Gentle, J.

1. The defendant District Board was incorporated under theBengal Local Self-Government Act, Act 3 [III] of 1885, (hereinafter called the"Act") the provisions of which govern it. The plaintiff company wasincorporated under the Companies Act on 30th July 1903. It constructed andmaintained a tramway or light railway about 52 miles in length of which about33 miles run along the roadways within the area of the Board. The claim by thecompany against Board, as originally made in the plaint filed on 22nd August1941, is for Rs. 1,04,000 being the aggregate of three sums of Rs. 38,000 (lessRs. 10,000 paid and for which credit is given) alleged to be due during each ofthe three years ending on 31st March 1939 1940 and 1941. This claim is madeunder six agreements by which it is alleged the Board guaranteed to supplementthe net earnings of the company by such annual sums, not exceeding Rs. 38,000,as might be necessary to make the net profits equivalent to Rs. 1500 per annumper mile of the tramway system. The correctness of the amount, as such, isadmitted solely for the purposes of the present suit and to avoid the necessityof taking an account in the event of the companys claim succeeding. Thisadmission, however, is made without prejudice to the Board disputing in anyfuture proceedings, in respect of other years, the method of accountancy bywhich the sum claimed has been computed. The trial commenced on 22nd April 1943at which date the above mentioned claim was the sole matter arising in thesuit. The hearing was interrupted by the Easter recess of the Court and at itsconclusion the trial was resumed on 5th May 1943 when the opening of theplaintiffs case was taking place. On this date Mr. S. N. Banerjee, learned counselfor the Board, raised the question for the first time that the agreements uponwhich the claim was made are not binding upon, and enforceable against theBoard on the ground they were not executed by the Board as required by the Actand the rules made thereunder. Mr. S. Chaudhuri, learned counsel for thecompany, stated he did not object to the written statement being amended byadding pleas to enable this contention to be raised but he said he wouldrequire an adjournment to consider the new defence, of which previous noticehad not been given. I granted an adjournment and later allowed furtheradjournments to enable the parties to discuss the matters in issue.

2. The suit eventually came before me for disposal on 15thNovember 1943. The plaint and the written statement have been amended andadditional pleadings have been filed by both parties which exhaustively dealwith the questions arising between the parties. So far as the plaint isconcerned, alternative claims have been made under Ss. 65, 70 and 72, ContractAct, for compensation for the advantages received by the Board under theagreements, for compensation for the benefits the Board enjoyed from thecompany, and for money paid by mistake, in the event of the agreements notbeing binding upon the Board and therefore being void. Leave to amend theplaint to include these claims was given on 17th November 1943. When grantingleave I appreciated that ante-dating, in effect, these claims might befavourable towards the plaintiff company with regard to the law of limitationbut I was satisfied it was just to do so in the circumstances, since they arisesolely by reason of the plea by the Board that the agreements are notenforceable against it and which was not indicated before 5th May 1943. Ifthese pleas had been included in the written statement at the time it was filedon 18th December 1941, the company would then have had an opportunity, which Iam satisfied it would have utilised, to make the alternative claims earlier butit was prevented from doing so by the Boards failure to raise the question ofenforceability until the second day of the trial. In its further writtenstatement, filed on 18th November 1943, the Board alleges that the company hasreceived advantages under the agreements which it should restore, or for whichit should pay compensation, under S. 65, Contract Act, in the event of theagreements being void. The Board could have included these pleas in itsoriginal written statement and its failure to do so was its own omission and wasnot occasioned by any default of the company. Consequently I directed thatthese claims should be treated as having been made on the day the pleading wasfiled in which they were first raised. On 6th July 1943 the plaintiffsadditional written statement and on 20th November 1943 the plaintiffs furtherwritten statement, were filed.

