Satibhusan Mukherjee v. Corporation of Calcutta — 1948 DIGILAW 106 (CAL)

JUDGMENT 1. Premises No. 88 Garden Reach Road situate in ward No. 25 of the Calcutta Municipality belonged in the past to the heirs of one Prafulla Kumar Banerjee, namely, to Pratima Debi, Kshitish Chandra Banerjee and Jyotish Chandra Banerjee. At the court sale held in execution of his mortgage decree obtained against them, the mortgagee Nitya Hari Mukherjee, purchased the said property on 26-6-1934. After his purchase he wrote a letter to the Corporation of Calcutta dated 11-1-1935 in which he asked the latter to let him know the amount of consolidated rates in arrear up to that time. To this letter the Junior Law Officer of the Corporation of Calcutta sent a reply on 17-1-1935. That letter has been marked as Ex. 'A' in the case. In the body of that letter it was stated that the total arrears of the consolidated rates due on account of both the owner's and the occupier's share then amounted to Rs. 434-10-0. The letter concluded with a demand made in the following terms: Now as purchaser of the above premises, please pay up the said dues of the Corporation forthwith, otherwise steps would be taken to realise the same under S. 205, Calcutta Municipal Act (B.C. III of 1923) without further reference to you. The details of the arrears were given in the schedule to the letter which showed that the owner's share was in arrears from the 3rd quarter of 1931-1932 up to the 4th quarter of 1934-1935 and the occupier's share from the 1st quarter of 1932 1933 to the 4th quarter of 1934-1935. The demand was from the purchaser, Nitya Hari, in respect of the period from before his purchase on the ground that those arrears were charged under the statute on the property purchased by him. Nitya Hari proposed payment of those arrears by instalments and the Corporation seems to have agreed to that proposal. He, however, paid only Rs. 111 which represented the whole of the arrears for the occupier's share of the municipal rates as demanded by Ex. 'A.' Thus a balance of Rs. 312-10-0 still remained due out of that demand, being the whole of the owner's share, when by a conveyance dated 6-7-1936 Nitya Hari sold the property to Sati Bhusan Mukherjee, the appellant before us. That conveyance has been marked Ex. 'B' in the case. 'A.' Thus a balance of Rs. 312-10-0 still remained due out of that demand, being the whole of the owner's share, when by a conveyance dated 6-7-1936 Nitya Hari sold the property to Sati Bhusan Mukherjee, the appellant before us. That conveyance has been marked Ex. 'B' in the case. In the said conveyance the vendor, Nitya Hari, made the statement that the property was not encumbered in any way and there was no charge upon it save and except for Rs. 323-10-0 on account of the arrears of municipal rates due up to the 4th quarter of 1934-1935 out of the demand made by Corporation in its letter to him dated 17-11935 (Ex. A) which remained still unpaid and for a further sum of Rs. 36-3-6 which was due on account of the municipal rates for the 1st quarter of 1936-1937. The purchaser, Sati Bhusan, retained in his hands out of the agreed price the said sums of money due on account of the municipal rates and a further sum of Rs. 12-6-0 which was then due to the superior landlord on account of rent of three past years, and paid the balance of the price to the vendor. It has been found by both the Courts below that Sati Bhusan acted in that manner on the faith of the representation made by the Junior Law Officer of the Corporation of Calcutta in his letter Ex. 'A', which he had sent to the vendor on 17-1-1935 and that he would have retained in his hands more money out of the price if he had known that the arrears of municipal rates were more than what had been stated in that letter. 2. On 15-1-1940 the Corporation of Calcutta brought the suit in which this appeal arises against Sati Bhusan for recovery of arrears of municipal rates amounting to Rs. 431-4-6. The other prayers in the suit were the prayers which are usually made for enforcing a charge on immovable property. It has been found that the arrears of municipal rates as claimed in the suit are due in respect of the premises. The claim, however, included a sum of Rs. 157-10-6 which was due on account of the owner's and occupier's share of the consolidated rates from the fourth quarter of 1927-1928 to the fourth quarter of 1928-1929. It has been found that the arrears of municipal rates as claimed in the suit are due in respect of the premises. The claim, however, included a sum of Rs. 157-10-6 which was due on account of the owner's and occupier's share of the consolidated rates from the fourth quarter of 1927-1928 to the fourth quarter of 1928-1929. The arrears for this period had not been mentioned in the aforesaid letter Ex. A. That letter gave the impression that the consolidated rates for that period had been paid before the date of that letter. The dispute in the appeal is whether the Corporation of Calcutta can recover the said amount. Both the Courts below have held that the Corporation of Calcutta is estopped from recovering the said amount by reason of the representation of fact made by its Junior Law Officer in the letter Ex. 'A' on the faith of which the defendant Sati Bhusan purchased the property from Nitya Hari and on the faith of which he paid more money to the latter from out of the price settled than he would have otherwise paid. Our learned brother, Blank J., relying upon the decision of the Judicial Committee of the Privy Council in Maritime Electric Company Limited v. General Dairies Limited 1937 A.C. 610 : (1937-1 All. E.R. 748) held that the Corporation of Calcutta was not estopped from claiming that sum in spite of the representation made in Ex. 