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PETITIONER: BOMBAY HOUSING BOARD (NOW THE MAHARASHTRAHOUSING BOARD)

       Vs.

RESPONDENT: KARBHASE NAIK & CO., SHOLAPUR

DATE OF JUDGMENT29/01/1975

BENCH: MATHEW, KUTTYIL KURIEN BENCH: MATHEW, KUTTYIL KURIEN BHAGWATI, P.N. UNTWALIA, N.L.

CITATION:  1975 AIR  763            1975 SCR  (3) 407  1975 SCC  (1) 828  CITATOR INFO :  D          1988 SC1791  (9)

ACT: The Bombay Housing Board Act (69 of 1948), s.  64--’Anything done  or  purporting to have been done in pursuance  of  the Act’,   Scope  of--Breach  of  contract  if   comes   within expression.

HEADNOTE: There  was a contract between the State and the  respondent, which  after  the passing of the Bombay Housing  Board  Act, 1948,  was  deemed  to have been entered  into  between  the appellant  and  the  respondent, for  the  construction  of’ buildings  by  the respondent.  Clause 14  of  the  Contract provided  that  where  any additional  or  altered  work  is directed  to be carried out and no rates are entered in  the Schedule  of Rates in the Division, or agreed to, then.  the contractor  may, within 7 days of the order, give notice  of the  rate  he  intends  to charge.   In  such  a  case,  the Engineer-in-charge  would be at liberty to cancel the  order if  he does not agree to the rate stated by the  contractor, and  get  the work done by another.  Where  the  Engineer-in charge  has not cancelled the order and the  contractor  has commenced  work  and incurred  expenditure,  the  contractor shall  only  be entitled to be paid at such rate as  may  be fixed  by the Engineer-in-charge, and if the  contractor  is dissatisfied, he may raise a dispute about the rate and  the decision of the Superintending Engineer will be final. Clause 15 provided that the Engineer-in-charge has power  to stop  or  to reduce the whole of the work specified  in  the tender or get it done by another, and the contractor has  no claim  to  any compensation whatsoever on  account  of  such stoppage  or reduction.  But, before the  Engineer-in-charge could  stop the work and get it done by another  contractor, he  should give the first contractor a written notice.   The contractor  shall  also have no right under the  clause  to, claim  any payment or compensation on account of any  profit or advantage which he might have derived from the  execution of  the  work  in  full  but which  he  did  not  derive  in consequence  of  the  full amount of work  not  having  been carried  out, or on account of any loss due to  purchase  of

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materials  or labour recruited by him.  The  clause  further provides that the contractor shall not also, have any  claim for compensation by reason of any alteration in the original specification  which  may  involve curtailment  of  work  as originally contemplated. The respondent filed a suit claiming a certain sum of  money with  respect to certain items and the suit was  decreed  by the  trial court except with respect to 4 items.   The  High Court  in  appeal. however decreed those items  also.   They were  : (1) the respondent was ordered to carry out  certain work with respect to the first two items and the  respondent intimated his rate as required by cl. 14.  The  Engineer-in- charge did not cancel the order or give the contract for the extra work to any other contractor, and therefore, the  High Court  held  that the amount due to the respondent  for  the extra  work was to be calculated’ on the basis of  the  rate specified  in the notice; (2) the respondent was assured  by the  appellant  that  the  work  was  to  be  completed   in accordance with the specifications in the agreement and that no  alteration  would  be  made  therein,  but-in  fact   an alteration  was  made as a result of  which  the  respondent became entitled to lesser amount and the High Court held  he was  entitled  to  the difference;  and  (3)  the  appellant represented  to  the  respondent that  the  appellant  would entrust  the  respondent  with  another  item  of  work  but contrary to the representation, got the work done by another without  giving  notice  in writing to  the  respondent  and hence, the High Court held that the respondent was  entitled to compensation. 408 In  appeal. to this Court, it Was contended; (1)  that  with respect  to  the  first  items,  in  view  of  cl.  14,  the respondent  was  entitled only to the rate as fixed  by  the Engineer-in-charge;  (2) with respect to the 3rd item  since the   Engineer-in,charge   was  entitled   to   change   the specifications,   the   respondent  was  not   entitled   to compensation in view of Cl. 15; (3) with respect to the  4th item no notice was necessary before getting the work done by another   contractor;  and  (4)  the  suit  was  barred   by limitation  under  s. 64 of the Bombay  Housing  Board  Act, 1948, which provides a 6-month period of limitation for  any suit  for anything done or purporting to have been  done  in pursuance  of  the Act, because the act of entering  into  a contract  was an act done in pursuance of the Act. and so  a claim  for  damages for breach of the  contract  would  come within the purview two items. [412E-F] HELD:     (1) The High Court was wrong in allowing the claim on the first two items. [412E-F] The   High   Court  erred  in  holding  that  cl.   14   was inapplicable.   The  High ,Court was also wrong  in  holding that  if the clause was applicable it gave the  Engineer-in- charge  an  absolute power to fix the rate and that  it  was unjust.   Until  the  rates were settled  by  agreement  the respondent  was  under  no  obligation  to  carry  out   the additional   or   altered  work.    The   respondent   could legitimately  have  said that in the  absence  of  scheduled rates  in the division for the type of work or an  agreement in  regard to the rates, it was not bound to carry  out  the additional or altered work.  Merely because the Engineer-in- charge did ,not exercise his liberty to cancel the  contract after  receiving notice of the respondent’s rate,  it  could not be said that there was a concluded contract ’between the parties  for  payment  at those rates.   The  fact  that  an express  power  was given to the Engineer-in-charge  by  the clause  to cancel the order if he did not agree to the  rate

