P L D 1956 (W (PLP)

KAIKAUS, J.‑--This is an appeal by Dr. Fazal Din against whom a decree has been passed by the learned Senior Civil Judge Layallpur, for damages for breach of a contract of lease entered into between him and the Municipal Committee of Layallpur. The facts are that the Municipal Committee respondent having invited tenders for lease of 183 acres 4 kanals and 12 marlas for one year beginning from Kharif 1949 to Rabi 1950, the appellant submitted a tender on the 15th of February 1949, offering a sum of Rs. 70,

000. This tender was accepted by the Executive Officer of the Municipal Committee, and on the 26th February 1949, a document Exh. P. 1, purporting to be a lease‑deed, was executed between the parties. It is stated in this document that lease of the land mentioned above, was by the deed, granted to the appellant for a period of one year for a sum of Rs. 70,000 that Rs. 10,000 had already been paid by the appellant on the 26th of February 1949, that out of the balance Rs. 30,000 were to be paid before the first of June 1949, before delivery of possession; and that Rs. 30,000 were to be paid on the first of October 1949. The document (Exh. P. 1) did not clearly say as to when posses sion was to be delivered but the implication of the words used was that possession would be delivered on the 1st of June 1949. The acceptance of the tender by the Executive Officer being subject to approval of the Municipal Committee, that approval was granted on the 30th of March 1949, and after this another document Exh. P. 2 was executed on the 6th of April 1949. The material terms in the documents were the same as in the earlier document, except that it was stated in this document that possession of vacant land would be delivered on the first of April 1949, and that possession would be delivered to the appellant of different pieces of land as and when they fell vacant (before 1st June). It may be explained here that whole of this land was in possession of Abdur Rahman, a previous lessee. It was also stated in the document that possession of such land as was under cultiva tion on the 1st of April would be delivered after removal of the Rabi crop. It was further provided that on the failure of the appellant to comply with any of the terms of the con tract, the respondent would be entitled to cancel and re‑auction the lease and the appellant would be responsible for damages. There were some other conditions also to which it is not necessary to refer for the decision of this appeal. It was the case for the Municipal Committee respondent that on the 8th of April 1949, possession of such land as was vacant was delivered to the appellant and a receipt was obtained. The appellant, however, did not pay the instalment of Rs. 30,000 which he was to pay on the first of June 1949. The Municipal Committee issued notices to the appellant to pay the said amount, and on his failure to do so, it re-auctioned the lease. This time the lease was auctioned only for a sum of Rs. 32,

000. The Municipal Committee claimed that it was entitled, according to the terms of the contract, to forfeit the sum of Rs. 10,000 which the appellant had already deposited; and was also entitled to Rs. 38,000 the difference between the lease money payable by the appellant and the lease money which had been secured it the second auction. On these allegations, the respondent prayed for a decree for Rs. 38,

000. The appellant pleaded that although he had signed a receipt as to delivery of possession of vacant land on the 8th of April 1949, in fact, he had not been granted possession of any land and that the whole of the land remained in the possession of the previous lessee. He pleaded further that he had been repeatedly asking the respondent to deliver possession but the respondent did not pay any heed to his request and that the breach of agreement was not on his part but on the part of the respondent. He contended that delivery of‑possession of the vacant land was an essential term of the contract so that in case of non‑compliance with it he was entitled to put an end to the contract. The plaintiff respondent took up the plea on this point that, though possession of vacant land had in fact been delivered, it was not essential to do so according to the contract between the parties, and the failure to do so would not give the appellant any valid cause for putting an end to the contract. The learned Senior Civil Judge, who tried the case, placed the onus of non‑delivery of the possession of vacant land on the defendant‑appellant in view of the receipt of delivery of possession signed by him on the 8th of April 1949. The learned Senior Civil judge came to the conclusion that the appellant had failed to discharge the burden that lay on him to establish that possession had not been delivered. He found too that it was not incumbent on the respondent to deliver possession of vacant land on the 1st of April 1949, nor was it incumbent on the respondent to deliver possession of such land as had fallen vacant before the 1st of June 1949. According to the learned Senior Civil judge, the condition as to delivery of possession on the 1st of April 1949, was not of the essence of the contract, the true condition being‑ only that as to delivery of possession on the 1st of June 1949. The learned Senior Civil judge came to the conclusion, on that the appellant had in not paying the money committed breach of contract, and the respondent was, therefore, entitled to damages. The damages were assessed at Rs. 38,

000. The learned Senior Civil judge did not agree that the respondent was entitled to forfeit Rs. 10,000 a part from the claim for damages, and, therefore, he deducted Rs. 10,000 from the damages claimed and awarded a decree for Rs. 28,