3. No oral evidence was called and all documents containedin the bundle were agreed between the parties. The following points arise uponthe pleadings: Whether the agreements are binding upon Board or are void;whether the guarantees in the agreements are ultra vires; if the agreements arevoid, (a) when they were discovered to be void, (b) whether the company or theBoard or both received from the other advantages under the agreements andshould restore or pay compensation for such advantages, (c) whether the Boardis bound to compensate the company under S. 70, Contract Act, in respect ofanything done by it which it did not intend to do gratuitously, and (d) whetherunder S. 72 of the same Act the Board should repay to the company money paid bymistake; limitation; and whether the Court has jurisdiction to entertain thesuit. Prior to and after the incorporation of the company on 30th July 1903 theBoard was negotiating and arranging for the construction and running of atramway system. After its incorporation the company constructed and has sinceextended, maintained and conducted the undertaking. About 1904, the tramway wasconstructed for a distance of about 25 mile from Baraset to Basirhat. About1907 it was extended to Taki and Hosonabad, about 1909 to Patipukur and about1915 to Belgatchia. Since the last extension the tramway is about 52 miles inlength of which about 33 miles run along the roadways in the Boards area. Theremaining 19 miles is on land which the company has either acquired or overwhich it has rights of passage; the Board is not concerned with this 19 miles.During the major portion of the period between 1904 and 1938 the company madesubstantial profits, part of which (the company alleges amounting to Rs.5,36,000) was paid to the Board under the provisions in the several agreementsto which reference will be made later. In the years ending 1933, 1935 and 1937the company either incurred losses, or its profits were small, so that, underthe provisions of the agreements payments (alleged to amount to about Rs.69,000) were made by the Board to the company. The original claim in the plaintis for similar payments due from the Board in respect of the years ending in1939, 1940 and 1941. The decrease in profits or the incursion of losses, it wasstated, was occasioned by competitive motor bus services along the tramwayroute; it was further stated that on account of petrol restriction and othercauses arising out of the present war this competition has decreased and inrecent years the company has made considerable profits, part of which, if theagreements are not void, would be payable to the Board. These, however, arematters which did not affect the questions and issues in the suit.

4. The firm of Martin & Co., are, and at all times havebeen, the companys managing agents. At all material times the partners of thefirm were Sir Thomas Acquin Martin, Rajendra Nath Mookerjee, Charles WoolardWalsh and Harold Patrick Martin (hereinafter called "the promoters").Prior to the companys incorporation in 1903, agreements with the Board weremade either with the firm or with the promoters as its partners. Pursuant to aresolution of the Board dated 9th July 1897, the Board in writing or byadvertisement, on 14th July 1897 invited applications for permission toconstruct and work a steam tramway from Baraset to Basirhat with a branch lineto Buduria (this branch was subsequently abandoned.) On 14th August 1897, Martin& Co., wrote a letter to the Board making a full and comprehensive proposalfor the construction of the tramway which was to be carried out by a company tobe incorporated in the future and they enclosed a draft agreement under whichthe scheme would be undertaken. At a meeting held on 29th October 1897 theBoard accepted Martin & Co.s proposal subject to a modification to whichMartin & Co., subsequently agreed. These terms, with the modification, wereincluded in an agreement dated 14th December 1897 made between the Board andthe promoters for and on behalf of a company about to be formed (which in factsubsequently became the plaintiff company.) It is clear that by its resolutionat the meeting held on 29th October 1897, the Board approved all the termscontained in the agreement which is one of those alleged not to be binding uponit and to be void.

5. A second agreement, made between the Board and thepromoters, dated 14th May 1902, purported to substitute a guarantee clausecontained in it, in place of the guarantee in cl. (4) of the first agreement.After the company was incorporated an agreement, dated 3rd August 1903, wasmade between the Board, the promoters and the company by which the companypurported to adopt and to ratify the first agreement, as modified by the secondagreement, made between the Board and the promoters. A tramway running betweenBaraset and Basirhat was constructed by the company acting under the first andsecond agreements as adopted and ratified by the third agreement. On 6thSeptember 1907, 21st December 1908 and 7th August 1914 further agreements weremade between the Board and the company providing for three extensions of thetramway. The extensions were constructed by the company pursuant to theseagreements. The six agreements to which reference has been made, are alleged bythe Board not to be binding upon it and to be void on the ground that the Boarddid not sanction nor execute them as required by the Act and the rules madethereunder. It is now convenient to set out these six agreements and theirrelevant terms.

(1) December 14, 1897 - made between the promoters, for andon behalf of a company about to be formed, and the Board. It was agreed interalia by cl. (1) that the Board would grant in perpetuity to the company freeuse of a portion of the roadway not exceeding eight feet in width betweenBaraset and Basirhat for the purpose of laying and using a steam tramway to beworked by the company; by cl. (4) the Board guaranteed to supplement the netearnings of the company by such annual subsidy as might be necessary to allowit to pay a dividend of 4 per cent per annum upon its share capital and anysurplus profits earned by the company in excess of 4 per cent on its capitalwould be equally divided between the Board and the company; by cls. (8), (9)and (10) the company should carry out the works specified therein; by cl. (11)the company should construct, maintain and repair all works connected with thetramway; and by cl. (13) upon adopting the agreement so as to make it bindingupon the company the promoters should be discharged from all liability.