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would  not mean that the failure to cancel the order  ,would result  in  an  agreement as to the rate  or.rates.  In  the absence of some positive act on the part of the Engineer-in- charge  agreeing to the rate, there was no agreement  as  to the  rate and the respondent was not bound to carry out  the work.   The  provision  regarding fixation of  rate  by  the Engineer-in-charge  and ’by the Superintending Engineer  was intended to cover cases where the notice specifying the rate was  not given by the contractor, or when, even  though  the notice was given, the Engineer-in-charge did not cancel  the order in the event of his not agreeing to the rate specified in the notice and the contractor ,commences work and  incurs expenditure. [412B-E] (2)  The High Court was right in its conclusion with respect to the 3rd item that cl. 15 had no application and that  the claim  was  well-founded.  The nature of the work  was  such that  by altering the specification, there was not  only  no curtailment  of  work but there was in fact an  increase  of work involving additional cost. [413G] (3)  The observance of the condition as regards the  written notice in cl. 15 was mandatory, and since no such notice was given the respondent ’was entitled to damages. [414B] (4)  The contract entered into by the Board for construction of  buildings is an act done in pursuance of the  provisions of the Act; and it makes no difference whether the  contract was entered into with the Board or that it was deemed to ’be entered  into with the Board., But the act complained of  in this  case  by  the respondent was the  non-payment  of  the amount alleged to be due to the respondent on the basis of a breach  of the contract; and that act could not be  said  to have  been done or purported to have been done in  pursuance of the Act.  It could not said that the breach complained of had  any reasonable connection with any duty cast  upon  the appellant or its agents by the Act. [415B; 417B] The  Trustees of Port of Bombay v. The  Premier  Automobiles Ltd.  A.I.R. 1974 S.C. 923, followed. The  Municipal Borough of Ahmedabad v. Jayantilal  Cheetalal Patel, I.L.R. 1947 Bom. 841, approved.  409 Athimannil Muhammad v. The Malabar District Board, I.L.R. 58 Madras 746. and Jalgaon Borough Municipality v. The Khandesh Spinning  and Weaving Mills, Co.  Ltd.  I.L.R.  1953  Bombay 590, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 13 of 1968. From  the  judgment and order dated the  29th/30th  January, 1963  of  the Bombay High Court in First Appeal  No.  51  of 1957. S.   T.  Desai, D. D. Kango, P. C. Bhartari and K. J.  John, for the appellant. Sharad  Manohar, B. P. Maheshwari, Randhir Jain  and  Suresh Sethi, for the respondent The Judgment of the Court was delivered by MATHEW,  J.-This is an appeal by the defendant on the  basis of  a certificate against a decree passed by the High  Court ’of Bombay in appeal from a decree in a suit for recovery of balance of amount due on account of extra construction  work carried out by the plaintiff respondent. The  State of Bombay prepared a scheme for  construction  of blocks  in Sholapur and invited tenders for the  same.   The respondent, a firm, submitted its, tender on 29-7-1948.  The tender  was  in  B-1 form,  otherwise  known  as  percentage

