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Gujarat High Court · body

1986 DIGILAW 10 (GUJ)

CHITRA PUBLICITY CO. v. MUNICIPAL CORPORATION AHMEDABAD

1986-01-15

A.P.RAVANI

body1986
A. P. RAVANI, J. ( 1 ) HAVING been forced to get out unceremoniously from one gate Special Civil Application in High Court) the appellant herein. a firm dealing in publicity lousiness. has knocked another gate (Civil Suit in City Civil Court) and shorn of technical niceties. In substance it prays whether the defendant-Corporation is without or not permit me to be its guest that is tn say. permit to perform the alleged contract appeals that the defendant-Corporation would probably be not unhappy if the Court grants permission but of its own it does not seem to be willing to take this decision. In this situation should the Court help the plaintiff ?. ( 2 ) THE appellant-original plaintiff filed suit being Civil Suit No. 2371 of 1985 in the City Civil Court Ahmedabad inter alia praying that Resolution dated 29/06/1984 passed by the Municipal Corporation to declared illegal and void. By this Resolution the Corporation resolved to reduce the period of the proposed contract from 5 years to 1 year. The appellant-plaintiff appeal to be a firm doing business in advertising and publicity. In response to the advertisement given by the respondent-Municipal authorities the appellant filled in the tender for the work of fixing poles and putting sign boards and kiosk and for putting dust-bins or metal receptacles at a certain height of the poles. The tenders here invited for different zones in the Corporation area. As per the letter dated 30-7-1983 (Mark 3/12) written by the Municipal Commissioner the Standing Committee passed a resolution dated 28-9-1983 (Mark 3/13 and resolved to accept the tender subject to the approval of the General Board of the Corporation in Gujarat the relevant part reads as follows: ( 3 ) EVEN in the letter written by the Municipal Commissioner it is specifically stated in the subject heading itself that the proposal was to pass resolution subject to the approval of the Municipal Corporation. Thereafter the Municipal Corporation passed Resolution on 29/06/1984 and resolved that as the plaintiff had not executed the terms and conditions of the tender. the period of five years be reduced to one year. The Corporation thus resolved that at appropriate place in the Standing Committee resolution instead of five years one year be substituted According. the General Board modified the resolution passed by the Standing Committee and gave its approval. the period of five years be reduced to one year. The Corporation thus resolved that at appropriate place in the Standing Committee resolution instead of five years one year be substituted According. the General Board modified the resolution passed by the Standing Committee and gave its approval. ( 4 ) MEANWHILE it appears that the plaintiff had submitted four draft agreements typed and/or hand-written on stamp papers It also appears that these papers of draft agreements were signed by the plaintiff. It is undisputed posittion that the draft agreement has not been signed by the Commissioner on behalf of the Municipal Corporation. There is nothing to show that the Commissioner had even approved the draft. It is contended that the Estate Officer has signed the same. However the Estate Officer is not empowered to sign contract on behalf of the Municipal Corporation and therefore it cannot be said that the Estate Officer has signed the same on behalf of the Municipal Corporation or the Commissioner. Thus the fact remains that the Commissioner who is the competent authority to sign the contract on behalf of the Corporation has not signed the same. ( 5 ) BEFORE filing the suit the plaintiffs had filed Special Civil Application No. 3571 of 1984 in this High Court. The petition was admitted and ad-interim relief was vacated the appellant-plaintiff withdrew the petition its resolution (Coram: N. H. Bhatt J. as he then was) But later on when by a speaking order passed by me the ad-interim relief was vacated the appellant plaintiff withdrew the petition and thereafter filed the suit with a prayer that the Resolution dated 29/06/1984 passed by the General Board of the Municipal Corporation modifying Standing Committee resolution so as to reduce the period of contract from 5 (five) years to 1 (one) year be declared illegal and void and alternatively the plaintiff be awarded damages to the tune of Rs. 30 0 0 (thirty lacs) for breach of contract the plaint is not produced on record of the appeal. But the main prayer was read out before me. It is elaborately worded. Though the substance of the same is that the impugned Resolution be declared illegal and void. It has varied implications which will be discussed little later. 