(2) May 14, 1902-made between the promoters and the Boardand expressed to be supplemental to the agreement dated 14th December 1897(therein called the principal instrument). It was agreed that cl. (4) in theprincipal instrument should be eliminated and there should be substituted inits place and be read as part of the principal instrument that the Boardguaranteed to supplement the companys net earnings by such annual subsidy asmight be necessary to make the net profits of the company equivalent to Rs.1500 per annum per mile of the tramway system provided that the total liabilityincurred by the Board in any one year should not exceed the sum of Rs. 38,000being four per cent on the amount of the companys share capital, and anysurplus profits in excess of four per cent on its capital earned by the companyshould be equally divided between the Board and the company.

As mentioned above, the company was incorporated on 30thJuly 1903 after the above two agreements were made.

(3) August 3, 1903- made between the Board of the firstpart, the promoters of the second part and the company of the third part. Thetwo early agreements were recited and it was agreed that the first agreement,as modified by the second agreement, was thereby adopted by the company andshould be binding on the Board and on the company in the same manner and totake effect in all respects as if the company had been in existence at the datethereof, and the company thereby ratified the same. The promoters should fromthenceforth be discharged from all liability under or in respect of the firstagreement.

(4) November 6, 1907-made between the Board and the company.It was agreed that, this agreement should be read with and as supplemental tothe three earlier agreements; subject to the sanction of the Local Governmentthe Board agreed and consented to the extension of the tramway to Taki andHosanabad subject to the same terms and conditions as applied to the existingline and as set out in the first and second agreements as if the extension hadformed part of the original tramway line and so that the guarantee of the Boardas to supplementing the net earnings of the company contained in the first agreement,as modified by the second agreement, should extend and apply so as to renderthe Board liable to pay a subsidy sufficient to make the net profits of thecompany equivalent to Rs. 1500 per annum per mile of the extension as well asof the original tramway but subject nevertheless to the maximum of Rs. 38,000prescribed by the first agreement as modified by the second agreement, andwhich should apply for the purpose of limiting the contribution in respect bothof the original tramway and the extension.

(5) December 21, 1908- made between the Board and thecompany and expressed to be read with and as supplemental to the four earlieragreements. It provided for the extension of the tramway system to Patipukurupon the same terms as the extension in the agreement dated 6th November 1907.

(6) August 7, 1914-made between the Board and the companyand expressed to be read with and as supplemental to the five earlieragreements. It provided for an extension of the tramway to Belgatchia upon thesame terms as in the agreements for the two previous extensions.

6. The above agreements purport to be executed by the Boardin the following manner

(1) December 14, 1897-by the signatures of the Chairman andtwo other members of the District Board. The common seal of the Board was notaffixed at the foot but is stamped at the head of the document. At the foot itis stated "as witness the hand of the Chairman for the time being of theBoard." The signature of the chairman alone is attested; the affixation ofthe common seal at the head of the document is not attested.

(2) May 14, 1902-by the signature of the Chairman and oneother member of the Board both of which are attested. The words "aswitness the hands of the Chairman and the Vice-Chairman of 24 Perganas"appear at the foot. The common seal of the Board is stamped at the foot of theagreement and also at the head thereof, its affixation is not attested.

(3) August 3, 1903-by the signature of the Chairman of theBoard with no common seal affixed.

7. The second to the sixth agreements do not bear thesignatures of three members of the Board with the common seal affixed. Thefirst agreement bears the signatures of three members of the Board, one ofwhich alone is attested, and the common seal is affixed at the top of thedocument. The first and second agreements were made before the company wasincorporated and by the third agreement the company purported to adopt and toratify the first, as modified by the second agreement. In order to considerwhether the agreements are binding upon the Board reference is required to thematerial provisions of the Bengal Local Self-Government Act of 1885 (as theyappeared prior to 1937) and to a rule made thereunder. They are:

Section 20 - Every District Board shall be a bodycorporate...... and shall have ... a common seal, with power... subject to anyrules made by the Local Government under this Act... to contract......

Section 138-It shall be lawful for the Local Government tomake rules consistent with this Act, for any District Board... for thepurpose... (e) regulating the powers of Boards.... to contract... and the modeof executing contracts.

8. On 2nd February 1886 rules were made by the LocalGovernment under S. 138. Rule 103 alone is material; it provides that:

Every contract or agreement entered into by any DistrictBoard in respect of a sum, or involving in value, above Rs. 500 shall besanctioned at a meeting, he in writing, be signed by the Chairman and two othermembers of the District Board, and shall be sealed with the common seal of suchDistrict Board. Unless so sanctioned and executed, such contract shall not bebinding on the District Board.