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tender.  The tender was accepted on 6-12-1948 by the  Labour Department  on  behalf of the State of Bombay.   The  Bombay Housing Board came into being with the passing of the Bombay Act  69  of  1948 and under s. 54 of that  Act,,  the  above contract shall be deemed to, have been entered into with the Board. The order to carry out the work was issued to the respondent by the Housing Commissioner on 15-8-1948.  The  construction was  to  be completed within one year from the date  of  the order.   The  time was extended and the  work  was  actually completed  in  March, 1950 and possession was taken  by  the appellant  some  time between 5-5-1950 and  30-5-1950.   The amount  paid to the respondent on 30-3-1951 under the  final bill  was  accepted by it under protest.   As  the  disputes between  the  parties in respect of the claims made  by  the respondent could not be settled by agreement, the respondent filed  the suit,, claiming under 4 items, namely, A to D,  a sum of Rs. 38,000-8-0. As  we  are concerned in this appeal only  with  the  claims specified  in A-3, A-4, C-1 and C-2, it is not necessary  to refer to the contentions of the appellant in respect of  the other items.  In regard to the claims in items A-3 and  A-4, the  appellant  contended  that they were  for  extra  works carried  out by the respondent without any agreement  as  to the  rate  to be charged and therefore  the  respondent  was entitled  to  have  the claim settled on the  basis  of  the provision  in clause 14 of the contract for such  works  and that  claims  in item C-1 and C-2 were not  maintainable  by virtue  of clause 15 in the contract and that the  suit  was barred by limitation. 410 The trial court decreed the suit for a sum of Rs.  2,865-0-0 with  proportionate cost and future interest.  It  dismissed the claims made under items A-3 A-4, C-1 and C-2. The respondent filed an appeal before the High Court for the balance of its claim and the appellant filed a cross appeal. The High Court decreed the claims in items A-3, A-4, C-1 and C-2  and  the sole question in this appeal  is  whether  the claims in these items were sustainable in view of clauses 14 and 15 of the contract between the parties and whether there was evidence to establish them. The  amount claimed in item A-4 was Rs. 8,239 and  that  was mainly  in  respect of the work of filling  up  of  ditches, etc.,  which was done by the respondent under the  order  of the  appellant.  The order to carry out this extra work  was given  on 7-11-1949.  The respondent intimated by notice  in writing, as required by clause 14, the rate for carrying out the  work.   The  Engineer-in-charge did  not  exercise  his liberty  to cancel the order, or give the contract  for  the extra  work to any other contractor.  The respondent’s  case was that the amount due to it for the extra work under  item A-4 was to be calculated on the basis of the rate  specified in  the  notice.  The appellant contended that  in  view  of clause 14 of the contract, the respondent was entitled only- to the rate as fixed by the Engineer-in-charge. So, the question for consideration in respect of item A-4 is whether, in view of clause 14 of the contract it was open to the  respondent to make the claim on the basis of  the  rate quoted by it in the notice.  Clause 14 provides:               Alterations in specifications and designs  not               to invalidate contracts--               The  Engineer-in-charge  shall have  power  to               make any alterations in, or additions to,  the               original specifications, drawings, designs and               instructions  that  may appear to  him  to  be