30 0 0 (thirty lacs) for breach of contract the plaint is not produced on record of the appeal. But the main prayer was read out before me. It is elaborately worded. Though the substance of the same is that the impugned Resolution be declared illegal and void. It has varied implications which will be discussed little later. Before the trial court the appellant-plaintiff also took out notice of motion and prayed that toe appellant-plaintiff be allowed to continue the contract work This would mean that even beyond the period of one year as modified in the impugned resolution. the appellant-plaintiff should be allowed to operate the contract. ( 6 ) THE trial court in an unusually lengthy order dated 2/12/1985 (running into about 52 typed pages) came to the conclusion that the appellant plaintiff was not entitled to the interim relief claimed by it. The trial court rejected the notice of motion mainly on the ground that there was no concluded contract as required under the provisions of the Bombay Provincial Municipal Corporations Act 1949 (hereinafter referred to as the Act) and the Rules and even if there be any such contract the relief of injunction as prayed for cannot be granted. It is against this order that the plaintiff has preferred this appeal from order. ( 7 ) BY the same order the trial court rejected an application filed by (1) Purshottambhai H. Patel (2) Himatlal Deva and (3) Gambhirbhai D. Shah rival businessmen for being joined as a party-defendant in the suit. The said third party has preferred Revision Application against the same order in this High Court. It has been alleged by rival businessmen that in the contract there is a huge margin of several lacs of rupees and according to the case of this third party the contract has been given arbitrarily and without following the procedure laid down by the Act and Rules for the disposal of the public properly. That revision application is pending in this High Court. That revision application is pending in this High Court. ( 8 ) AT the outset it must be said that the trial court ought not to have made certain observations against the Corporation which were in the facts and circumstances of the case not only unnecessary but are also improper In para 71 of the order the trial court has observed:" It is curious as to how the General Board thereafter ex-parte arbitrarily and without any basis or even authority can change material term of the contract to the detriment of that right of plaintiff without him (it appears that some word is missing after the word without and before the word him. Probably it may be hearing ). In the same para it is further observed:" Yet by a stroke of pen without consulting the party suffering only due to factions inter-se and some rivalry the General Board curtailed the period. . . . . "the trial court ought to have realised that the material of contract in question other side (the plaintiff) was never required to be heard Moreover there was basis for modification of the term of the contract and the same has been mentioned in the resolution itself. Unfortunately the trial court has not cared to read the same properly. The trial court ought to have realised that if the resolution was passed by the Corporation on account of factions and inter- rivalry the same factor may have very well announced the members of the standing committee also. Further the Corporation exercised its power under the Act and also because as per the long standing practice of the Corporation the entire chapter was forwarded to it. The Corporation had not called for the papers; they were sent to it by in Standing Committee. ( 9 ) WHILE dealing with the conduct of elected representatives of the people it would be better if the trial court had reminded itself that we have adopted a democratic from of government wherein ultimately the will of the people as expressed by their chosen representatives must prevail and not the will of the judiciary or that of executive officers who are not directly accountable to the people. It may be that the decision of such an elected body may be erroneous. It may also not to the liking of the judicial officer or the executive officer concerned. It may be that the decision of such an elected body may be erroneous. It may also not to the liking of the judicial officer or the executive officer concerned. But if such an elected body has acted within the limits of its powers and authority and has done something while performing its functions assigned to it under the Act such loose observations as noted hereinabove are certainly not called for. Some measure of restraint is necessary while discussing the conduct of the elected representatives of the people. If democracy is to survive then proper respect has got to be shown to the democratically elected representatives of the people. The Corporators may be right may be wrong. They They might have committed even serious mistakes but before attributing arbitrariness to them it would have been better for the learned trial court Judge to read the resolution itself properly. ( 10 ) IN the impugned Resolution it is mentioned that the appellant-plaintiff had failed to execute the terms and conditions of the tender and therefore the period of contract was required to be reduced. This is the reason which has weighed with them. In this appeal the learned Advocate General appeared for the appellant plaintiff. He has also argued on the basis that the impugned resolution did not