Citation Codes

Equivalent Citations

citation codes

Case Number

Civil Revision Petition No. 1036 of 1936.

Advocates

Mr. S.K Ahmed Meeran for the Petitioner.
Mr. P.N Marthandam Pillai for the Respondent.

Judges

Abdur Rahman, J.

Acts

provisions of Ss. 68 and 69, District Municipalities Act and of S. 107, T.P. Act.
provisions of S. 69, District Municipalities Act,
S. 68, District Municipalities Act
S. 3, Cl. 25, General Clauses Act.
SECTION 65 CONTRACT ACT
S. 68 (2), Act 5 of 1920
S. 65, Contract Act
S. 53-A, T.P. Act.
S. 105, T. P. Act
S. 107, T.P. Act

See more information ...

Smart Summary

Summary of the Court's Opinion

Factual and Procedural Background

This revision arises from a decree passed in a suit for recovery of two cists for November and December 1934. The claim was founded on a lease dated 22 March 1934 (Ex. A) allegedly executed by the defendant in favour of the Tinnevelly Municipal Council. Under that lease the right to collect fees from slaughter houses and fish bazaars was let to the defendant. The lower Court's decree in that suit resulted in the present revision petition. The lower Court had reached a conclusion based on its view of the instrument and the present petition challenges that decree.

Legal Issues Presented

Whether the instrument (Ex. A) is a valid, enforceable lease within the meaning of the relevant statutes (including S. 3, cl. 25, General Clauses Act; S. 105 and S. 107, Transfer of Property Act) given the registration and execution formalities.
Whether the lease complied with the mandatory requirements of the District Municipalities Act (notably Ss. 68 and 69) and any municipal resolution or authority required to bind the Municipal Council.
Whether the doctrine of part performance (S. 53-A, T.P. Act) or similar equitable doctrines could validate the instrument or permit enforcement despite the statutory defects.
Whether the Court could, notwithstanding invalidity of the lease, grant relief in the form of reasonable compensation under Section 65 of the Indian Contract Act as an alternative to enforcing the defective instrument.
Procedural question: whether the decree of the lower Court should be set aside and the suit remanded for reconsideration and further evidence on relief under S. 65.

Arguments of the Parties

Petitioner (as represented in the opinion)

The instrument is inadmissible for want of registration and is unenforceable because it failed to comply with S. 107, T.P. Act and the District Municipalities Act (Ss. 68 and 69).
No municipal resolution or authority under S. 68 was produced to show that the Council had sanctioned the contract as required by law.
The signatures of municipal councillors required by S. 69 were not properly proved, and the document could not be treated as valid merely because signatures appeared after registration.
On these grounds the suit based on the lease should have been dismissed by the lower Court.

Respondent (as represented in the opinion)

Counsel characterized the instrument as an agreement to lease rather than a lease, arguing it should not be treated as a void lease requiring registration and formalities.
It was argued that signatures of municipal councillors did exist, albeit placed after registration; the respondent could not state the date of signing.
The respondent sought to invoke the doctrine of part performance under S. 53-A, T.P. Act to sustain the instrument or the remedy.
Alternatively, the respondent urged that it would be inequitable to dismiss the plaintiff's suit on technical grounds because the defendant had received the benefit of the lease; relief could be granted under S. 65 of the Contract Act by assessing compensation equivalent to the agreed rent.
The respondent also contended that the defendant had suffered loss because of competition and that evidence of loss had not been led by the defendant because of advice the suit was not maintainable on the basis of the lease.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Raman Chetty v. Municipal Council of Kumbakonam (1907) 30 Mad 290	Supports the proposition that where statutory formalities render a contract not binding on a municipal body, it cannot be held binding on the other party (mutuality).	The Court relied on this authority to hold that absence of required formalities (Ss. 68 & 69 District Municipalities Act, S. 107 T.P. Act) meant the document could not be enforced against the Municipal Council and therefore could not be enforced against the other party either.
Municipal Council, Tiruvarur v. Kannuswami Pillai, AIR (1930) Mad 600	Used to support the view that non-compliance with statutory formalities makes the contract not binding on the municipal authority (mutuality principle).	Referenced alongside Raman Chetty to support the conclusion that the instrument fails for want of compliance with mandatory statutory provisions and hence is unenforceable.
Municipal Council, Dharapuram v. Mohammad Ismail, AIR (1936) Mad 90	Another authority affirming the principle that a municipal contract not made in conformity with statutory formalities is not binding on the municipal body.	Cited to reinforce the Court's conclusion on invalidity and unenforceability where municipal formalities are not observed.
Ramakrishna Jha v. Jainandan Jha, AIR (1935) Pat 291 (14 Pat 672)	Doctrine that the general doctrine of part performance is not available in India except in limited circumstances (S. 53-A may be available to defendant; plaintiff's reliance on it is misplaced except in exceptional cases).	The Court relied on this authority to reject the respondent's contention based on part performance / S. 53-A as a basis for validating the lease in the plaintiff's favour.
Srivilliputtur Municipal Council v. Arunachala Nadar, AIR (1933) Mad 332	Cited among authorities arguing that equitable relief substituting for statutory requirements would undermine the statute.	The Court considered this authority when weighing the respondent's equity-based submission (S. 65 relief) but ultimately balanced the equities and procedural necessity for further trial rather than applying it as an absolute bar.
Young & Co. v. Mayor, etc. of Royal Leamington Spa (1883) 8 AC 517	Authority invoked to argue that granting relief which effectively nullifies a statute's requirements would be improper.	Presented by counsel opposing equitable relief under S. 65; the Court acknowledged the force of this line of authorities but nevertheless allowed a remand to permit consideration of S. 65 relief with proper evidence rather than sustain or dismiss solely on technical grounds.

