President, District Board vs Koneru Lakshmayya

Horwill, J.—The District Board of Kistna has brought these suits against the defendants, who are motor bus proprietors for a permanent

injunction restraining them from plying their motor cars on the roads of the District Board of Kistna without a licence, and for recovery of licence

fees or damages from the defendants for running their respective motor vehicles without licences. The District Munsiff of Masulipatam discussed

the various points of law that arose in a very elaborate judgment and came to the conclusion that the District Board was not entitled to an

injunction, that they were not entitled to the recovery of licence fees as such; but that there was nothing in law to prevent the District Board from

recovering damages for damage to their roads; and he has assessed the damages on the basis of the licence fees which the defendants did not pay.

The District Judge, while agreeing with the trial Judge that the suit was maintainable, held that the action of the District Board in granting temporary

licences was ultra-vires and that the defendants, although in fact they only received licences for two months, must be deemed to have obtained

licences for a full year, as the District Board was not entitled to refuse them licences for that period. He therefore allowed the appeals and

dismissed the suits.

The facts that gave rise to the trouble between the Kistna District Board and the various bus proprietors in the District were that certain

proposals had been sent to Government for a modification of the bye-laws, so that a higher rate for licence fees might be charged. There was also

some question as to the legal position that would arise from a bifurcation of the District Board. While these proposals were pending with the

Government, the District Board were unwilling to grant licences for the full period of a year and granted licences for two months only, debiting the

bus proprietors with one-sixth of the annual rate. Upon the expiry of that two months the defendant made no application for further licences, but

continued to ply their buses without licence, until the end of the year. It appears from the correspondence that has been filed that other bus

proprietors did apply for renewals of their licences and were told that licence would be granted for the remaining period of the year upon their

paying the proportionate share of the remaining months in the year of the new rate of licence sanctioned by the Government.

A point was raised in the Courts below whether the District Board, in view of the provisions of bye-law 4, Sub-section 1, could issue licences

for a period less than one year. The District Munsiff seemed to think that they could and held that in any event the defendants were estopped from

denying the right of the Board, in that they had accepted the licences. The District Judge thought that there could be no question of estoppel,

because the actions of the proprietors in applying for licences for a year and in running their buses for a year showed that they did not accept the

terms of the licence, while the evidence let in on behalf of the plaintiff did not show that there was an acceptance of the licence for two months. I

have been taken through some of the more important evidence on this point and there can be no doubt that the motor bus proprietors in the Kistna

District were well aware of the discussions that were taking place in the Council and the proposals to enhance the rates for the granting of licences.

They were also aware of course of the proposal to bifurcate the District Board. It is also equally clear from the evidence that the District Board

intended to extend the licences without question subject to the payment of such enhanced licence fees as might be sanctioned by the Government.

It has been contended that there is nothing to show that the bus owners were able to read the stipulation in the licences granted that they were

good only for two months. In view of the fact that the bus owners had been protesting to the District Board against any enhancement of licence

fees, the defendants cannot be heard to say that they were not aware of the stipulation of the licence. Even if they did not know English it would be

their business to find out what was written in their licences. After setting out the particulars regarding the description of the vehicle, fees paid, etc.,

there was a note in the licence to this effect:

In view of the fact that revised bye-laws which are sent up for the formal approval of Government, will come into operation shortly, and in view of

the fact that an elected Board will come into office ere long, this licence is granted only from 1st April, 1929, to 31st May, 1929.

The defendants were therefore well aware of the fact that the District Board purported to issue this licence for a period of two months only. Had

the defendants refused to accept the licence for such a short period, then the District Board would have had the option of either issuing a licence

for a year or refusing it altogether; and it would appear from the conduct of the officers of the Board and the correspondence that took place that it

is probable that the Board would have refused to issue the licences for a whole year in view of the fact that the licence fees which were expected

to come into force shortly were very much higher than the licence fees then current. At any rate, by accepting these licences the defendants made it

impossible for the District Board to exercise any discretion in the matter, and prima facie they would be estopped from denying that the District

Board had authority to issue licences for a period of two months only. The argument of the earned Counsel for the defendants is that even if it is

true that the action of the defendants showed that they, accepted the two months'' licence, there cannot be any question of estoppel if the contract

was itself ultra vires of the Board. Considerable reliance is placed on a case, Gobinda Ramanuj Das Mohanta v. Ram Charan Das ILR (1925)

Cal. 748, where a portion of the judgment of the Lord Chancellor in Duke of Leeds v. Earl of Amherst (1846) 2 Ph. 117 : 41 E.R. 886 is referred

to:

If a party, having a right, stands by and sees another dealing with the property in a manner inconsistent with that right, and makes no objection

while the act is in progress, he cannot afterwards complain. That is the proper sense of the word acquiescence.