specify any reason for reducing the period of contract from five years to one year. It appears that similarly before the lower court also the counsels appearing for the parties might not have drawn the attention of the trial court to this part of the resolution. To be fair to the learned trial court Judges it may be observed that he might have been misled as no one might have drawn his attention to this particular part of the resolution. But it is a five line resolution and the learned Judge himself ought to have taken the trouble to read the same. Unfortunately it appears that the learned trial court Judge has not properly read the impugned resolution which is under challenge. If the learned Judge found that there were factions in the Municipal Corporation and on account of the factional fight the decision was being taken one way or another it should not have been forgotten by him that on account of the factions only the decision at the Standing Committee level also might have been taken. If the learned Judge found that there were factions in the Municipal Corporation and on account of the factional fight the decision was being taken one way or another it should not have been forgotten by him that on account of the factions only the decision at the Standing Committee level also might have been taken. Simply because one or another faction has prevailed over at another level the earlier decision which also has been taken by a smaller committee of the same Corporation would not be free from that very charge. If one keeps his ears and eyes open every- where groups and factions will be found. On the other hand there is more likelihood of there being groups and factions in democratically constituted institutions. Moreover one important aspect should be borne in mind. At times parties resort to court proceedings not to resolve their dispute but either to pass over the buck to the courts or with a view to see that the matter remains in confused state at least for some time. In such a situation if a faction in power is helping outsider (the plaintiff) then both of them will less conspicuously but in most sophisticated manner help each other and go on playing the ding- dong battle. They would make it appear to other members of the Corporation and the unwary public that it was on account of the court proceedings that the stalemate continued. In this very matter such a course appears to have Wen adopted. But since it is not germane to the dispute I refrain from articulating my reasons for forming such impression. For all these reasons factional fight between the members of the Corporation should not ordinarily weigh with the Court in the dispute as is involved in this case. As far as possible the courts should refrain themselves from being dragged into the factional fight between different groups of such corporate and elected bodies. ( 11 ) THE appellant-plaintiff has elaborately worded the main prayer the substance of which is to pray for declaration that the impugned resolution passed by the Corporation be declared illegal and void. But if properly analysed and understood the Prayer if granted will have many other implications. They are as follows:1 First of all the court will have to hold that there is a concluded contract arrived at between the appellant-plaintiff and the respondent-Municipal Corporation. But if properly analysed and understood the Prayer if granted will have many other implications. They are as follows:1 First of all the court will have to hold that there is a concluded contract arrived at between the appellant-plaintiff and the respondent-Municipal Corporation. 2 That such a contract could be legally arrived at and it has been arrived at in view of the conduct of the Municipal Corporation and the correspondence which has taken place and that such contract is binding to the Municipal Corporation. 3 That the contract is still subsisting despite the resolution dated 29/06/1984 passed by the General Board of the respondent-Municipal Corporation. 4 That the resolution passed by the General Board is of no consequence and it has got to be ignored. 5 That a specific performance of the contract which has never been reduced into writing and which has never been regularly executed be grantedif the aforesaid implications of the grant of prayer are perceived it would immediately be noticed that such a suit itself is prima facie not maintainable. A contract is after all a matter of volition between two parties. It always takes twos to make a contract. A corporate body like Corporation being a creature of the statute call act in accordance with the statute an no contract can be foisted upon it because one or another of its officers has conducted him- self in a particular fashion. In this view of the matter the trial court ought to have held that there was no prima facie case whatsoever in favour of the plaintiff. 