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             necessary or advisable during the progress  of               the work, and the contractor shall be bound to               carry  out  the work in  accordance  with  any               instructions  in this connection which may  be               given   to  him  in  writing  signed  by   the               Engineer-in-charge  and such alteration  shall               not   invalidate   the   contract;   and   any               additional  work which the contractor  may  be               directed  to do in the manner above  specified               as  part of the work shall be carried  out  by               the  contractor on the same conditions in  all               respects  on  which he agreed to do  the  main               work,  and at the same rates as are  specified               in  the tender for the main work.  And if  the               additional  or altered work include any  class               of work for which no rate is specified in this               contract,  then  such class of work  shall  be               carried  out  at  the  rates  entered  in  the               Schedule  of Rates of the Division or  at  the               rates   mutually  agreed  upon   between   the               Engineer-in-charge    and   the    contractor,               whichever  are  lower. if  the  additional  or               altered work, for which no rate is entered in                 411               the  Schedule  of Rates of  the  Division,  is               ordered to be carried out before the rates are               agreed upon then the contractor shall,  within               seven,  days of the date of receipt by him  of               the  order to carry out the work,  inform  the               Engineer-in-charge of the rate which it is his               intention  to charge for such class  of  work,               and  if the Engineer-in-Charge does not  agree               to this rate he shall by notice in writing  be               at  liberty to cancel his order to  carry  out               such  class of work, and arrange to  carry  it               out   in  such  manner  as  he  may   consider               advisable,   provided  always  that   if   the               contractor  shall commence work or  incur  any               expenditure in regard thereto before the rates               shall   have   been   determined   as   lastly               hereinbefore  mentioned, then in such case  he               shall  only be entitled to be paid in  respect               of  the  work.  carried  out  or   expenditure               incurred  by him provide (previous ?)  to  the               date  of  the  determination of  the  rate  as               aforesaid  according to such rate or rates  as               shall be fixed by the Engineer-in-charge.   In               the  event of a dispute, the decision  of  the               Superintending Engineer of the Circle will  be               final." It  is  clear from the clause that where any  additional  or altered work is directed to be carried out and no rates  are entered  in the Schedule of Rates in the Division or  agreed to,  then,  the  contractor may, within seven  days  of  the order,  give  notice of the rate he intends to  charge.   In such  a case, the Engineer-in-charge would be at liberty  to cancel the order if he does not agree to the rate stated  by the  contractor and get the work done by any  other  agency. Where, however, the Engineer-in-charge has not cancelled the order for additional or altered work and the contractor  has commenced  work  and incurred  expenditure,  the  contractor shall  only be entitled to be paid at such rate or rates  as may be fixed by the Engineer-in-charge.  In any such case if the contractor is dissatisfied, he may raise a dispute about the rate or rates so fixed by the Engineer-in-charge.  Where

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such  dispute  is raised, the Superintending  Engineer  will decide the same and his decision will be final. We  do not think that the respondent was bound to carry  out the additions, and alterations as there was no reply to  the notice stating the rates it intended to charge.  But it  was free  to  commence and complete the work on the  basis  that since the rates quoted by it were not accepted, it would  be paid at such rates to be fixed by the Engineer-in-charge and that if it was dissatisfied with the rate or rates fixed  by the Engineer-in-charge, if could raise a dispute before  the Superintending   Engineer  and  that  the  time  limit   for completion  would be extended in all cases of  additions  or alterations as stated in the last sub-para of clause 14. The  High  Court  was  of the view that  clause  14  had  no application because it thought that the respondent was bound to carry out the work as directed by the  Engineer-in-charge even  when there was no agreement as regards the rate to  be charged  for the extra work, as the nature of work  in  some cases  would be such that if the work was not  completed  at the time when the work was to be completed, the cont- 412 ractor  would have to do much extra work over and above  the actual  work involved.  The Court also said that  clause  14 gave  the  Engineer-in-charge an absolute power to  fix  the rate  and  that  would be unjust  and  therefore  the  Court decreed in full the amount claimed under items A-3 and A-4. We think that until the rates were settled by agreement  the respondent  was  under  no  obligation  to  carry  out   the additional   or   altered  work.    The   respondent   could legitimately  have  said that in the  absence  of  scheduled rates in the division for the type of work in question or an agreement in regard to the rates, it was not bound to  carry out  the additional or altered work.  We are  not  satisfied that  since  the  Engineer-in-charge did  not  exercise  his liberty to cancel the order, there was a concluded  contract between  the parties.  The failure to cancel the  order  for additional  or altered work on receipt of the notice  speci- fying  the rate would not result in an agreement as  to  the rate  to be charged.  The clause only gave the  Engineer-in- charge the liberty to cancel the order and get the work done by  another contractor.  The fact that an express power  was given to the Engineer-in-charge by the clause to cancel  the order  if he did not agree to the rate would not  mean  that the failure to cancel the order would result in an agreement as  to  the  rate or rates.  The proviso in  clause  14  was intended to cover cases where the notice specifying the rate was  not given by the contractor, or where, even though  the notice was given, the Engineer-in-charge did not cancel  the order in the event of his not agreeing to the rate specified in  the notice.  We are of the view that in the  absence  of some  positive  act on the part  of  the  Engineer-in-charge agreeing to the rate, there was no agreement as to the  rate and that the respondent was not bound to carry out the work. In  this  view of the matter, we think that the  High  Court went wrong in allowing the claim in item A-4. The claim under Item A-3 stands on the same footing as  the, claim under item A-4 and, therefore, that claim has also  to be rejected; The next question is whether the High Court was justified in decreeing the claims in items C-1 and C-2. Item C-1 was a claim for Rs. 9,000/-.  The respondent’s case was that there was assurance by the appellant that the  work was to be completed in accordance with the specifications in the agreement and that no alteration would be made  therein. According  to the respondent, as per the  specification,  it

