John Beaumont, Kt., C.J.
1. This is an appeal from the decision of the District Judge of Ratnagiri. The plaintiffs are the Chiplun Municipality, and the defendants are certain gentlemen who were members of the managing committee of theChiplun Municipality for the years 1922-23 and 1928-24,
2. The facts giving rise to the litigation are stated at considerable length in the judgments of the lower Courts, but I think the facts material to this appeal can be stated very shortly. In the years 1922-23 theChiplun Municipality was minded to acquire some dustbins, and they entered into a contract for the supply of these dustbins with a gentleman named Tankale, The dustbins were supplied and delivery of them was taken by the Municipality, and Tankale was paid the contract price. The claim of the Municipality against the defendants is that they were the managing committee who entered into this contract, that the dustbins were not in accordance with the contract, and that the managing committee ought not to have paid for them. The claim in the suit originally was for the money paid to Tankale for the dustbins, being a sum of Rs. 681-8-6, but the learned trial Judge, holding that the Municipality could not keep the dustbins and also have the money paid for them reduced the claim and allowed to the Municipality the difference between what he held to be the true value of the dustbins and the amount which the Municipality had paid for them, that difference being a sum of Rs. 116-4-0. The lower appellate Court confirmed the decree with the modification that the amount for which the defendants were liable was Kb. 177-8-0.
3. Various technical defences were raised, and in order to deal with them it is necessary to look at the Bombay District Municipal Act, Bombay Act III of 1901, and the rules made thereunder. Under Section 9 of that Act the Municipality is a corporation with perpetual succession and with the right to sue in its corporate name. By Section 27 the managing committee is constituted with power in effect to carry out the duties of the Municipality. By Section 37 the Municipality has power to delegate its powers. By Section 40 it is given power to contract, by Section 46, power to make rules, and by Section 50 all the property of the Municipality vests in the Municipality. There are two other sections which are material, viz., Sections 42 and 167, to which I will refer more in detail, because it is on those sections that the judgments of the lower Courts were based and on which the judgment of this Court must depend.
4. Before discussing those sections I ought to refer to some of the rules which were made by the Municipality under the powers conferred by Section 46 of the Act. By Rule 68 it is made the duty of every committee to see that all works in their department are duly executed in accordance with duly sanctioned plans and estimates, Completion certificates are to be required for all works and are to be countersigned by one member of the committee in token of his having personally inspected the work and satisfied himself that it has been thoroughly well executed in accordance with plans and estimates. Rule 95 provides that monies may be paid on behalf of the Municipality only as follows:-Any sum exceeding Rs. 25 by the president by cheque. Rule 113 provides that no payments on behalf of the Municipality shall be made, except in cases covered by Rule 114 before payment has been ordered by the controlling committee. And Rule 120 provides that before ordering payment of any claim against the Municipality the controlling authority or the chairman acting under Rule 116 shall satisfy himself as to various matters.
5. Now the claim against the defendants is that they as managing committee gave their completion certificates in respect of the contract with Tankale without satisfying themselves that the contract had been properly carried out. The learned trial Judge held that in fact the contract had not been properly carried out and in effect, I think that he held that the defendants were guilty of negligence in giving completion certificates. The plaintiffs originally made a claim against the defendants of fraudulent collusion with Tankale, but that case was not established and the only case proved against the defendants in the trial Court was that they gave their certificates improperly. For the purposes of this appeal I accept those findings.
6. The first defence raised was that the suit did not lie having regard to Section 42 of the Act. That section provides:-
Every councillor shall be personally liable for the misapplication of any fund to which he shall have been a party, or which shall have happened through, or been facilitated by, gross neglect of his duty as acouncillor, and may be sued for recovery of the moneys so misapplied as if such moneys had been the property of Government.