000. Before us it has been urged by learned counsel for the appellant that:‑ (1) the agreements Exhs. P. 1 and P. 2, are void because of failure to comply with section 6 of the Punjab Municipal (Executive Officer) Act ; (2) the so‑called lease‑deeds do not comply with section 107 of the Transfer of Property Act, and as there was no valid lease, no valid agreement came into existence between the parties ; and (3) it is the respondent who had committed breach of the agreement by not delivering possession of the land to the appellant. Learned counsel for the respondent has objected to the first two points raised by the appellant on the ground that they were not raised before the Lower Court. Both, how ever, are pure questions of law, and we have allowed them to be argued. It appears to us that both the objections taken up by the learned counsel for the appellant to the validity of the agreement between the parties are sound. The first objection is based on section 6 of the Punjab Municipal (Executive Officer) Act which runs:‑ "6. (1) Every contract to be entered into by the Committee shall be made on behalf of the Committee by the Executive Officer: Provided that the Executive Officer shall be bound by any resolution of the committee fixing terms, rates or maximum prices in the particular case or any class of case. (2) No contract affecting immovable property or involv ing a sum exceeding such sum as the committee may fix shall be made by the Executive Officer unless it has been sanctioned by the committee. (3) Every contract made y the Executive Officer shall be reported to the committee' within fifteen days of its being made. (4) Every contract made by the Executive Officer on: behalf of the committee shall be entered into in such manner and form as would bind him if it were made on his own behalf and may in like manner and form be varied or dis charged: Provided that every contract involving a sum exceeding one hundred rupees or affecting immovable property shall be in writing and shall be sealed with the common seal of the committee. (5) The common seal of the committee shall remain in the custody of the Executive Officer and shall not be affixed to any contract or other instrument except in the presence of the Executive Officer who shall sign the contract in token that the same was sealed in his presence. (6) No contract executed otherwise than as provided in this section shall be binding on the committee: Provided that, when work is given on contract at unit rates and the number of units is not precisely determinable, the contract shall not be deemed to contravene the provi sions of this section merely by reason of the fact that the pecuniary limits prescribed in subsection (2) or sub section (4) are eventually exceeded." The Layallpur Municipal Committee is admittedly a municipality to which the Punjab Municipal (Executive Officer) Act applies, for there is an Executive Officer for this Municipal Committee. Under section 6 of that Act contract affecting immovable property has to be in writing and has to be under seal. Neither Exh. P.1 nor Exh. P. 2 bears any seal. So far as Exh. P. 1 is concerned, it may be kept out of considera tion for it has really been superseded by the second agreement, but, in any case, anything which we say with respect to Exh. P. 2 is equally applicable to Exh. P. 1 also. So in this discussion we will refer to Exh. P. 1 alone. As to the effect of the contract being without seal, learned counsel for the appellant has referred us to a judgment of a Division Bench of this Court in R. F. A. No. 99 of 1951 Corporation of the City of Lahore v. Messrs. Sheikh Ghulam Muhammad and seven others wherein this point has been exhaustively discussed. The learned judges held in that case that the absence of seal would render the contract invalid. In view of the full discus sion of the point in that case, it is unnecessary for us to deal with the point at any great length. Nothing has been urged before us by the learned counsel for the respondent which may throw any doubt on the correctness of the conclusion reached in that judgment. There is one aspect of the matter, however, which was not considered in that case, the point not having been raised, and that is as to whether the other parties to the contract can also rely upon section