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was to do the work with 5" thick R.C.C. slab over B and  B-1 type of blocks to cover an area of about 61,000 sq. ft.  an, the  rate at which the respondent agreed to do the work  was Rs.  2-15-6 per sq. ft.  The further case of the  respondent was  that  it  agreed  to do  the  construction  work  after estimating  the cost of the entire construction as  a  whole and  after  making a calculation of the profit and  loss  on that  basis in different items of work and it had  sustained loss because it had to do a different type of work for which it  could  make no estimate in anticipation.  The  order  to carry  out the work in the altered form was communicated  to the respondent on 27-1-1949. 413 It  protested  against it saying that it will  have  to  use extra quantity of iron and claimed 6 annas extra per sq. ft. over  the  rate for 4 1/2" slab which it had given  for  ’A’ type  block.  The appellant turned down the demand  and  the respondent had to do the work with 4 1/2" R.C.C. slabs  over the area of 24,000 sq. ft.  According to the respondent,  if it  were  to  do  the work with 5"  slab  according  to  the original specification over the’ area of 24,000 sq. ft.,  it would  have  used 27,000 lbs. of iron as  reinforcement  and would have got Rs. 71,250 for the work, but, because of  the reduction in the size of the slab, it was required to put in 44,000  lbs. of reinforcement and was to be paid Rs.  60,000 only.   On the other hand, the appellant contended that  the Engineer-in-charge was entitled to change the  specification under  the contract and the respondent was not  entitled  to claim  any damage arising from the change in the  nature  of the  work and relied upon clause 15 for this  purpose.   The High Court held that clause 15 had no application. We do not think that the High Court was in error.  Clause 15 empowers  the  Engineer-in-charge to step or to  reduce  the whole  of the work specified in the tender if he  thinks  it necessary to do so and the, contractor has no right to claim any  compensation whatsoever on account of such stoppage  or reduction  in the work.  The clause also provides  that  the contractor  shall  have  no right to claim  any  payment  or compensation on account of any profit or advantage which  he might  have derived from the execution of the work  in  full but  which  he  did not derive in consequence  of  the  full amount of the work not having been carried out or on account of  any loss that he may be put to on account  of  materials purchased  or agreed to be purchased or for unemployment  of labour  recruited by him.  The clause further provides  that the   contractor   shall  not  also  have  any   claim   for compensation by reason of any alteration having been made in the original specifications, drawings, design or instruction which   may  involve  curtailment  of  work  as   originally contemplated. In its evidence, the respondent stated that it put slabs  of 4 1/2" thickness in an area measuring 24,000 sq. ft. out  of an area of 61,000 sq. ft. and that it had to put 44,000 lbs. of  reinforcement instead of 27,000 lbs. and so it  must  be paid  for the extra 17,000 lbs. a sum of Rs.  9,000/-.   The High Court took the view that this involved no reduction  or curtailment  in  the  work and as  the  alteration  involved additional  cost to the respondent, it cannot be  said  that there was reduction or curtailment of work. 1n other  words, the  High Court was of the view that the nature of the  work was such that there was not only no curtailment of work  but an increase of work involving additional cost.  We think the High Court was right in its conclusion that clause 15 has no application and that the claim was well founded. The respondent had claimed Rs. 9,097/- from the appellant in