But Page, J., in the Calcutta case adds ''but acquiescence cannot rehabilitate or render valid a transaction which is ultra vires and illegal''. It is

not contended here that a contract which is illegal can be made legal by acquiescence; and the doctrine of estoppel does not depend altogether

upon the legality of a contract. Moreover, Page, J., in considering the facts of that case, came to the conclusion that there was no acquiescence by

the parties and that neither of them was aware of the circumstances that would amount to a representation which led one party to do a certain act

to his own prejudice. Other cases have also been referred to, of which a typical one is Great North-West Central Railway v. Charlebois (1899)

A.C. 114:

It is quite clear that a company cannot do what is beyond its legal powers by simply going into Court and consenting to a decree which orders that

the thing shall be done. If the legality of the act is one of the points substantially in dispute, that may be a fair subject of compromise in Court like

any other disputed matter. But in this case both the parties, plaintiff or defendant in the original action and in the cross-action, were equally insisting

on the contract. The president, who appears to have been exercising the powers of the company, had an interest to maintain it, and took a large

benefit under the judgment. And as the contract on the face of it is quite regular, and its infirmity depends on extraneous facts which nobody

disclosed, there was no reason whatever why the Court should not decree that which the parties asked it to decree. Such a judgment cannot be of

more validity than the invalid contract on which it was founded.

An extract from Halsbury has also been read somewhat to the same effect. It is clear that what has been considered in Halsbury in the passage

referred to and in all the cases above quoted is the liability of a company for an act of its agent or director. Any person dealing with a company is

supposed to be acquainted with its articles and memorandum and therefore to be aware of the powers, that the directors have. If therefore one

enters into a contract with a company and such a contract is beyond the powers of the director, the company cannot be bound by it; and even if

the company subsequently ratifies the contract without knowledge of the fact that it was a contract entered into ultra vires the company cannot be

bound by the contract. The present case does not depend upon this principle at all. The District Board entered into the contract by its agent and

the District Board did not dispute the liability arising out of the contract. The act of the special officer was the act of the District Board, and

therefore the ordinary laws of estoppel that arise out of the conduct of principals apply equally well to a contract of this nature entered into by the

District Board through its executive officers with the defendants.

I may refer before leaving this point to a case which I do not think has much importance but deserves mention as the earned Counsel for the

defendants has stressed it, namely, Ellammal, In Re: Ellammal and Others, . As this was a criminal case, the learned Judges who decided it were

considering primarily what the intention of the accused person was; had the accused person who had applied for the licence the right to use a

private market? And the decision turned upon the facts that it was a private market and that there was no reason at all why permission to use the

market should be withheld provided that the requirements as to sanitation and so on were complied with. The important section relied on by the

accused in that case was one to the effect that if orders on an application for a licence are not communicated within 30 days after the receipt of the

application by the president the application should be deemed to have been allowed for the year. It was held that the order of the Board was ultra

vires and therefore no order at all and that it had therefore to be considered that the licence had not been refused. Entirely different considerations

arise in the granting of motor bus licences; and the ultra vires nature of an order does not affect the question of estoppel.

The earned Counsel for the defendants has sought to uphold the decree of the lower appellate Court by contending that the suit was not

maintainable, a point on which both the lower Courts were in agreement. It is unnecessary for me to discuss in detail the considerable amount of

case-law that has been referred to in this case, as the learned District Munsiff has discussed most of the cases very carefully and has, I think,

correctly interpreted them. The line of argument of the earned Counsel for the defendants is that the owner of the bus-had the common law right to

take his bus over any road he pleased and that the legislature, by the Local Boards Act, has not taken away that right but has only compelled bus

owners to comply with certain formalities - one of them being the taking out of a licence. If the licence is not taken out the only remedy of the

Board is to take action against the bus owners for failing to comply with the terms of the Act and to ask the Court to invoke the powers given to it

under the Act; for the Board has no cause of action outside the Local Boards Act. I cannot accept the correctness of the contention that the owner

of a motor bus has a common law right to take his bus over any road subject to compliance with a formality. When the common law right to the

use of the roads was being built up, there were of course no motor cars in existence; and it was always understood that the right to the road was

one to use it in some recognised and usual manner. If in those pre-motor car days some vehicles had been driven at a high speed along the roads

and caused as much damage as a motor car would do to any ill-constructed road, I doubt very much whether it would have been held that the

owner of such a vehicle had the common law right to do what he did and to cause unusual destruction to the road. When motor cars first came into

existence it was incumbent upon an owner to arrange that a man should walk in front of the car as a warning that a dangerous vehicle was coming.

Obviously that prevented any excessive speed on the part of the motor car and the motor car could not have done any more damage than any

other carriage or cart. As the speed of motor cars increased, the control of the use of these cars increased with it; and I doubt whether at any time

the motor vehicle has had an unrestricted common law right to use the highway. However, assuming that such a right did at one time exist or must

be presumed to have existed from the mere fact that a motor bus is a vehicle that runs along roads, it seems clear to me that that right was taken

away by the Local Boards Act, unless the person who wished to use the highway got permission to do so from the local body having jurisdiction.