'A.' Before considering reasons on which our learned brother rested his judgment we will notice three other points raised by the learned Advocate appearing for the Corporation of Calcutta. 3. These points are: (1) that the statement by the Junior Law Officer in the letter, Exhibit A, is not binding on the Corporation of Calcutta in as much as it was not part of his duty to supply Nitya Hari or any person whatsoever, the information given in that letter; (2) that even if the statements made in that letter regarding the amount of arrears of taxes can be imputed to and used against the Corporation of Calcutta no estoppel can arise against it. For this point he contends that the law is that the statement of fact on which estoppel is sought to be founded must lead to a course of conduct on the part of the person pleading estoppel which is either intended by the person making the statement or which at least is the natural and probable consequences of the representation. Relying upon the proposition of law so formulated by him he says that no estoppel can be founded on the representation of fact made in Exhibit A, for what was intended by the maker of that representation was that payment of the arrears should be made by Nitya Hari, and that payment and nothing else would be the natural and probable consequences of the representation; and (3) that as Sati Bhusan is an assignee of Nitya Hari, and so the representative of Nitya Hari, he cannot succeed on the point of estoppel on the strength of S. 115, Evidence Act, for on the facts of this case Nitya Hari could not have succeeded on that plea for the reason that Nitya Hari did not act to his prejudice. On the representation made in Exhibit A he got more in his pocket from Sati Bhusan out of the price for which he executed the conveyance Exhibit B. As at present advised we do not feel inclined to accept this contention but do not wish to discuss the matter in detail as for the reasons hereafter appearing the plea of estoppel has to be overruled and this appeal has to be dismissed. We may only point that Sati Bhusan pleads and is entitled to plead estoppel in his own individual character and not in his character as the representative of Nitya Hari. 4. In support of the second point noticed above the learned Advocate appearing for the Corporation relies upon an observation of Brett J. (afterwards Lord Justice Esher) made in the case of Carr v. London and North Western Railway Co. (1875) L.R. 10 C.P. 307 at p. 316 : (44 L.J.C.P. 109). In that passage the learned Judge states what in his opinion constitutes estoppel in pais. The first proposition enunciated by him need not be considered. (1875) L.R. 10 C.P. 307 at p. 316 : (44 L.J.C.P. 109). In that passage the learned Judge states what in his opinion constitutes estoppel in pais. The first proposition enunciated by him need not be considered. He states therein that the representation made by the man by words or conduct must amount to a wilful endeavour on his part to cause another to believe in a certain state of things which he knows to be false. This underlined (here italicised) portion has not been accepted as good law for estoppel would still operate even if the man making the representation does not know that the statement that he is making is false-he may believe it to be true but would still be estopped to deny the correctness of the statement as against another person if the other elements are satisfied. Then he proceeds on to say that: another recognised proposition seems to be, that if a man, either by express terms or by conduct, makes a representation to another of the existence of a certain state of facts which he intends to be acted upon in a certain way and it be acted upon in that way, in the belief of the existence of such a state of facts, to the damage of him who so believes and acts, the first is estopped from denying the existence of such a state of facts. It is on this observation that the learned advocate for the Corporation of Calcutta relies. He lays great stress on the passages we have underlined (here italicised). In the case of Greenwood v. Martins Bank, 1933 A.C. 51 : (101 L.J.K.B. 623) Lord Tomlin in delivering the judgment of the Privy Council formulated at p. 57 of the report what he considered to be the essential elements of estoppel. The first element was described by him as follows: (1) A representation or conduct amounting to a representation intended to induce a course of conduct on the part of the person to whom the representation is made etc. These passages do not, however, lay down the proposition that if the other acts in a way different from the way intended by the maker of the representation no estoppel would arise. This, to our mind, is how the Judicial Committee of the Privy Council understood the above mentioned passages in the case. These passages do not, however, lay down the proposition that if the other acts in a way different from the way intended by the maker of the representation no estoppel would arise. This, to our mind, is how the Judicial Committee of the Privy Council understood the above mentioned passages in the case. In the case of the Maritime Electric Company v. General Dairies, 1937 A.C. 610, Lord Mongham noticed the point, as also Brett J.'s judgment in Carr v. London and North Western Railway Company, (1875 L.R. 10 C.P. 307 : 44 L.J.C.P. 109) at p. 619 of the report and at p. 624 of the report observed thus: As above pointed out the agreed facts are of an unusual character, and the diligence of counsel was unable to find any authority (meaning thereby decisions of English Courts) in which the invalidity of an estoppel was held to turn on the circumstances that the course of conduct induced by the representation was not that intended to be caused by the person making the representation. As at present advised we cannot accept as correct the law as formulated by the learned advocates appearing for the Corporation of Calcutta. 