12 Simply because the plaintiff has given draft agreement signed by it it cannot be said that the Municipal Corporation is bound by the same. If one reads the resolution passed by the Standing Committee and forwarding letters written by the Municipal Commissioner and the Estates Officer everywhere it is stated that the contract was to be entered into subject to the approval of the Corporation. It is stated on behalf of the Municipal Corporation that this is the practice of the Municipal Corporation. As per the practice such contracts are entered into only after the approval of the General Board of the Municipal Corporation. There appears to the substance in adopting such practice. Such types of contracts would fall within the purview of sec. 79 (c) of the Act and not within the purview of sec. As per the practice such contracts are entered into only after the approval of the General Board of the Municipal Corporation. There appears to the substance in adopting such practice. Such types of contracts would fall within the purview of sec. 79 (c) of the Act and not within the purview of sec. 79 (a) and (b) as contended by the plaintiff. Section 79 deals with the disposal of municipal property. Clauses (a) and (b) of sec. 79 empower the Commissioner to dispose or the property in certain cases. Section 79 insofar as it is relevant for our purposes reads as follows:"79 With respect to the disposal of property belonging to the Corporation other than property vesting in the Corporation exclusively for the purposes of the Transport Undertaking the following provisions shall have effect namely : (a) the Commissioner may in his discretion dispose of by sale letting out on hire or otherwise any movable property belonging to the Corporation not exceeding in value in each instance five hundred rupees or such higher amount as the Corporation may with the approval of the State Government from time to time determine or grant a lease of any immovable property belonging to the Corporation including any right of fishing or of gathering and taking fruit and exceeding twelve months at a time: Providing that the Commissioner shall report to the Standing Committee every lease of immovable property within fifteen days of the grant thereof unless it is a contract for a monthly tenancy or the annual rent thereof at a rack rent does not exceed three thousand rupees; (b) with the sanction of the Standing Committee the Commissioner may dispose of by sale letting out on hire or otherwise any movable property belonging to the Corporation of which the value does not exceed five thousand rupees; and may with the like sanction grant a lease of any immovable property belonging to the Corporation including any such rights as aforesaid for any period exceeding one year or sell or grant a lease in perpetuity of any immovable property belonging to the Corporation the value of premium whereof does not exceed fifty thousand rupees or the annual rantal whereof does not exceed three thousand rupees; (c) with the sanction oil the Corporation the Commissioner may lease sell let out on hire or otherwise convey any property movable or immovable belonging to the Corporation". ( 12 ) THE amount of consideration involved in the contract would take it out of the purview of the provisions of clause (a) and (h ). Hence if the afore- said provision is read together with provisions of secs. 73 and 74 of the Act. it would be clear that the contract is required to be executed by the Municipal Commissioner only after the sanction of the Municipal Corporation. In this connection reference may be made to the provisions of sec. 73 (b) of the Act which read as follows:"73 (b) No such contract for any purpose which in accordance with ally provision of this Act the Commissioner may not carry out without the approval or sanction of some other municipal authority shall be made by him until or unless such approval or sanction has first been duly given". In the instant case other municipal authority was the Corporation itself. Everyone concerned understood this and right from the stage of proposal to the Standing Committee made by the Commissioner there is reference to the approval of the Corporation to be obtained. ( 13 ) SECTION 74 makes it clear that the contract shall be executed in the manner provided by Rules and sub-sec. (2) of sec. 74 directs that no contract which is not made in accordance with the provisions of the Act and the Rules shall be binding on the Corporation. In Chapter V of Schedule A the Rules relating to the execution of the contract are to he found. In this case there is no contract arrived at by and between the parties in the manner provided under the Act and the Rules. In view of the mandatory provisions of sec. 74 (2) of the Act when there is no such contract the question of coming into existence of any such contract by correspondence and the same being binding on the Corporation does not arise at all ( 14 ) THE Corporation is after all a creature of statute. The Corporation can act as per the provisions of the Act and the Rules by which it is created and governed. The Corporation can act as per the provisions of the Act and the Rules by which it is created and governed. The Act makes specific provision as regards the manner and method of entering into contract by and on behalf of the Corporation The Act does not make any provision by which it can be said that the