.I.M. Port Officer, Moulmein, have hereunto set their hands on this the ninth day of April in the year nineteen hundred and twenty at Moulmein, Lower Burma.

J.W. Donaldson Aiken.

Attorney for Mohamed Ebrahim Molla

B. Gordon.

Lieutenant-Commander, R.I.M. Port Officer

7. It is to be observed that; although the original understanding, as evidenced by the telegrams, was that the tug was to tow the War Puffin, by the agreement actually executed by the Port Officer, Moulmein, on behalf of the plaintiffs, it was to

assist in the salvage operation on the SS, War Puffin now lying stranded on the Longstones Reef at Amherst,

8. The plaintiffs, however, acquiesced in the agreement executed, and nothing turns upon the variation.

9. The tug Gekko sailed from Chittagong under the charge of Captain Jackson on the 9th April and arrived off Amherst on the 12th April. On the next day, Captain Jackson reported his arrival to the Port Officer and received a wire from Aiken: Imperative' Gekko at Amherst tomorrow morning at the latest.' The Gekko arrived at Amherst on the 13th April at 3-20 p.m.; but Aiken informed Jackson that he could not come that day as he was unwell. On the next morning (14th April) Aiken boarded the tug.

10. The plaintiffs' case is that Aiken then told Captain Jackson that he would make an attempt to float War Puffin on the 17th April, the tide of that day being the highest and consequently most suitable for attempt at salvage, and that in the meantime the Captain with the permission of Aiken went to Moulmein to arrange for coal for his return journey but informed him that he would come down to Amherst daily to see if his services were required. On the 17th April Captain Jackson began the work of salvage; after several unsuccessful attempts wire from the tug was connected to War Puffin. At 1-30 p.m. under orders from Aiken, Captain Jackson picked up the anchor of the steam-tug Gekko and commenced towing War Puffin. The towing was continued until it was discovered that, notwithstanding every effort, the vessel would not float clear of the reef, and further towing was useless. Mr. Aiken at 2-15 p.m., asked Jackson to stop towing, as the vessel was, nothwith standing the towing, fast on the reef. On the next day (18th April), Jackson received a letter from Aiken saying, that as War Puffin had strained herself so badly during the attempt to clear her, any further attempt would be useless, and as the further Services of the Gekko would no longer be required, Jackson was asked to go back to Chittagong with all despatch. Accordingly, after waiting for a towing wire which was made over on the 21st April, and in the meantime taking necessary coal from Moulmein, the Gekko left Amherst on the 21st April and reached Chittagong on the 24th April 1920. The plaintiffs claim from the defendant Rs. 27,768-12-0 for the hire of the tug from 9th April to the 24th April including Rs. 5,238 paid by them as insurance premium.

11. The defendant admitted that the tug arrived at Amherst on the 12th April and was at the scene of the salvage operations on the afternoon of the 13th, but that on the 14th the defendant's agent was not able to utilize the services of the tug, as Jackson said that the vessel had not enough coal to effectively assist in the salvage operations, and that in consequence all arrangements for that day and the favourable conditions of that date were, lost to the defendant. The defendant denied that the salvage operations were postponed by Mr. Aiken to the 17th April for any such reasons as alleged by the plaintiffs, and contended that the Gekko made several trips between Amherst and Moulmein from the 14th to 16th April for Captain Jackson's benefit, as he was taking to his own use the pilotage fees which the defendant had ultimately to pay, and it was on the 16th that Captain Jackson for the first time asserted that the vessel had sufficient coal to perform the services for which it was hired and that the salvage operations were performed on the 17th April, as up to that date the Gekko was not in a position to render any service for which it was hired. The defendant submitted that the salvage operations on the 17th April were unsuccessful owing to the Gekko being unable to render any assistance or service, as the vessel was not capable to tow the War Puffin effectively, and as the tug was not provided with the necessary equipment, towing gear, etc., for such salvage operations, that consequently the War Puffin was badly strained, and ultimately all saivage operations had to be abandoned, and that the defendant sustained substantial damage. It was further pleaded that in any case the defendant was not liable for the hire of the vessel except for the six days the vessel took in coming and going and for the one day it was engaged in the salvage operations.