Both the trial Court and the lower appellate Court held that this was a case of misapplication of moneys within Section 42, but that even so Government! was not a necessary party to the suit, With all respect to the lower Courts I disagree with them on both points, If this were a suit within Section 42 it seems to me that the Government would be the only possible plaintiffs. Section 42 imposes on a councillor a liability to be sued for misapplication, or for facilitating by the neglect of his duty as a councillor the misapplication, of moneys of the Municipality, and he is to be sued as if such moneys had been the property of Government. I apprehend that if the moneys had been the property of Government nobody but Government could have sued in respect of them, and therefore if the suit had been brought under Section 42 it could, as it seems to me, only have been brought by Government. But I agree with the lower Courts in thinking that the Municipality can itself sue for misapplication of its moneys. In my opinion a 42 does not deprive the Municipality of the right which it possesses under the ordinary law of suing any person, whether or no he be a councillor, who misappropriates the Municipality's property. I apprehend that the reason for providing in Section 42 that moneys may be recovered from a councillor as though the property of Government was to give Government the power to take action in cases in which the Municipality neglects to do so, but I see nothing in the section to deprive the Municipality of the right which any owner of property would have to sue anybody who wrongfully misapplies such property.
7. But, in my opinion, the facts in this case do not establish any misapplication of the Municipality's money. The Municipality were quite entitled to order the dustbins, and they were quite entitled to take delivery of them, and pay for them, and having paid they could not recover the money. It was not in fact the defendants who paid, because the defendants were not the persons to pay out the money of the Municipality, All that the defendants did was to give completion certificates in a negligent manner, and that, in my opinion, was not a misapplication of the moneys of the Municipality.
8. The cause of action against the defendants being, in my opinion, for damages for negligence, the next question which arises is whether Section 167 of the Act applies to the case. The trial Court and also the lower appellate Court disposed of that issue by saying that inasmuch as this was a case of misapplication of the Municipality's money it was not an act done or purporting to be done under the terms of the Act of Parliament and therefore Section 167 had no application. But if the cause of action be for negligence, the question assumes a different aspect. Section 167 is in these terms:-
No suit shall be commenced against any Municipality, or against any officer or servant of a Municipality, or any person acting under the orders of a Municipality, for anything done, or purporting to have been done, in pursuance of this Act, without giving to such Municipality, officer, servant or per., son one month's previous notice in writing of the intended suit and of the cause thereof, not after six months from the date of the act complained of.
It is not disputed that no notice was given in this case to the defendants. Two of the completion certificates complained of were given more than six months before the suit was commenced, though the third certificate was given within six months. The question is whether that section applies to an action by the Municipality against the members of its managing committee for negligence in giving completion certificates. In my opinion the section does 80 apply. I think that such a suit is one against officers of a Municipality, and also against persons acting under the orders of the Municipality, for something done in pursuance of this statute. The act of the defendants in giving the completion certificates was done in pursuance of their obligations arising under this statute and the rules made thereunder, and was done as officers of the Municipality, and acting under the orders of the Municipality. That being so it seems to me that the suit is one within Section 167, and that notice ought to have been given, and as notice was not given I think the suit must fail. In my opinion it is not necessary to discuss the other defences raised.
9. The appeal must, therefore, be allowed with costs throughout.
Broomfield, J.
1. This suit was filed by the chiplun Municipality on July 19,1924, against four defendants who had formed the managing committee of the Municipality for the years 1922-23 and 1923-24 to recover the sums paid in respect of certain contracts for supplying dustbins, the allegation being that excess payments had been made through gross negligence on the part of the defendants.