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respect  of item C-2.  In the plaint the  respondent  stated that  the  appellant represented to it  that  the  appellant would   entrust  the  respondent  with  the  pipeline   work mentioned  therein  but  that  the  appellant,  contrary  to representation, got the work done by another contractor and, therefore,  the respondent was entitled to compensation  for it. 423SCI/75 414 The  High Court found that as it was provided in  clause  15 that  before the Engineer-in-charge could stop the work  and get the work done by another contractor, he should give the. respondent  a  written notice and as such a notice  was  not given, the respondent was entitled to damage. We  see no reason to think that observance of the  condition as regards the written notice was not mandatory.  We see  no force  in  the  argument that the  written  notice  was  not necessary  as  that  was specifically provided  for  in  the clause. The  last  point for consideration is whether the  suit  was barred by limitation as it was not brought within six months of the act complained of. The  High  Court was of the view that s. 64  of  the  Bombay Housing  Board  Act, 1948 has no application as  the  claims were for damages for breach of contract. Section 64 provides               "No person shall commence any suit against the               Board or against any officer or servant of the               Board or any person acting under the orders of               the Board, for anything done or purporting  to               have been done in pursuance of this Act, with-               out  giving the Board, officer, or servant  or               person two months’ 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."               "And in the case of any such suit for damages,               if tender of sufficient amends shall have been               made  before  the  action  was  brought,   the               plaintiff  shall  not recover  more  than  the               amounts  so tendered and shall pay  all  costs               incurred by the defendant after such tender." The  appellant submitted that the act of entering  into  the contract was an act done or purporting to have been done  in pursuance  of the Act and therefore, any claim for money  as damages  for breach of the contract by the respondent  would come within the purview of the section. The Preamble of the Act provides               "Whereas   it  is  expendient  to  take   such               measures,  to make such schemes and  to  carry               out  such  works  as  are  necessary  for  the               purpose  of  dealing with and  satisfying  the               need  of housing accommodation and  with  that               object in view it is necessary to establish  a               Board  and  to make certain  other  provisions               hereinafter appearing; It is hereby enacted as                             follows." Section  19 provides that the Board may enter into all  such contracts as it may consider necessary for carrying out  the purposes of the Act.  Section 23 (1 ) states that the  Board may  incur expenditure and undertake works for  framing  and execution  of housing schemes.  Section 23(2) says that  the government may entrust to the Board the framing 415 and  execution of any housing scheme. Therefore,  the  Board

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has  statutory  duty to frame schemes  for  construction  of houses and execute them.  Section 24(f) would also  indicate that  the purpose of a scheme is construction of house.   In these circumstances, we think that the contract entered into the Board for construction of buildings might be an act done in  pursuance  to the provisions of the Act.  We  will  also assume that it makes no difference whether it was deemed  to be  entered the contract was or whether it wag deemed to  be entered 54 of the Act.  But the question is whether the  act complained  of, namely the non-payment of a claim for  money based  on breach of contract, was an act done or  purporting to have been done in pursuance of the Act. There  can  be no doubt that the act complained  of  by  the respondent  was  the  non-payment of  money  as  damages  or compensation resulting from an alleged breach of contract. In   The  Municipal  Borough  of  Ahmedabad  v.   Jayantilal Chhotalal  Patel(1) the Court held that when a  municipality has  power  to  enter into a contract  under  the  Municipal Boroughs  Act and the municipality purports to exercise  its power to enforce such contract, any act done in the exercise of its power to enforce the contract is not in pursuance  of the  Act but in pursuance to the contract and, therefore,  a suit brought against the municipality for return of  deposit under a contract to clean the streets was not a suit of  the type  described in s. 206 of the Bombay  Municipal  Boroughs Act,  1925 which is in pari materia with s. 64 of  the  Act. In  the course of the judgment, Chagla, J. (as he then  was) observed that what the plaintiff sought to enforce was,  the right which came into existence as a result of the  contract entered into between the plaintiff and the municipality  and not a public duty cast upon the municipality by the statute, that  in  forfeiting the deposit, the municipality  was  not acting in pursuance to the power given to ’it under  statute but  was doing so in pursuance of a power given to it  under the  contract  and, therefore, the suit  to  enforce  rights under the contract entered into with the municipality  which the  municipality  was  not under any  obligation  to  enter into,  cannot fall with the ambit of the section.  We  think that the decision lays down the law correctly ,and that  the principle deducible from it is applicable to the facts here. Mr. S. T. Desai referred to the decision of the Madras  High Court  in  Athimannil  Muhammad  v.  The  Malabar   District Board(2)  and said that the decision therein would I  govern the  instant case.  That was a case where a suit  was  filed against  the District Board more than six months  after  the date of the accrual of the cause of action, claiming damages on  the  ground that its President  improperly  cancelled  a contract  of  lease  for one year of the  tolls  in  certain places,  which was stated to have been entered into  by  the plaintiff  with the Board through its Vice  President.   The President  in  performance of what he thought was  his  duty under the Madras Local Boards Act accepted a higher offer by another  person  and  the necessary consequence  of  it  was cancellation of the acceptance of the plaintiff’s offer.  It was  held  that though the distinction  between  actions  on contract and actions independent of con- (1) (I.L.R.) 1947 Bom. 841 (2) I.L.R. 58 Madras 746. 416 tract  may be convenient enough as a working rule, the  real test  to be applied was whether what was complained  of  was some act done in pursuance of a statute.  Varadachariar,  J. in  delivering  the  judgment of the  Court  said  that  the cancellation  of  the  acceptance  of  the  offer  was   the necessary result of what the President thought was his  duty