12. In his additional written statement, filed on the 3rd November 1921, the defendant further pleaded that the Port Officer of Chittagong had no authority to represent and did not represent the plaintiffs in the negotiations and the contract, and further that the contract executed by the Port Officer of Moulmein as agent of the Port Officer of Chittagong for the plaintiff was illegal and void under the Chittagong Port Act and was not binding or of any legal effect on any of the parties thereto. It was also pleaded that the tug Gekko which was let out on hire to the defendant on his requisition to send a 'powerful tug' was not of sufficient power to salve the steamer or to tow up the same from the Longstone's Keel: to Rangoon, and that there was thus a breach of warranty on the part of the plaintiffs and the defendant was not liable to pay any amount for hire. The defendant claimed Rs. 50,000 as damages caused to the War Puffin.

13. Capain Jackson and Mr. Bryan, Port Officers, Moulmein, were the principal witnesses examined for the plaintiffs, and Rahman Chaudhury and Mr. England for the defendant. The defendants wanted to examine Mr. Aiken on commission. He was certainly an important witness, as he was in charge of the salvage operations on behalf of the defendant. A commission was sent out for his examination at New York where he was then residing, but he having left New York, the commission was returned unexecuted. Fresh commission was applied for by the defendant for his examination in California, but, as his whereabouts were not known with certainty, it was not issued. Ultimately the defendant stated that Aikon was residing in Mexico and applied for commission for his examination there. The Court, however, was of opinion that as the witness was so often changing his place of residence, and there was no certainty of his continuing to reside at Mexico, and as the commission to New York took about a year's time, the application for the defendant should be disallowed.

14. The learned Subordinate Judge, upon a consideration of the evidence, found in favour of the plaintiffs. The defendant has appealed. The first question for consideration is whether the salvage operations could not take place before the 17th April owing to any refusal or default on the part of the Captain of the tug. (After dealing with evidence the judgment proceeded). The Court below has shown that no warrant was given for the success of the salvage operations either expressly or impliedly, and that on the contrary the terms of the agreement indicate that Gekko was to play a subsidiary part in the salvage operations by making such contributions as she was capable of. We need not discuss the matter, as no arguments have been addressed to us on the point.

15. On the whole we see no sufficient reason to differ from the conclusion arrived at by the Court below on the point.

16. The next question is whether the hiring of the tug for the purpose of towing or salvage operations outside the Ohittagong river, at Amherst, was ultra vires of the Port Commissioners.

17. Section 38 of the Chittagong Port Act lays down that the Commissioners may contract and carry out the following works...(g) 'the procuring and employment of steam vessels for towing vessels into out of, in or upon the river....' It is contended for the appellant that 'the river' means the Chittagong river, and that under the Act the Commissioners have no power to employ tugs outside that river and that they have no power to hire out a tug either for the purpose of towing or for salvage operations, at any rate outside the Chittagong river.

18. With regard to this contention it is to be observed that the words 'towing vessels into' the river must refer to cases, of towing from outside into the Chittagong river. It appears, however, that the vessel War Puffin was not to be towed into the Chittagong river but from Amherst to Moulmein of Rangoon both of which are outside the Chittagong river.

19. It is contended by the learned Advocate-General that under Section 69 of the Act.

the Commissioners may, for the purposes of the Act, acquire and hold moveable and immovable property within or without the limits of the Port and may lease, mortgage, sell or exchange such property,

that the Commissioners, therefore, for the purposes of Clause (g) of Section 38 had power to acquire the tug Gekko and hold it without the limits of the port, and also to let it out.

20. Mr. Pugh contends that the hiring of a vessel is not 'lease.' The expression 'lease' is not defined in the Act and although it is ordinarily used in connexion with immovable property, it appears that in the agreement between the parties in the present case (Exhibit 4, dated the 9th April 1920.) the Port Officer of Chittagong is referred to as the 'lessor.' In Scrutton on Charter Party, 11th Edition, page 4, 'demise or lease' of ship is referred to, though, at page 5, it is stated that the modern tendency is against the construction of a charter as a 'demise or lease.' It is contended by Mr. Pugh that whether there can be a 'lease' of a ship or not, there was no lease in the present case as the Commissioners never parted with the whole control of the ship. Captain Jackson, the master of the vessel Gekko, was no doubt to act under the instructions of the defendant's agent Aiken, but the Commissioners did not part with the entire control of the vessel for the period. Paragraph 2 of the agreement, after providing that the lessor (the Port Officer of Chittagong) shall see that the Gekko arrives at the scene of salvage operations on the 13th April 1920, together with all necessary equipment, towing gear, fuel, oil, etc., states that:

the said Gekko will be thereafter at the disposal of and under the instructions of the said attorney saving and excepting such instructions as the officer in command of the said Gekko may consider as calculated to endanger the safety of the vessel.

