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1943 Supreme(Cal) 39
CALCUTTA HIGH COURT
Baraset Basirhat Light Railway Co. Ltd. - Appellant
Versus
District Board of the 24-Pergunnahs - Respondent
Suit No. 1434 of 1941
Decided On : 15-12-1943
The main legal point established in the judgment is the requirement for agreements to comply with the statutory provisions and rules under the Bengal Local Self-Government Act in order to be binding and enforceable. The judgment also emphasizes the importance of obtaining the court's jurisdiction before instituting a suit with new causes of action.
Headnote:
Bengal Local Self-Government Act - Agreements - Section 20, Section 138, Rule 103 - The court discussed the binding nature of the agreements made under the Bengal Local Self-Government Act and the rules made thereunder. It concluded that the second to sixth agreements were not executed as required by the Act and the Rule, and therefore, were not binding upon the Board and cannot be enforced against it. The first agreement, however, complied with the statutory requirements regarding sanction and execution, and was held to be an enforceable contract and not void for non-compliance with the Rule.
Fact of the Case:
The plaintiff company claimed compensation from the defendant District Board under six agreements, alleging that the Board guaranteed to supplement the net earnings of the company. The Board raised the question of the enforceability of the agreements, leading to extensive pleadings and amendments. The suit eventually came before the court for disposal, and the court addressed the issues of the binding nature of the agreements, the jurisdiction of the court, and the claims made under Sections 65, 70, and 72 of the Contract Act.
Finding of the Court:
The court found that the second to sixth agreements were not binding upon the Board and cannot be enforced against it. The first agreement, however, complied with the statutory requirements regarding sanction and execution and was held to be an enforceable contract and not void for non-compliance with the Rule. The court also concluded that it did not have jurisdiction to entertain the alternative claims raised in the amendment to the plaint, and dismissed them without prejudice to being preferred in a fresh suit.
Issues: The issues addressed by the court included the enforceability of the agreements, the jurisdiction of the court, and the claims made under Sections 65, 70, and 72 of the Contract Act.
Ratio Decidendi: The court held that the second to sixth agreements were not executed as required by the Act and the Rule, and therefore, were not binding upon the Board and cannot be enforced against it. The first agreement, however, complied with the statutory requirements regarding sanction and execution and was held to be an enforceable contract and not void for non-compliance with the Rule. The court also concluded that it did not have jurisdiction to entertain the alternative claims raised in the amendment to the plaint, and dismissed them without prejudice to being preferred in a fresh suit.
Final Decision: The court held that each party should respectively bear its own costs, considering the special circumstances of the case. The court also expressed regret at the outcome, noting the benefits provided by the tramway system to the public over a period of about 40 years.
JUDGMENT
Gentle, J. - The defendant District Board was incorporated under the Bengal Local Self-Government Act, Act 3 [III] of 1885, (hereinafter called the "Act") the provisions of which govern it. The plaintiff company was incorporated under the Companies Act on 30th July 1903. It constructed and maintained a tramway or light railway about 52 miles in length of which about 33 miles run along the roadways within the area of the Board. The claim by the company against Board, as originally made in the plaint filed on 22nd August 1941, is for Rs. 1,04,000 being the aggregate of three sums of Rs. 38,000 (less Rs. 10,000 paid and for which credit is given) alleged to be due during each of the three years ending on 31st March 1939 1940 and 1941. This claim is made under six agreements by which it is alleged the Board guaranteed to supplement the net earnings of the company by such annual sums, not exceeding Rs. 38,000, as might be necessary to make the net profits equivalent to Rs. 1500 per annum per mile of the tramway system. The correctness of the amount, as such, is admitted solely for the purposes of the present suit and to avoid the necessity of taking an account in the event of the company's claim succeeding. This admission, however, is made without prejudice to the Board disputing in any future proceedings, in respect of other years, the method of accountancy by which the sum claimed has been computed. The trial commenced on 22nd April 1943 at which date the above mentioned claim was the sole matter arising in the suit. The hearing was interrupted by the Easter recess of the Court and at its conclusion the trial was resumed on 5th May 1943 when the opening of the plaintiffs' case was taking place. On this date Mr. S. N. Banerjee, learned counsel for the Board, raised the question for the first time that the agreements upon which the claim was made are not binding upon, and enforceable against the Board on the ground they were not executed by the Board as required by the Act and the rules made thereunder. Mr. S. Chaudhuri, learned counsel for the company, stated he did not object to the written statement being amended by adding pleas to enable this contention to be raised but he said he would require an adjournment to consider the new defence, of which previous notice had not been given. I granted an adjournment and later allowed further adjournments to enable the parties to discuss the matters in issue.
2. The suit eventually came before me for disposal on 15th November 1943. The plaint and the written statement have been amended and additional pleadings have been filed by both parties which exhaustively deal with the questions arising between the parties. So far as the plaint is concerned, alternative claims have been made under Ss. 65, 70 and 72, Contract Act, for compensation for the advantages received by the Board under the agreements, for compensation for the benefits the Board enjoyed from the company, and for money paid by mistake, in the event of the agreements not being binding upon the Board and therefore being void. Leave to amend the plaint to include these claims was given on 17th November 1943. When granting leave I appreciated that ante-dating, in effect, these claims might be favourable towards the plaintiff company with regard to the law of limitation but I was satisfied it was just to do so in the circumstances, since they arise solely by reason of the plea by the Board that the agreements are not enforceable against it and which was not indicated before 5th May 1943. If these pleas had been included in the written statement at the time it was filed on 18th December 1941, the company would then have had an opportunity, which I am satisfied it would have utilised, to make the alternative claims earlier but it was prevented from doing so by the Board's failure to raise the question of enforceability until the second day of the trial. In its further written statement, filed on 18th November 1943, the Board all