2. There has been a great deal of discussion in both the lower Courts as to whether the suit is one which comes within the scope of Section 42 of Bombay Act III of 1901. Both Courts have held that it does come under that section. I agree with the learned Chief Justice that this finding is wrong. The section does not say in so many words by whom the suit is to be brought or by whom the liabilities ofcouncillors officers and servants of a Municipality are to be enforced, but the concluding words of the first paragraph of the section are that the responsible person may be sued for recovery of the moneys misapplied ' as if such moneys had been the property of Government', and it is difficult to see how such a suit could possibly be brought except by Government. The Municipality is not suing to recover this money as if it were the property of Government, but as if it were the property of the Municipality. It is not necessary, however, in my opinion, that a suit of this kind should be based upon Section 42. No doubt the plaint seems to have been framed on that basis although the plaint itself does not refer to Section 42. The relief claimed was the whole of the money paid in respect of the contracts and in the purshis which was put in by the plaintiffs' pleader it was expressly stated that the suit was founded upon Sections 42 and 50 of the Bombay District Municipal Act. Nevertheless the suit is in effect one for damages for negligence and it has been so treated by both the lower Courts, for in spite of the finding that Section 42 applied the amount decreed was the difference between the sums paid and the value of the dustbins, not the whole of the payments. The District Judge modified the decree of the trial Court and found that a larger sum was due by way of damages but his decree was based on the same principle. So far as I am aware there is no reason why a suit of this kind-a suit for damages for negligence -should not be maintained by a Municipality against the members of its managing committee.
3. One of the contentions raised on behalf of the appellants was that the plaint in the case was not properly signed. There is a by-law of the Chiplun Municipality which provides thatvakalatnamas and powers-of-attorney shall be signed by the chairman of the managing committee, and it appears that the chairman of the managing committee, who at the time of the filing of the suit was one Mr. Bapat, was authorised to sign the plaint. But some days after the filing of the plaint the managing committee was suspended by the Collector by reason of a breach of another by-law which requires that the said committee shall include a certain number of members of the former managing committee. The argument is, therefore, that Mr. Bapat was not legally the chairman of the managing committee and had no power to sign the plaint, In my opinion there is no real substance in this point. Mr. Bapat was de facto chairman of the managing committee. No one else but he could apparently have signed the plaint under the rules of the Municipality and there is no doubt that the Municipality has authorised the filing of this suit. I think this is a case which is covered by Section 99 of the Civil Procedure Code. At the most it is an irregularity in the proceedings which does not affect the merits of the case.
4. But if the suit is maintainable only if it is treated as a suit for damages for negligence, a difficulty at once arises under Section 167 of the Act which provides :-
No suit shall be commenced against any Municipality, or against any officer or servent of a Municipality, or any person acting under the orders of a Municipality, for anything done, or purporting to have been done, in pursuance of this Act, without giving to such Municipality, officer, servant or person one month's previous notice in writing of the intended suit and of the cause thereof, nor after six months from the date of the act complained of.
It has been argued that this section does not apply because the defendants were not officers or servants of the Municipality, and we were referred to a municipal Rule 83 by which officers and servants are defined. But that is a definition for the purposes of the rules and not for the purposes of the Act. There is no definition of officer or servant in the Act and I can see no reason why the members of the managing committee should not come under the designation ' officer of the Municipality.' They could also, it seems, be described as ' persons acting under the orders of the Municipality.' It is true that they were not officers of the Municipality nor acting under its orders at the time of the suit, but, in my opinion, that makes no difference. Damages are claimed in the suit for acts done by the defendants as officers of the Municipality, and the provisions as to notice and limitation in Section 167 would seem to be necessary a fortiori in the case of a person who has severed his connection with the Municipality at the time of the suit. The further contention that Section 167 does not apply because the suit is not for anything done or purporting to have been done in pursuance of this Act has, in my opinion, no force either. If the suit had been a suit coming under Section 42 and were based upon misapplication of the municipal funds there might have been some point in that argument. But if the suit is to be treated as one for damages for negligence then the gist of it is that the defendants issued these certificates and made these orders for payment negligently, But the issuing of the certificates and the making of the orders for payment must be regarded as things done in pursuance of the Act. As the learned Chief Justice has pointed out no notice was in fact given to the defendants and in respect of part of the cause of action the suit is also barred by time.
5. I agree, therefore, that the suit must be dismissed with costs throughout.