21. It appears, therefore, that the Gekko was to be under the disposal and instructions of the defendant's agent so far as the operations to be performed by it were concerned, but that it was to be under the control of the Commander for the purpose of navigation. But, having regard to the nature of the property (a towing vessel), such control would necessarily be reserved in the Commander of the vessel, and would not show that it was not hired or let out, if the latter expression includes hiring.

22. The question, however, still remains whether a towing vessel can be let out by the Port Commissioners for operations outside the Chittagong port. If the contention of the learned Advocate-General is correct, the Commissioners can let out the vessel for towing or salvage operations in the Indian Ocean or the Mediterranean Sea. It seems that the provision in Section 69 that the Commissioners may hold moveable property without the limits of the Port should be qualified by the words 'for the purposes of this Act,' and the purposes of the Act under Section 38(g) being to tow into the river (the Chittagong river), the lease is to be confined to cases where the vessel is leased for 'towing vessels into, out of, in or upon the river' (i.e., the Chittagong river), and not for such operations unconnected with the Chittagong river. The expression 'lease', however, occurs along with the words ' mortgage, sell or exchange such property.' It is difficult to see how there can be a sale for the purposes of the Act, and if a sale not to be qualified by the purposes of the Act, a lease may also be held to be not so qualified. The result of our accepting the contention of the respondents will be to hold that although the acquisition and holding property must be for the purposes of the Act, the lease, mortgage, sale or exchange need not be for such purposes. The words, used, however, are wide, and we accordingly hold, though not without hesitation, that it was not ultra vires of the Commissioners to let out the steam-tug for operations outside the Chittagong river. The third question is1 whether the agreement, dated the 9th April 1920, between the Port Commissioners and the defendant is a valid contract which can be enforced.

23. As already stated, the agreement was executed between defendant by his attorney, Mr. Aiken, and the Port Officer, Chittagong, by his proxy, Lieutenant Commander Gordon, the Port Officer of Moulmein.

24. Now Section 28(1) and (2) lays down:

The Commissioners may enter into contracts authorized by this Act with any person for the execution or supply of any works, labour, materials, machinery, stores, or for other matters necessary for carrying into effect the trusts and purposes of this Act. (2). Any such contract, the value or amount of which does not exceed two thousand five hundred rupees, may be made by the Chairman in the case of any work or matter which he is authorized to carry out by this Act or the rules or by-laws thereunder or which has been sanctioned by the Commissioners, but other contrasts shall not be entered into except in accordance with a resolution passed by the Commissioners in meeting.

25. Section 29 which lays down the made of executing contracts and agreements is as follows:

Any contract, the value or amount o which does not exceed two thousand five hundred rupees, made by the Chairman for and on behalf of the Commissioners may be made in such manner and form as; according to the law for the time being administered in Chittagong, would bind him if such contract were on his own behalf. (2) Every contract or agreement by or on behalf of the Commissioners which shall exceed the sum of two thousand five hundred rupees shall be in writing and signed by the Chairman or Vice-Chairman and by two other Commissioners, and shall be sealed with the common seal of the Commissioners.

26. The contract was not made by the Chairman and it could not be, as Rs. 1,500 was payable daily and according the telegram o Mr. Aiken, dated the 6th April 1920, the probable duration of the engagement was 12 days.

27. The value or amount of the agreement thus being over Rs. 2,500, it should have been under Sub-section (2) signed by the Chairman or Vice-Chairman and by two other Commissioners and sealed with the common seal of the Commissioners. This admittedly was not done. It is accordingly contended for the appellant that the agreement not having been executed as provided in Sub-section (2) was not, under Sub-section (3), binding upon the Commissioners. The question is whether the provision is obligatory and not merely directory and whether a noncompliance with the provision renders the agreement unenforceable.