5. The first point noticed above must also in our opinion be decided against the Corporation, The letter Ex. 'A' does not simply furnish the information that had been asked for by Nitya Hari in his letter of 11-1-1935 addressed to the Corporation of Calcutta. The junior Law Officer also made a demand of payment of the arrears and pointed out the course which the Corporation of Calcutta would follow if the arrears of consolidated rates were not paid promptly. It was a part of the duty of the Law Officer of the Corporation of Calcutta to give demand notice when consolidated rates were in arrears and to take steps for their recovery, and this has not been and cannot be disputed by the Corporation of Calcutta. The Junior Law Officer, therefore, had acted within his powers in writing the letter Ex. 'A' to Nitya Hari and the Corporation of Calcutta is bound by the representation of fact made in that letter. 6. The Courts below simply proceeded upon the language of S. 115, Evidence Act, and related the language of that section to the facts of the case. 'A' to Nitya Hari and the Corporation of Calcutta is bound by the representation of fact made in that letter. 6. The Courts below simply proceeded upon the language of S. 115, Evidence Act, and related the language of that section to the facts of the case. But the whole law of estoppel in pais is not laid down in that section. A familiar rule is that there cannot be estoppel against statute, but that rule is not to be found on the four corners of the section. The rule that there can be no estoppel against statute cannot, however, be invoked by the Corporation of Calcutta in the case before us, for though S. 149, Calcutta Municipal Act, creates a statutory liability on the owner to pay his share of the consolidated rates, the liability of Sati Bhusan for arrears of consolidated rates which fell due before the date of his purchase, was not a personal liability. He may have to pay those arrears, but only if he intends to save the property he had purchased from sale, for those arrears are also charged on that property by reason of the provisions of S. 205 of the Act. 7. We will now examine the question on principle as when estoppel can be pleaded against an artificial person, which can only be created either by Royal Charter or by statute. For that purpose we will have to examine closely the decision of the Judicial Committee given in Maritime Electric Company Ltd. v. General Dairies Limited (1937 A.C. 610) 8. The Maritime Electric Company was a public utility company, that is to say, a commercial undertaking formed for promoting public interest. It had to perform certain defined statutory duties imposed by the "Public Utilities Act of New Brunswick (chap. 127 of the Revised Statutes 1927 of New Brunswick.)" By the provisions of that statute it was under the duty to supply electric energy to consumers and for its service could charge at rates laid down in the schedule annexed to the statute by S. 16, it could neither charge more or less. If it charged different rates to different consumers it would be guilty of "unjust discrimination" (section 18) and would be charged to a penalty. If it charged different rates to different consumers it would be guilty of "unjust discrimination" (section 18) and would be charged to a penalty. Section 19 provided that: no person, form or Corporation (that is to say the consumer) shall knowingly solicit, accept or receive any rebate, concession or discrimination in respect to any service in, or affecting or relating to, any public utility whereby any such service is by any device whatsoever, or otherwise, rendered free or at less rate than that named in the schedules in force. A penalty was also provided for for violation of this section. 9. The General Dairies Company was a large consumers of electric energy supplied by that electric company. The electric company by mistake charged the dairy company for some years past a much lesser rate than that mentioned in the schedule to that Act. The bills so made were duly paid by the Dairy Company. The Dairy Company was purely a commercial undertaking. On the basis of these payments so made it prepared its yearly balance sheets, which consequently showed more profit earned than these balance sheets would have shown if the electric bills had been correctly made out. The Dairy Company accordingly declared larger dividends and paid them to its share-holders. Thereafter the Electric Company discovered its mistakes and made further demands for those past years by supplementary bills. Those supplementary bills not being paid it brought the suit to recover the amounts included in those supplementary bills. The Dairy Company pleaded estoppel. It was admitted that the Dairy Company acted on the representation made in the original bills as to the amounts payable for electric energy supplied in the belief that the representations were true and had acted on those representations to its prejudice by paying larger sums of money as dividends to its share-holders. Still it was held by the Judicial Committee of the Privy Council that the Electric Company was not debarred by the rule of