6. It is urged by learned counsel for the respondent that the only effect of non‑compliance with section 6 is that the contract is, in the words of section, "not binding on the committee" and that the plea that the contract is invalid can be taken only by the Municipal Committee and not by the other party to the contract. For this proposition, learned counsel for the respondent is unable to quote any authority, except the opinion expressed at page 145 of Salmond and Williams Law of Contract (1955 Edition). The authors of that book no doubt expressed the opinion that these words have some significance. We are unable to accept the opinion of the learned authors of that treatise. In the first place, there is a long string, of authorities of pre‑Partition India which lay down that on account of the principle of mutuality, a contract which is not binding on one party cannot be binding on the other too and that, therefore, such contracts would not be enforceable even by the Municipal Committee. In the second place, we are of opinion ourselves, on a consideration of the fundamental assumptions of the Law of Contract, that such agreements are void. Authorities in support of the proposition are: The Ahmedabad Municipality v. Sulemanji(I L R 27 Bom. 618), Muhammad Rowther v. Tinnevelly Municipal Council (A I R 1938 Mad. 746), Municipal Corporation Bombay v. Secretary of State (A I R 1934 Born. 277), Bhumbbo Metharam and another v. District Local Board. Hyderabad (Sind) (A I R 1949 Sind 199), Municipal Committee Peshawar v. Haji Masiti (A I R 1933 Pesh. 16), Municipal Council Tiruvarur v. P. K. Kannuswami Pillai and another (A I R 1930 Mad. 600) and Abdul Hamid and another v. Municipal Committee Peshawar (A I R 1935 Pesh. 124) There is no Lahore case in which this question has been discussed, but in more than one case the point has been conceded or not urged on behalf of the committee. In the unreported case of this Court to which we have already referred, the Corporation of the City of Lahore was the plaintiff and the suit was for damages for breach of contract. The learned Judges upheld the dismissal of the suit. It was not urged before the learned judges that the plea of invalidity of contract could not be taken by the defendant. In Municipal Committee Lahore v. Miran Bakhsh (I L R 13 Lah. 561) again, the Municipal Committee was a plaintiff and the learned counsel who appeared on behalf of the Municipal Committee, conceded that on account of non‑compliance with section 47 of the Municipal Act (which section applies to Municipal Committees where there is no Executive Officer) suit for rent as such was not maintainable. A consideration of the essentials of contract would show that there is no room for the existence of a contract which remains always enforceable at the instance of one party and always unenforceable at the instance of the other party. A contract implies a transaction by which each of the parties is bound. But the non‑enforceability of an agreement like the one with which we are concerned will also become apparent if we look to the reason why a contract not under seal is not binding on a Corporation. To explain the necessity for a seal Anson has, in his law of Contract (page 60 of 1937 Edition), quoted the following passage from Mayor of Ludlow v. Charlton (6 M & W 815):‑ "The seal is the only authentic evidence of what the corporation has done, or agreed to do. The resolution of a meeting however numerously attended is after all, not the act of the whole body. Every member knows he is bound by what is done under the common seal and by nothing else. It is a great mistake, therefore, to speak of the necessity for a seal as a relic of ignorant times. It is no such thing. Either a seal, or some substitute for a seal, which by law shall be taken as conclusively evidencing the sense of the whole body corporate, is a necessity inherent in the very nature of a corporation." It is only by a seal that the corporation acts when it enters into contracts in writing and if there be no seal the corpora tion has not acted at all. No question of the existence of a contract, therefore, arises. One way of looking at the matter is that there is no consideration for the agreement of the appellant to pay the lease money. The consideration stipulated was that the appellant should be granted the rights of a lessee. There being no valid document (even apart from the question of registration) executed in accordance with section 6 which may create rights of a lessee consideration is wanting. Section 6 requires a document under seal in case of contracts affecting immovable property and lease rights can be granted only by such a document. It is urged by learned counsel for the respondent that this should be regarded as a voidable contract, effect to which can be given at the option of one of the parties. Not much consideration is needed to show that the position of learned counsel is untenable (even apart from the objection that the Committee has not acted at all.) A voidable contract in one which is enforceable at the option of one party to the contract, but the party can exercise this option only once. If it elects to affirm the contract, it becomes enforceable henceforth at c the option of both the parties. The true conception of a voidable contract is that it remains in abeyance till the party that has the option exercises it. It then becomes, if the party approves, a full‑fledged contract. That, however, is not the case, as learned counsel admitted, when an agreement is hit by section

6. I asked learned counsel whether, even if .the Committee had been accepting the contract and acting on it, it was not open to the Committee to plead section 6, when a suit was filed on the basis of a contract. Learned counsel admitted that it was open to the Committee, to do so. Had it been a voidable contract, once the Committee affirmed the contract outside Court, it could not be heard to say that the contract was not valid. In the case of an agreement which is hit by section 6, however; the position, if we accept the argument of learned counsel for the respondent, would be, chat it would always be enforceable as against one party and always unenforceable against the other party. Such a concep tion is inconsistent with our notion of a contract. Really it would be a contradiction in terms to call it a contract. We hold, therefore, that the agreement in this case is wholly void not being binding either on the plaintiff or on the defendant. The second objection of learned counsel for the appellant is equally valid. Section 107 of the Transfer of Property Act is in force in all the Municipal Areas of what used to bet the Punjab. Under that section a lease of property reserving a yearly rent or for more than one year can be effected only by means of a registered instrument. In this case, it will be observed the lease was to continue, at least in the case of land of which possession was taken before the 1st of June 1949, for more than one year, in case it was not vacant on the 1st of April 1950. It is also to be observed that even if the lease was for only one year, it would be invalid if it was based on Exh. P.