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in  accordance with the terms of the Act as  he  interpreted them  namely  to accept the highest tender and that  he  did this on the footing that the Vice President’s acceptance  of the  plaintiff’s tender was not in compliance with the  Act. He  further  said  that the right to  collect  tolls  was  a special  privilege conferred upon local bodies  by-  statute and   that  they  were  authorized  either  to  manage   the collection  of  the tolls themselves or  through  their  own agency  or to lease them out, and that in any case what  the President  as representing the Board did in connection  with the  leasing out of the right to levy tolls was  undoubtedly an  act done in execution of his powers or duties under  the Act. We  need not consider the correctness of this  decision  as, even  on  the  assumption  that it is  correct,  it  has  no application  to the facts here.  There the Court found  that the  act  complained of had reasonable connection  with  the discharge of his statutory duty as President or at any rate, he  thought that it was his statutory duty as  President  to accept the highest bid.  The distinction between an act done with  some  semblance of authority or show of  right  and  a prima  facie  illegal act in this context has  been  clearly pointed out in the decision in Jalgaon Borough  Municipality v.  The  Khandesh Spinning and Weaving Mills  Co.  Ltd.  (1) where  the  question was whether-notice under s.206 ,of  the Bombay  Municipal Boroughs Act, 1925, was  necessary  before filing  a suit to recover a sum of money on the basis  of  a contract.   The Court held that an act which is Prima  facie illegal is not within the category of acts done or purported to  have been done in pursuance of that Act, and that it  is only  an act done under a vestige or semblance of  authority or  with  some show of a right that would  fall  within  the category.   Bhagwati, J. in the course of his judgment  said that the acts which would fall within the category of  those done or purported to have been done in pursuance of the  Act could  only  be  those which were done under  a  vestige  or semblance  of  authority, or with some show of a  right  and that the distinction between ultra vires and illegal acts on the one hand and wrongful acts on the other wrongful in  the sense  that they purport to have been done in  pursuance  of the  Act  is  that they are intended to have  been  done  in pursuance  of  the  Act  and are done  with  a  vestige  or, semblance  of authority or sort of- a right invested in  the party doing those acts. In The Trustees of Port of Bombay v. The Premier Automobiles Ltd.  (2)  section 87 of the Bombay Port  Trust  Act,  1879, which  is  in  pari materia with s.64 of the  Act  fell  for consideration and the question was whether short delivery by a statutory bailee was something done or purporting to  have been  done under the provisions of that Act.  In the  course of the judgment, Krishna Iyer, J., speaking for the Court, (1)  I.L.R. (1953) Bombay 590 (2) A.I.R. 1974 S.C. 923                             417 said  that a suit for damages for breach of  contract  would not, attract the section (see para 46 of the judgment). As we said, the act complained of in this case was the  non- payment of the amount alleged to be due to the respondent on the-basis of the breach of the contract between the parties. We do not think that the act complained of could be said  to have  been done or purported to have been done in  pursuance of  the Act.  By no stretch of imagination could it be  said that the breach complained of had any reasonable  connection with  any duty cast upon the appellant or its agents by  the Act. In  the result we disallow the claims of the  respondent  in

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items A-3 and A-4 set aside the decree of the High Court  to that  extent.   We affirm the decree of the  High  Court  in respect  of the claims in items C-1 and C-2.  The appeal  is allowed  to the extent indicated but is dismissed  in  other respects.  We direct the parties to bear their cost in  this Court. V.P.S.          Appeal allowed in part. 418