estoppel from claiming the moneys mentioned in the supplementary bills. The principle on which the decision rests is that a Corporation cannot indirectly do by placing itself under the disability of estoppel, what it could not have directly done by reason of statutory prohibitions. That principle is not formulated for the first time in that decision but is a well established principle. The principle on which the decision rests is that a Corporation cannot indirectly do by placing itself under the disability of estoppel, what it could not have directly done by reason of statutory prohibitions. That principle is not formulated for the first time in that decision but is a well established principle. The principle is stated in general and in more comprehensive terms in Art. 542, vol. 13 of Halsbury's Laws of England p. 474, 2nd Edn. Our learned brother noticed and relied upon this decision but he did not examine the provisions of the Calcutta Municipality Act 1923, for the purpose of finding out what the Corporation of Calcutta could not do, or had the duty of doing, in respect of consolidated rates by reason of the provisions of that Act. This, in our opinion is essential, for the purpose of deciding the case. 10. In the first place it is to be observed that the Corporation of Calcutta is in no sense a public utility company like the Maritime Electric Company. It is not a commercial undertaking created by statute for public benefit. It is purely a public body formed solely for the purpose of serving the citizens of Calcutta. It has specific statutory duties to perform which are defined in part v of the Act, namely to keep the town clean by providing for conservancy, to maintain the streets, to construct, repair and maintain drains, to light up the town, to provide for water supply, etc. To discharge these statutory duties it would require funds. So a municipal fund is created. So it is authorised to raise money to create that fund by imposing and collecting consolidated rates and other fees. Section 80 of the Act expressly states that the municipal fund shall be held by the Corporation "in trust for the purpose of the Act." The right conferred upon the Corporation to impose and collect consolidated rates by the provisions of Part IV, Chap. X of the Act is thus coupled with a duty on its part. In other words the Corporation has not only a right to impose and collect consolidated rates but it is also at the same time under a duty to do so. There are some sections in that part which empowers the Corporation to grant exemptions in respect of the consolidated rates. One of those sections is S. 126. In other words the Corporation has not only a right to impose and collect consolidated rates but it is also at the same time under a duty to do so. There are some sections in that part which empowers the Corporation to grant exemptions in respect of the consolidated rates. One of those sections is S. 126. But for our purpose the provisions of S. 213 only are relevant. The material part of that section runs thus: The corporation may order to be struck off the books any sum duo on account of consolidated rates.......which may appear to them to be irrecoverable. Of course the Corporation is the sole judge as to whether the consolidated rates due in respect of a particular holding is irrecoverable or not. If it bona fide exercises its judgment and comes to the conclusion that it is irrecoverable its judgment cannot be revised by any outside body or tribunal. But the question is can the Corporation strike out the consolidated rates due in respect of a particular holding from its books in spite of its conclusion that it is not irrecoverable. In our judgment it cannot. There is a fundamental distinction between the capacity of a natural person and of an artificial person which has been created by Statute or Charter. To a natural person whatever is not expressly forbidden by the law is permitted by the law. He has the capacity to do everything save and except those forbidden by law. In the case of an artificial person-e.g., a corporation, which can be created either by charter or by statute the rule applicable to a natural person is reversed. Whatever is not permitted expressly or by necessary implication by the constituting instrument is prohibited not by any express or implied prohibition of the legislature but by the doctrine of ultra vires. This fundamental principle has been laid down in many cases Ashbury Railway Carriage and Iron Co. v. Riche (1875) L.R. 7 H.L 653 : (44 L.J. Ex. 185), Attorney General v. Great Eastern Railway Company : (1880) 5 A.C. 473 at p. 481 : (49 L.J. Ch. 545) and many other cases noticed in books on ultra vires. According to the principle on which the decision in Maritime Electric Company's case: (1937 A. C. 610) and of other cases noticed in Art. 542 of Vol. 185), Attorney General v. Great Eastern Railway Company : (1880) 5 A.C. 473 at p. 481 : (49 L.J. Ch. 545) and many other cases noticed in books on ultra vires. According to the principle on which the decision in Maritime Electric Company's case: (1937 A. C. 610) and of other cases noticed in Art. 542 of Vol. 13 of Halsbury's Laws of England, 2nd Edn., rest the estoppel, pleaded by the defendant in the case against the Corporation of Calcutta cannot succeed, for if that plea be allowed the consolidated rate due in respect of the holding which is not in the opinion of Corporation irrecoverable-(for it has sued for it) would be indirectly remitted which the Corporation of Calcutta could not by any act directly remit. 11. The result is that this Letters Patent Appeal is dismissed with costs.