Court's Reasoning and Analysis

The Court's analysis proceeded in a sequence of legal findings applying statutory definitions and authorities to the facts before it:

Characterization of instrument: The Court examined the document (Ex. A) and concluded it is a lease (a transfer of a right to collect fees amounting to a profit arising out of land and therefore "immovable property" under the General Clauses Act and within the definition of "lease" under S. 105, T.P. Act), not merely an agreement to lease.
Formal requirements: Because the lease was for a year and reserved yearly rent, it required registration under the relevant provisions. Further, a lease falling within the Transfer of Property Act required execution by both lessor and lessee under S. 107. The registration copy showed the lease was not executed on behalf of the lessor at the time of registration; signatures of municipal officers appear to have been added after registration.
Statutory municipal formalities: The Court found no municipal resolution or evidence of authority required by S. 68 (and S. 68(2), Act 5 of 1920) authorizing the municipal officers to execute the lease. The requirement under S. 69 for signatures of two municipal councillors was not proved in a way that established the date of signing; the only municipal witness's statement could not be accepted on this point.
Consequences of non-compliance: Section 69(2) provides that a contract not made in conformity with the preceding sections shall not be binding on the Municipal Council. The Court adopted the mutuality principle — a contract that is not binding on one party cannot be held binding on the other — and relied on precedent to support that position.
Part performance doctrine: The respondent's attempt to rely on S. 53-A (part performance) was rejected. The Court explained that S. 53-A is generally a protection available to a defendant and that the broader doctrine of part performance is not generally applicable in India (citing authority to that effect), so it could not validate the instrument for the plaintiff.
Equitable relief under S. 65 Contract Act: The Court considered the equitable argument that compensation under S. 65 might be awarded because the defendant had obtained benefits from the lease, and that dismissing the suit on merely technical grounds would be unjust. The Court accepted in principle that the Municipal Council could seek reasonable compensation under S. 65 despite the invalidity of the lease. However, the Court found insufficient evidence on the record to determine what amount would be reasonable: the case had proceeded solely on the basis of the lease and no evidence had been led to quantify reasonable compensation or to adjust the equities if the defendant's counter-claims about loss were true.
Remand for trial and amendment: Because the factual data necessary to award compensation under S. 65 was lacking, the Court set aside the decree of the lower Court and remanded the suit for a de novo trial. The plaintiff was given leave to amend its plaint to claim relief under S. 65, and both parties were permitted to lead additional evidence on the remand.
Costs: The Court ordered that the plaintiff pay Rs. 100 to the defendant in costs (a sum not to be taken into account in taxing costs of the suit).

Holding and Implications

Holding: The revision petition is allowed; the decree of the lower Court is set aside; the suit is remanded for a de novo trial with leave to the plaintiff to amend its plaint to claim relief under Section 65 of the Contract Act.

Direct consequences and practical implications:

The Court held the lease invalid and unenforceable against the Municipal Council because it did not comply with mandatory requirements (registration and municipal formalities under Ss. 68 & 69 of the District Municipalities Act and S. 107 of the Transfer of Property Act).
Although the lease was invalid, the Municipal Council is not precluded from seeking reasonable compensation under Section 65 of the Contract Act; the Court remanded the matter so that the parties may present evidence necessary to determine such relief.
The plaintiff (Municipal Council) must be allowed to amend its plaint to plead relief under S. 65 and both parties may lead further evidence; the lower Court will try the suit afresh in accordance with directions given.
The plaintiff was ordered to pay Rs. 100 to the defendant as costs (distinct from taxed costs of the suit).
The opinion does not purport to establish a new general precedent beyond applying existing statutory interpretation and precedent; it resolves the dispute by remand and by directing the appropriate procedural and evidentiary steps necessary to decide a S. 65 claim.