He did not, in my opinion, ever have a right subject only to his complying with some formality. He had no right at all to use the road unless he got

permission from the local body to do so, although Courts have held that permission should not be withheld except for good reason. In the present

case there was no question of withholding permission for no permission was sought for. Most of the cases referred to in connection with the

remedy of the Board against a person who fails to take out a licence are cases in which the local bodies have been given some power to regulate

certain acts within their jurisdiction; and it has been held that where a body has been given certain powers under a statute its remedy for

disobedience of the orders of the body with regard to those acts must be sought within the Act itself. Devonport Corporation v. Tozer (1902) 2

Ch. 182 is a fair example of the type of cases on which the defendants rely. There, the owners of a certain piece of land erected houses; but did

not make allowance for roads through the estate of the nature required by the bye-laws of the borough. The borough thereupon brought a suit for

an injunction restraining the defendants from proceeding any further with their work and for a declaration that the borough was entitled to pull

down any work begun or done by the defendants in contravention of the bye-laws. It was held on the facts of the case (1) that the defendants

were not laying out or intending to lay out the highways as new streets within the meaning of the bye-laws; (2) that the bye-laws could riot be

enforced by action for an injunction but only by the special remedies thereby provided or by way of information by the Attorney-General; and (3)

that no such declaration as asked for ought to be made. It is partly on account of these cases that the learned District Munsiff refused to grant the

declaration and injunction prayed for by the District Board. But it was not considered either in that case or in any of the cases referred to what

rights the body would have had if its private property were damaged. If the running of the defendants'' bus was a nuisance to the public and the

rights of the public were in some way infringed by the continual running of these buses without licence, then, as was actually the case in Attorney-

General v. Sharp (1931) 1 Ch. 121 the Advocate-General could bring an action on behalf of the public. The question whether the civil rights of a

local body had been infringed did not there come up for discussion. The principle that the earned Counsel for the appellants seeks to apply has

been very well set out in the extract from Bhaishankar v. The Municipal Corporation of Bombay ILR (1907) Bom. 604 and Venkata Siva Rao v.

Rama Kristnayya (1925) 50 M.L.J. 148 : ILR 50 Mad. 91:

Where a special tribunal, out of the ordinary course, is appointed by an Act to determine questions as to rights which are the creation of the Act,

then, except so far as otherwise expressly provided or necessarily implied� that tribunal''s jurisdiction to determine those questions is exclusive.

It is an essential condition of those rights that they should be determined in the manner prescribed by the Act, to which they owe their existence. In

such a case, there is no ouster of the jurisdiction of the ordinary Courts, for they never had any.

The local board however do not contend that there is anything in the Act which empowers them in a case like the present to oust the jurisdiction

of the Civil Court. They merely rely on the fact that they, like any private person, have a right to bring a suit against any person who does damage

to their property, and the damages alleged in the present case is that of the wearing out of the roads which are the property of the District Board.

No doubt the District Board has no complete right of property over the roads. As was said by King, J., in Sree Rajah Uppalapati

Suryanarayaneswara Jogi Jagannadharaju Garu and Another Vs. The Taluk Board, Rajahmundry and Another, , the property vested is such

property and such property only as is necessary for the control, protection and maintenance of the street as a highway for public use''. The District

Board has to spend considerable sums of money in maintaining the road; and if any person who has no authority to use the road causes damage to

that road, then I can see no reason why the District Board should not bring a suit for damage caused to its road by the unauthorised use. I

therefore agree with both the lower Courts that the suit as framed for damages was maintainable.

The last question that arises for consideration is the quantum of damages to which the plaintiffs are entitled. The learned Munsiff thought that

the amount of the licence fee was a very good guide to the Court in arriving at a reasonable estimate of the damages. Unfortunately, no satisfactory

evidence has been let in on this head. The report by the District Board Engineer to the Municipality recommending certain rates to be adopted in

licensing buses has been referred to : but the District Board Engineer himself has not been examined. The document, even if admissible, can have

little value. One naturally presumes that in the granting of a licence the local body not only allows for an injury that may result to its road by the use

of the bus : but also for the pay of the staff whose time is taken up in dealing with licences, for office expenses and so on, and for some reasonable

profit to assist the general revenues of the local body. According to the report of the District Board Engineer, the licence fee collected from buses

and cars is insufficient for the maintenance of roads; but there is no evidence in support of this. I see therefore no ground for thinking that the actual

damage caused to the road by the running of the defendants'' buses for ten months was greater than the amount of licence fee that they had already

paid, which was that for a full year at the old rates. I therefore find on this point that the plaintiffs have not proved that they are entitled by way of

damages to any larger sum than they have already paid by way of licence fees. On that ground the suit has to be dismissed; but as most of the

discussion in three Courts has been taken up by a consideration of technical pleas relating to the maintainability of the suit and other issues arising

out of the written statement, with regard to which the defendants have been unsuccessful, the parties will be ordered to pay each his own costs in

all the Courts.