Corporation can be said to have entered into a contract on account of certain acts and/or omissions of its office bearers. However from the factual point of view in this case at every stage the Municipal Commissioner and the Standing Committee has said that the tender shall be accepted subject to the approval of the General Board of the Corporation. Therefore even from the point of view of the conduct it cannot be said that any contract has been arrived at between the parties. At every stage the appropriate officer and/or authority of the respondent- Corporation has made it clear that the final step shall be only after the proposal is approved by the General Board of the Municipal Corporation. This is also the practice of the Municipal Corporation. It is not that it was only in this case this practice was applied. Therefore by no stretch of reasoning it can be said that the Municipal Corporation has entered into contract by its conduct. More- over it is also not permissible to infer such contract on the basis of conduct of some of its officers. (If necessary reference may be made to the decision of the Supreme Court in the case of H. S. R. v. New Delhi Municipality reported in AIR 1962 SC 554 ). ( 15 ) THE argument that it was within the power of the Commissioner and the Standing Committee of the Municipal Corporation to enter into contract and if these two authorities have done something in anticipation of the sanction of General Board and if that event does not fructify the power exercised by the authorities i. e. the Municipal Commissioner and the Standing Committee would not be invalidated has no merits First of all in the instant case the power to enter into contract would be governed by sec. 79 (c) and not by sec. 79 (a) and/or (b) of the Act. Therefore the argument that the power is with the Municipal Commissioner and the Standing Committee has got to be rejected. 79 (c) and not by sec. 79 (a) and/or (b) of the Act. Therefore the argument that the power is with the Municipal Commissioner and the Standing Committee has got to be rejected. ( 16 ) EVEN assuming for a moment that the Municipal Commissioner and the Standing Committee have power to enter into such contract then also both these authorities have made it expressly clear that they shall not exercise the power unless the approval of the General Board is obtained. The Municipal Commissioner is the principal Executive Officer under the provisions of the Act. If he in his wisdom thinks that although power is conferred upon him in the particular facts and circumstances of the case it would be proper to obtain the approval of larger body constituted by the elected representatives of the people and then only it would be proper to enter into contract then it cannot be said that he is acting arbitrarily or that he is abdicating his duty. Be it noted that the Corporation is constituted by the elected representatives of the people. The Municipal Commissioner is only an Executive Officer who is not directly accountable to the people. If for the proper democratic functioning of the Corporation the Municipal Commissioner feels that in certain cases he should exercise his power only after taking approval from the General Board of the Corporation he would be well within his limits and would also be acting in conformity with the basic tenets of democracy. ( 17 ) ON the contrary in some cases it would be proper even where the Municipal Commissioner is expressly empowered to exercise power of his own that he may seek the approval or at least he may take the same of the elected representatives of the people. In the instant case the Standing Committee also found it proper that the prior approval of the General Board be taken and there- after only the contract be entered into. There appears to be good reason for adopting such a course. First reason the long standing practice of the Corporation in such cases. Secondly the amount involved in the contract work for a period of five years would run into several lacs of rupees. Thirdly prima facie it appears that the case fell within the scope of sec. 79 (c) and not within sec. First reason the long standing practice of the Corporation in such cases. Secondly the amount involved in the contract work for a period of five years would run into several lacs of rupees. Thirdly prima facie it appears that the case fell within the scope of sec. 79 (c) and not within sec. 79 (a) and (b) of the Act as contended by the appellant plaintiff. Moreover it may be noted that both these authorities have so far not exercised their power. Both have made it clear that the tender will be accepted only after the approval of the General Board of the Municipal Corporation is obtained. The argument as advanced may have some merit had these two authorities i. e. the Municipal Commissioner and the Standing Committee exercised their power. In the instant case it has not so happened. Both the authorities have thought it fit to await the decision of the General Board of the Municipal Corporation. Hence the argument that both the authorities are duly empowered and therefore the power exercised is valid and the