Note: This summary is confined to the matters expressly stated in the provided opinion. No factual or legal conclusions beyond those appearing in the opinion have been added.

Show full summary ...

Mohamed Rowther v. Tinnevelly Municipal Council

Disposition: Petition Allowed

Citing Reference: Mentioned 5

Case Note:Contract - Suit for recovery of two cists - Suit dismissed by lower Court - Hence, present petition - Held, in present case, rent agreed to be paid by Defendant should be considered to be a fair measure of compensation to be awarded under Section 65 of Contract Act - There was no sufficient data to adjust equities between parties, if ground of complaint as urged by Defendant in his written statement had any truth at all - Amount was reasonable had not been gone into as case proceeded upon lease alone - Decree of lower Court set aside - Revision petition allowed. ORDER

Abdur Rahman, J.

1. This revision arises from a decree passed in a suit filed for recovery of two cists for November and December 1934 under a lease dated 22nd March 1934 (Ex. A) executed by the defendant in favour of the Tinnevelly Municipal Council under which the right to collect the fees of slaughter houses and fish bazaars was let by the latter to the former. The right to collect fees for the above mentioned places amounts to a profit arising out of land and falls within the definition of immovable property as given in S. 3, Cl. 25, General Clauses Act. It would therefore fall within the definition of a "lease" as defined in S. 105, T. P. Act and would require to be executed by both the lessor and the lessee under S. 107 of the Act. The lease was for one year but inasmuch as a yearly rent was reserved, it could only be made under a registered instrument, although one-fourth of the rent was paid by the lessee in advance at the time of the execution of the lease and the remaining three-fourths was recoverable in nine monthly instalments. It is true that the lease was executed by the lessee and presented for registration by him, but at the time of the registration it was not executed on behalf of the lessor, although certain signatures purporting to be those of the President and two members of the Tinnevelly Municipal Council appear to have been put after registration on the document itself. This is clear from the registration copy of the lease filed on behalf of the defendant.

2. It would thus follow that the lease fails to fulfil the requirements of S. 107, T.P. Act and would therefore be invalid. The counsel for the respondent has tried to meet the contention by characterizing the instrument (Ex. A) as an agreement to lease. But the tenor of the document leaves no doubt in my mind that it falls within the definition of a lease and not that of a mere agreement as suggested by him and found by the lower Court. This interpretation receives its support also from the fact that an agreement to let the right to collect fees from slaughter houses and fish bazaars was executed on 3rd January 1934 and has been produced by the plaintiff (Ex. C). Moreover, this is a contract of more than Rs. 1000 and the sanction of the Municipal Council had to be taken under S. 68 (2), Act 5 of 1920 before it was made. A copy of the resolution of the Municipal Council authorizing the President or the members to execute the lease as required by S. 68, District Municipalities Act has not been produced on behalf of the plaintiff and in the absence of any such authority it would be difficult to hold -- even if the registered lease deed was signed by the President and two other members -- that they did so under the authority of the Municipal Council.

3. These are not the only objections which have been raised on behalf of the petitioner. His counsel further contends that the lease is unenforceable as it does not comply with the provisions of S. 69, District Municipalities Act, under which the lease has to be signed by two Municipal Councillors. The respondent's counsel urges in reply that the lease has been signed by them although after it was registered. He is not in a position however to state the date on which it was signed. It was for the Municipal Council to prove that the formalities required by S. 69 were duly observed and in view of the only witness who was examined on its behalf and whose statement cannot be accepted, as he stated that the signatures of the Councillors were placed on the document before registration, I cannot assume that the terms of the Section were complied with. Moreover the date on which these signatures were placed on the lease had to be established. The Municipal Councillors cannot be held to be entitled to sign a contract at any time -- even if they do so after years and just before the institution of the suit, this would be unreasonable. A contract cannot remain in a state of suspended animation for an indefinite period. It should therefore be signed by them in my opinion either almost immediately or within such a period as may not be considered to be unreasonable in the circumstances of the case.