28. It is a rule of common law in England that, with certain exceptions, a corporation is bound by those contracts only which are made under the Corporate Seal. The exceptions are (i) where the contract is executed, (ii) in small matters of very frequent occurrence, and (iii) where it is impossible to affix the seal, as in cases of great urgency.

29. In the case of Clarke v. Guardians of the Cuckfield Union [1852] 21 L.J.Q.B. 349, Wightman, J., reviewed the cases on the subject and held that:

wherever the purposes for which a corporation is created render it necessary that work should be done or goods supplied to carry such purposes into effect, as in the case of the guardians of a poor law union, and orders port a board regularly constituted, and non-general authority to make contracts for won or goods necessary for the purposes for which the corporation was created, and the work is done, or goods supplied and accepted by the corporation, and the whole consideration for payment executed, the corporation cannot keep the goods or the benefit, and refuse to pay on the ground that though the members of the corporation who ordered the goods or work were competent to make a contract and bind the rest, the formality of a deed or of affixing the seal were wanting, and then say : 'No action lies, we are not competent to make a parol contract, and we avail overselves of our own disability.

30. Although the decisions on the point were not uniform, the above view may now be considered established by the decision of the Court of appeal in Law-ford v. Billericay Rural District Council [1903] 1 K.B. 772 where it was held that if the work done or goods to be supplied to carry into effect the purposes for which a corporation is created, are accepted by the corporation and the whole consideration for payment is executed, there is a contract to pay implied from the acts of the corporation, and the absence of a contract under the seal of the corporation is no answer to an action brought in respect of the work done or the goods supplied.

31. In common law, therefore, in case3 of executed consideration, the absence of a contract under seal does not invalidate a contract and it is unnecessary to refer to the other cases cited. But where there is express statutory provision, that exception has been held not to apply even in cases of executed contract.

32. In Young and Co. v. Mayor and Corporation of Royal Leamington [1883] 8 A.C. 517, the corporation, duly acting as an urban authority, contracted under seal with one Powis for the making of some waterworks. Powis failed to complete the contract, which, therefore, ceased. The urban authority then, without seal, directed their agent to contract with Young and Company to finish the works. The works were finished to the entire satisfaction of the corporation; certain extra necessary works were also done. Then the corporation, having had the benefit of ail the works, refused to pay the full price of the same.

33. In the Court of appeal, Lindley, L.J., said in this judgment:

viable last point urged for the plaintiffs was, that as the contract has been performed and the defendants have the benefit of the plaintiffs' work, labour, and material, the defendants are at all events liable to pay for these at a fair price. In support of this contention cases were cited to show that corporations are liable at Common Law quasi ex contractu to pay for work ordered by their agents and done under their authority. The cases on this subject are very numerous and conflicting, and they require review and authoritative exposition by a Court of appeal. But, in my opinion, the question thus raised does not require decision in the present case. We have to construe and apply an Act of Parliament. The Act draws a line between contracts for more than 50 and contracts for 50 and under. Contracts for not more than 50 need not be sealed, and can be enforced whether executed or not, and without reference to the question whether they could be enforced at common law by reason of their trivial nature. But contracts for more than 50 are positively required to be under seal; and in a case like that before us, if we were to hold the defendants liable to pay for what has been done under the contract, we should in effect be repealing the Act of Parliament and depriving the ratepayers of that protection which Parliament intended to secure for them.

34. In the House of Lords, Blackburn, after referring to the judgments of the Courts of appeal, the cases on the point, and the Public Health Act, 1875, observed:

I think, bearing in mind this, it is not possible to construe Section 174 as meaning anything else than that when the subject-matter of a contract exceeds 50 in value the contract must be under seal; and that the distinctions and differences which, according to the opinions of the Court of Queen's Bench, might dispense with a seal in the case of an ordinary corporation should not do so when the contract was by an urban authority, and related to a subject matter above that value. This was the construction put upon the Act in Hunt v. Wimbledon Local Board [1878] 4 C.P.D. 48, as well as in the Court below. I think it is right, and it disposes of this appeal, It is true that this works great hardship upon the now appellants, They had an agreement, but it was not sealed; and though it is possible that if the agreement had been under seal the defendants might have established a defence on the merits to all or part of what is claimed, it is hard on the appellants that they should not be allowed to raise the question. It is, however, for the Legislature to determine whether the benefits derived by enforcing a general rule are or are not too dearly purchased by occasional hardships. A Court of law has only to inquire, what has the Legislature thought fit to enact.