same cannot be invalidated on the ground of anticipatory approval not coming forth has no merit and has got to be rejected. ( 18 ) THE trial court was right in holding that in such matters injunction cannot be granted. The trial court has relied upon the provisions of sec. 14 (c) and sec. 41 of the Specific Relief Act. It is argued that as there is a clause in the draft agreement empowering the Municipal Commissioner to terminate the contract after giving one months notice it should be construed that the contract by its very nature is not determinable. The argument has no merit. Even if this clause is not inserted the nature of the contract would remain what it is. If the clause is inserted the contract does not become indeterminable or determinable. The nature of the contract has got to be understood by referring to the contract itself and not by referring to this particular clause. In the facts and circumstances of the case there is nothing to show that such a contract cannot be determined and such a contract cannot be said to be determinable in its nature. The nature of the contract has got to be understood by referring to the contract itself and not by referring to this particular clause. In the facts and circumstances of the case there is nothing to show that such a contract cannot be determined and such a contract cannot be said to be determinable in its nature. On the contrary it can be said that because the contract was determinable a clause was necessary to be incorporated with a view to provide the manner and method of determining the same. Clause (3) of the draft agreement provides the manner and method of determining the contract. The trial court has rightly come to the conclusion that if at all there is any breach of the contract the compensation will be an adequate alternative remedy and specific performance of the contract in such cases cannot be granted. ( 19 ) THE argument that the plaintiff is seeking to enforce a right under the contract and not seeking. specific performance of the contract has also no merit. By simple change of terminology the substance of the prayer cannot his changed. If one enforces the right under a contract he is enforcing the contract itself. However in the instant case no such contract has come into existence which can be enforced against the Municipal Corporation. There fore the question of enforcing the right under a contract also does not arise. ( 20 ) THE argument that the provisions of sec. 74 and Chapter V of Schedule A to the Act are not attracted at all cannot he accepted. By entering into the transaction with the plaintiff the Municipal Corporation is disposing of its property and therefore the provisions of sec. 79 of the Act are attracted. When the property of the Municipal Corporation is being disposed of some contract is required to be entered into and the literal meaning to the provisions of Rule 1 falling in Chapter V cannot be given. If one reads Rule 2 of Chapter V it becomes clear that in certain cases the Commissioner is required to call for the tender and then follow the provisions of sec. 73 also. Reading the entire Chapter V of the Rules and the provisions of sec. If one reads Rule 2 of Chapter V it becomes clear that in certain cases the Commissioner is required to call for the tender and then follow the provisions of sec. 73 also. Reading the entire Chapter V of the Rules and the provisions of sec. 73 and 74 it has got to be held that even if the provisions of a particular part of the Rules is not applicable to the facts of the case the principles underlying the provisions of the Act and the Rules are applicable to the typos of contract in question. . ( 21 ) THE argument that equity takes as done that which ought to have been done and therefore the Commissioner and the Standing Committee should have been presumed to have done things which were within their powers and authority has also no merit. It has already been observed hereinabove that the Standing Committee and the Municipal Commissioner have no authority to enter into such contract. Even assuming for a moment that they have any such authority or power even then both these authorities have made it clear right from the beginning that the contract shall be entered into only after the approval of the Corporation is obtained. This fact has also got to be taken into consideration. Both these authorities have made it abundantly clear that their action was subject to the approval of the General Board. When the General Board has not approved the proposal of the Standing Committee for entering into contract for five years it cannot be said that the principle of equity would come into play No principle of equity says that such material facts be ignored and a statutory corporation be foisted with a contract though not executed as required under the Act and the Rules. ( 22 ) NO other contention is raised. ( 23 ) IN above view of the matter the appeal fails and the same is hereby dismissed. ( 24 ) IN view of the order of dismissal pass. . d on the appeal from order the civil application does not survive and hence the same is rejected. (KMV) appeal dismissed. .