4. The penalty for the omission of this formality is provided in S. 69 (2) which declares a contract made otherwise than in conformity with the provisions of S. 69 and the last preceding Sections, to be not binding on the Municipal Council. It has been argued that this provision only means that the lease is not binding on the Municipal Council but it does not lay down that it would not be binding on the other party. In other words the contention is that it is not enforceable against the Municipal Council but can be enforced by the Municipal Council against the other party to the contract. This has no force in my opinion. A contract is a bilateral act and necessarily implies mutuality. If it is not binding on one party, it cannot be held to be binding on the other as well. The same view was taken in 30 Mad 290, Raman Chetty v. Municipal Council of Kumbakonam, (1907) 30 Mad 290: 2 MLT 294: 58 MLJ 377 Municipal Council, Tiruvarur v. Kannuswami Pillai, AIR (1930) Mad 600: 127 IC 120: 53 Mad 362: 58 MLJ 377 and 46 MLW 892. Municipal Council, Dharapuram v. Mohammad Ismail, AIR (1936) Mad 90 : 46 MLW 892 The conclusion is therefore irresistible that the document has not been executed by the lessor and fails to comply with the mandatory provisions of Ss. 68 and 69, District Municipalities Act and of S. 107, T.P. Act. It cannot, for the reasons given above, be held to be enforceable and the action of the Municipal Council on the basis of such a contract cannot be sustained.

5. It has been contended on behalf of the petitioner that the document being inadmissible for want of registration and being unenforceable for want of the requisite authority of the Municipal Council and in the absence of Municipal Councillors' signatures as required by law, the suit should have been dismissed. In reply, the respondent's counsel tried in the first instance to invoke the doctrine of part performance as defined in S. 53-A, T.P. Act. This is however based on a misconception. S. 53-A, T.P. Act is generally speaking only available to a defendant. It is only in exceptional cases such as in a suit for specific performance that it may be availed of by the plaintiff. Apart from S. 53-A the doctrine of part performance is not applicable to India: see 14 Pat 672. Ramakrishna Jha v. Jainandan Jha, AIR (1935) Pat 291: 157 IC 98: 14 Pat 672: 16 PLT 451 (FB) . This contention must therefore be decided against the respondent.

6. The counsel for the respondent tried to argue in the end that having secured the benefit of the lease, it would be extremely unjust to dismiss the plaintiff's suit on merely technical grounds when it is possible to grant relief on the principle underlying S. 65, Contract Act and decree the claim as the amount of compensation can be very fairly taken to what the defendant had agreed to pay each month. On the other hand it is contended mainly on the authorities in (1883) 8 AC 517, Young & Co. v. Mayor, etc. of Royal Leamington Spe, (1883) 8 AC 517: 32 LJQB 713: 49 LT 1: 31 WR 925: 47 JP 660: 30 Mad 290 Raman Chetty v. Municipal Council of Kumbakonam, (1907) 30 Mad 290: 2 MLT 294 and 37 MLW 429 Srivilliputtut Municipal Council v. Arunachala Nadar, AIR (1933) Mad 332: 144 IC 784: 37 MLW 429 that the grant of relief in the manner suggested by the plaintiff's counsel would virtually reduce the wholesome provision of the statute to a nullity. It was further urged that it was impossible to pass a decree at once as the defendant had suffered heavily in consequence of another person carrying on similar trade in the vicinity and that the Municipal Council did not help the defendant in either removing or getting rid of him in spite of several representations made in this behalf. The counsel for the petitioner also stated that evidence in regard to the loss suffered by his client was not led in the case as his client was advised that the suit was not maintainable on the basis of the lease which was both inadmissible and unenforceable. There is a great deal of force in these contentions but I consider it to be inequitable to permit the defendant to succeed on the merely technical objections when he has apparently had advantage of the lease and it is possible to go into the merits of the case on the principle underlying S. 65, Contract Act and to ascertain if the plaintiff is entitled to any relief. I do not think the invalidity of the lease prevents the Municipal Council from recovering such amount as may be found to be reasonable in the circumstances. On the other hand it is impossible for me to decide the case as it stands, on the ground that the rent agreed to be paid by the defendant should be considered to be a fair measure of compensation to be awarded under S. 65, Contract Act. There is no sufficient data before me to adjust equities between the parties, if the ground of complaint as urged by the defendant in his written statement has any truth at all. The question as to what amount is reasonable has not been gone into as the case proceeded upon the lease alone.

7. I am therefore compelled in a case like this to set aside the decree of the lower Court and remand the suit for a de novo trial granting leave to the plaintiff to amend its plaint claiming relief under S. 65, Contract Act, to which the defendant would in the ordinary course be entitled to plead. The parties will then lead such additional evidence in the case as they think necessary. In the circumstances of the case however, the plaintiff shall pay a sum of Rs. 100 as costs to the defendant which will not be taken into account in taxing the costs of the suit. The revision petition is therefore allowed and the suit remanded to the lower Court for disposal according to law bearing the directions given above in mind.

Mohamed Rowther v. Tinnevelly Municipal Council

Summary of the Court's Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner (as represented in the opinion)

Respondent (as represented in the opinion)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Mohamed Rowther v. Tinnevelly Municipal Council

Comments