35. Lord Bramwell, in the same case, observed:

The Legislature has made provisions for the protection of ratepayers, shareholders and others, who must act through the agency of a representative body, by requiring the observance of certain solemnities and formalities which involve deliberation and reflection. That is the importance of the seal. It is idle to say there is no magic in a wafer. It continually happens that carelessness and indifference on the one side, and the greed of gain on the other, cause a disregard of these safeguards, and improvident engagements are entered into. Whether that has been so in this case I have no notion but certainly the ratepayers of Leamington may well be astonished at the amount claimed of them. The decision may be hard in this case on the plaintiffs, who may not have known the law. They and others must be taught it, which can only be done by its enforcement.

36. See also British Insulated Wire Company, Limited v. Prescot Urban District Council [1895] 2 Q.B. 463 which also was a case of executed consideration.

37. Then again in the later case of Hoare v. Kingsbury Urban District Council [1912] 2 Ch. 452, following Young's case [1883] 8 A.C. 517 it was held that

in equity as well at law no contract, although executed, for over 50 in value can be enforced unless ft is under seal.

38. See also Frend v. Dennett [1858] 4 C.B.N.S. 576.

39. In Douglass v. Rhyl Urban District Council [1913] 2 Ch. 407, Joyce, J., observed:

Although there may have been a difference of opinion and conflicting authorities, I think it is now settled that, in the absence of an express statutory provision requiring a contract under seal, the requirement of the corporate seal at common law is subject to this exception,

and the case of Lawford v. Billericay Rural District Council [1903] 1 K.B. 772 was referred to and there being no statutory prohibition applicable to the case, the plaintiff was held entitled on a quantum meruit.

40. In the cases decided in the Indian Courts, similar provisions in other Acts have been construed to be mandatory, and non-compliance therewith has been held to render the agreement unenforceable. See Chairman, South Barrackpore Municipality v. Amulya Nath Chatterjee [1907] 34 Cal. 1030, Mathura Mohan Saha v. Ram Kumar Saha [1916] 43 Cal. 790, Eziekiet & Co. v. Annada Charan Sen A.I.R. 1923 Cal. 35, Radha Krishna Das v. Municipal Board of Benares [1905] 27 All. 592, Raman Chetti v. Municipal Council of Kumbakonam [1907] 30 Mad. 290; Some of these were cases of executory contracts, and it is pointed out on behalf of the respondents that in the case of Ahmedabad Municipality v. Sulemanji Ismalji [1903] 27 Bom. 618, the rule was applied in the case of an executory contract, whereas in the case of Abaji Sitaram Modah v. Trimbak Municipality [1903], 28 Bom. 66 the same learned Judges held that though a contract by a corporation must ordinarily be made (Under seal, still where there is that which is known as an executed consideration, an action will lie, though this formality has not been observed. In the case of Radha Krishna Das v. The Municipal Board of Benares [1905] 27 All. 592, however, following the English cases of Young and Co. v. Mayor and Corporation of Royal Leamington Spa [1883] 8 A.C. 517 and British Insulated Wire Co. Ltd. v. Prescot Urban District Council [1895] 2 Q.B. 463 the learned Judges held that the rule applied to executed consideration also, and did not follow the statement of the law laid down in case of Abaji Sitaram Modah v. Trimbak Municipality [1903] 28 Bom. 66.