2. Of course a lease for a period not exceeding one year could be made orally if it was accompanied by delivery of possession, but there is no plea of oral lease in this case. In fact, there could be no plea of oral lease in view of section 6 and the deed sued upon, therefore, is as a lease wholly ineffective. If it creates no right then it does not cast any liability on the defendant to pay the lease money. The agreement between the parties would be dependent on the proper transfer of interest in any immovable property. There is also the objection that a lease should, under the "Transfer of Property Act, be executed both by the lessor and the lessee and in this case the lease is not executed by the lessor at all. It would be proper to notice an argument which was put forward by the respondent in connection with the application of section

6. Learned counsel for the respondent said that the agreement between the parties was, in fact, oral and the Exhs. P. 1 and P. 2 were only memorandums of it. There call be many answers to this argument. One is that there was no such plea in the plaint. Another is that section 6 of the Punjab Municipal (Executive Officer) Act does not contem plate at all an oral transfer of interest in the immovable property. It explicitly requires a document in writing. Whatever may be said of the very technical nature of the requirement as to seal, the requirement as to there being a writing cannot be considered to be of an entirely technical character. It should be observed here that section 47 of the Punjab Municipal Act, which relates to Municipal Committee where there is no Executive Officer, provides expressly that every transfer of interest in the immovable property has to be by means of a deed. The next question is as to whether the suit should be wholly dismissed or whether we should grant relief on the basis of sections 65 and 70 of the Contract Act. Although it was not pleaded in the plaint that even if the agreement is found to be void, the defendant should restore any benefit which he may have derived from the contract, we consider it only just that the question of benefit should be gone into, and a decree passed in favour of the plaintiff‑respondent in case receipt of benefit for more than Rs. 10,000 (already received) is proved. It was urged before us by learned counsel for the appel lant, though only half heartedly, that no relief by way of quantum meruit could be granted under sections 65 and 70 of the Contract Act. Learned counsel relied on the unreported judgment of this Court to which we have already referred. In that case no relief was granted to the Committee but there is no discussion in the judgment of the question as to why restoration of benefit cannot be ordered. There is in favour of the appellant, no doubt, a judgment of the Full Bench of the Oudh Chief Court in Municipal Board Lucknow v. S. C. Deb (A I R 1932 Oudh 193). It was held in that case that although section 65 did cover the case, it was not to be applied because the provision in the U. P. Municipalities Act making the contract not binding on the Committee was in the nature of a special law which should apply to the exclusion of the general law. Another ground of decision was that a person could not be allowed to do indirectly what he was not allowed to do directly. Reliance was placed by the learned judges of the Full Bench on an English case which went up to the House of Lords. This Full Bench case of the Oudh Chief Court was dissented from by a Bench of the Madras High Court, consisting of Abdul Rahman and Panrang Row JJ. in Madura Municipality through Commissioner v. K. Alagiri sami Naidu (A I R 1939 Mad. 957). After a full consideration of the point, we are in entire agreement with the view expressed in the Madras case and for that reason it is not necessary to enter into a detailed discussion of the matter. In this Court relief has always been granted on the basis of quantum meruit vide Municipal Committee Gujranwala v. Fazal Din (I L R 11 Lah. 121), and Municipal Committee Lahore v. Miran Bakhsh (I L R 13 Lah. 561) and this is the view generally accepted by the High Courts in pre‑Parti tion India vide Zulaing v. Yamethin District Council (I L R 10 Rang. 522) Muhammad Ebrahim Molla v. Commissioners for the Port of Chittagong (54 Cal. 189) and Pallonjee Eduljee & Sons v. The Lonavla City Municipality (I L R 1937 Bom. 782). To determine whether we should remand this case at all we did go into the question whether the defendant had received possession of any part of the property. In order that any observations by us may not affect the decision of the case after remand, we refrain from expressing any opinion as to the contentions of the parties on this point. Had we found that possession of no part of the property had passed to the defendant, there would have been no need for a remand, but we find that there are fourteen or fifteen was of land of which the defendant was in possession already as tenant of the previous lessee. Although we do not know whether, even with respect to this land, he did not pay rent to the previous lessee for the period for which he was in possession after the 1st of April 1949, and whether in law it was the previous lessee or the Committee, who was entitled to rent of those fourteen or fifteen kilas, we consider it proper that the question of benefit received by the appellant should be gone into. We accept this appeal; therefore, and remand the case to the trial Court for a re‑decision after recording evidence on the following issue:‑ "Whether the defendant has received any benefit on account of the contract; if so what is the extent of that benefit and to what sum is the plaintiff entitled on that account." The Court shall allow the parties to produce further evidence and also to produce the lease‑deeds relating to the previous lessee, Abdur Rahman. Costs of this appeal shall be costs in the cause. A.H. Case remanded.