41. In this Court, in the case of Mathura Mohan Saha v. Ram Kumar Saha [1916] 43 Cal. 790, it was pointed out:

The strict rule of the ancient common law, no doubt, was that a corporation could only act under its seal and was not bound by written contracts not under seal. This rule, however, was relaxed in many cases at an early date, and where a corporation is acting within the scope of the legitimate purposes of its institution even parol contracts made by its authorised agente raise implied promises, for the enforcement of which an action may well lie, specially where there is no express statutory requirement of a contract under seal and the benefit of the contract has been enjoyed by the corporation;

and that, as pointed out in the judgment of Neville, J., in Hoare v. Kingsbury Urban District Council [1912] 2 Ch. 452:

the exception based upon the doctrine of part performance cannot be applied where, as in Frend v. Bennett [1858] 4 C.B.N.S. 576 and in Young and Company v. Mayor and Corporation of Royal Leamingtion Spa [1883] 8 A.C. 517, the contract is, by statute, positively required to be under seal; to hold otherwise would in effect be, as Lindley, L. J., said young and Co. v. Mayor and Corporation of Royal Leamington Spa [1883] 8 A.C. 517 to repeal the Act of Parliament and to deprive the ratepayers of that protection which Parliament intended to secure for them.

42. In the present case the Chittagong Port Act expressly provides that the agreement must be in writing and signed by the Chairman or Vice-Chairman and two other Commissioners, and sealed by the the common seal of the Commissioners and that an agreement not so executed shall not be binding upon the Commissioners. Having regard to the express provisions of the statute, we think that non-compliance with the provisions of Section 29 renders the agreement not binding upon the Commissioners.

43. It may be said, however, that the law only lays down that the agreement shall not be binding upon the Commissioners and that although it may not be binding upon the Commissioners, having regard to the express words of the Statute, there is no reason why it should not be binding so far as a private person is concerned who is not governed by any such provision of the law, Reference was made to the case of Fishmongers Co. v. Robertson [1843] 5 Man. & Gr. 131, where the learned Judges observed:

It may possibly be the case, that, up to the time of the corporation adopting the contract by performing the stipulations on their part, there was a want of mutuality, from the corporation not being compellable to perform their contract; and that the defendants might, during that interval, have the power to retract, and insist that their undertaking amounted to a nudum pactum only. But after the adoption of the contract by the corporation by performance on their part, upon general principles of reason the right to set up this defence appears altogether to fail.

44. In that case, however, there, was no statutory provision which rendered the agreement invalid and the case therefore is distinguishable.

45. The question was raised in this country in the case of Raman Chetti v. The Municipal Council of Kumbakonam [1907] 30 Mad. 290, (a case of executed contract) where the defendant, a private party, pleaded that the contract had not fulfilled the requirements Section 45 of the Madras District Municipal Act 4 of 1884. The learned Judges observed:

The view of the 'Subordinate Judge that it does not bind the Municipality but does bind the other party is erroneous see Ahmedabad Municipality v. Sulemanji Ismalji [1903] 27 Bom. 618.

46. In the latter case (which was a case of an executory contract) it was the defendant who pleaded the invalidity of the agreement. Sir Lawrence Jenkins, C.J., observed:

It is open to the defendant to say that it is not binding on him inasmuch as it is not binding on the plaintiff. We think that where a contract is invalid so far as one party is concerned by reason of statutory provisions, it cannot bind the other party also.

47. There remains the question whether it was a case of great urgency in which there was no time to comply with the requirements of the Statute. In the first place that principle cannot apply to a case such as the present, where the Statute requires the agreement to be executed in a certain manner, and secondly, there is nothing to show that the agreement could not be executed according to the Statute before the steam-tug Gekko sailed from Chittagong. It is true that the agreement was executed on behalf of the Port Commissioners of Chittagong by the Port Officer of Moulmein, but that was not in accordance with the original agreement to tow the War Puffln.

48. In these circumstances, we think that the contract, sued upon cannot be enforced.

49. We do not see, however, why the plaintiffs should not recover quantum meruit for the services rendered by them to the defendants. It is contended by Mr. Pugh that the Chittagong Court would have no jurisdiction to entertain a suit for payment of quantum meruit. But any payment which was to be made for the services rendered by the steam-tug was to be made at Chittagong. We do not think that the invalidity of the agreement prevents the plaintiffs from recovering such amount as may be reasonable and just for the services rendered by them. The question as to what amount is reasonable for the use of the steam-tug has not been gone into, as the case proceeded upon the agreement. We think, therefore, that the case should go back to the Court below in order that the question as to what amount the Port Commissioners can reasonably claim from the defendant for the use of the steam-tug by the latter may be gone into and the case disposed of accordingly.

50. Costs will abide the result.


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