9. From the foregoing it appears that the power of the Boardto contract which, by S. 2 (h), Contract Act, is to make an enforceableagreement, is under S. 20, subject to rules made by the Local Government underS. 138. Rule 103 requires a contract or agreement to be sanctioned at a Boardmeeting, signed by three members of the Board and sealed with its common seal andunless so sanctioned and executed, a contract is not binding upon it. Rule 103is not ultra vires the power of the Local Government to make rules. By S. 138(d) rules can be made to regulate the powers of a Board to transfer property.In 43 Cal. 790 [LQ/CalHC/1915/356] Mathura Mohan v. Ram Kumar (16) 3 A. I. R. 1916 Cal. 136 : 43Cal. 790: 35 I. C. 305 it was held that this power included rule-making powerto regulate the mode in which an alienation is to be effected. Section 138 (e)expressly enables the mode of executing contracts to be regulated andtherefore, a fortiori, R. 103 must be intra vires the rule-making power of theLocal Government. The Board was incorporated under the Act and its provisionsgovern it. When a provision is mandatory and it is a statutory requirement thatthe contract of a corporation must have its common seal affixed in order tomake a binding agreement, in that event the contract is not binding if thecommon seal is not affixed even when consideration has passed to thecorporation: vide (1882) S. A. C. 517 H. Young & Co. v. The Mayor andCorporation of Royal Leamington Spa. (1882) 8 A. C. 517: 52 L. J. Q. B. 713: 49L. T. 1 : 30 W. R. 500. The same position must arise when any other requirementis not fulfilled, as in this case, by an insufficient number of members of thecorporation signing the contract. Rule 103 having been made pursuant to andunder the provisions of the Act it has the same effect as the enactmentscontained in the statute. The second to the sixth agreements were not executedas required by the Act and the Rule, which requirements are mandatory. It must,therefore, follow that none of the second to the sixth agreements is bindingupon the Board and cannot be enforced against it.

10. As regards the first agreement, dated 14th December1897, as mentioned above it is signed by the Chairman and two other members ofthe Board. The signature of the Chairman alone is attested and the Boardscommon seal is stamped at the head of the document and there is not thecustomary attestation that it was affixed in the presence of any officer. Aletter, disclosed by the Board, dated 14th December 1897 (the same as thatborne by the first agreement) written by the Board to Martin & Co., statesthat the agreement in duplicate duly signed and sealed was returned with theletter. Rule 103 does not require the seal of the Board to be affixed in anyparticular place on an agreement nor its affixation to be attested. The letteris evidence that the seal was affixed at the date which the agreement bears.There is no reason to doubt that the seal was affixed to, and the three membersof the Board signed the agreement in execution of it. In my view, so far asexecution is concerned, the first agreement complies with the requirements ofR. 103.

11. It was argued, on behalf of the Board, that the firstagreement, after it was engrossed, was not placed before the Board for itsapproval and therefore this agreement does not comply with R. 103 whichrequires it to be sanctioned by the Board. All the terms contained in theagreement were approved by the Board at its meeting held on 29 October 1897whereat it was resolved that Martin & Cos tender be accepted subject to amodification, set out in the minutes of the meeting, and which subsequentlyMartin & Co., accepted, and the modification was included in the agreement.Since the Board had already approved all the terms of the agreement, whichsubsequently was executed, this approval was their sanction to the agreement.It was unnecessary for the Board to accord its approval a second time by theengrossment being formally placed before it for this purpose. The rule onlyrequires the Board to sanction an agreement, no special form or method ofsanction is prescribed. Since it approved all the terms, the Board must havesanctioned the agreement. I am satisfied and I hold that the sanction of theBoard was given, which R. 103 requires to be accorded to an agreement. Thefirst agreement is an enforceable contract and is not void for non-compliancewith the Rule.

12. There is no evidence, and no record or proceedings ofany meeting of the Board, showing that the 2nd, 3rd, 4th, 5th, and 6thagreements, or the terms which they contain, were ever approved or sanctionedby the Board. In regard to these agreements the requirement of R. 103 withregard to sanction was not fulfilled. It was contended on behalf of the companythat the Board had full authority to enter into the six agreements and thatthey are binding contracts whatever the form of their execution may have been.Reliance in support of this contention was placed upon S. 79, Bengal LocalSelf-Government Act, the material provisions of which are:

It shall be lawful for a District Board to take measuresfor, or to contribute towards the construction, repair and maintenance of anyworks which may directly improve the means of communication within thedistrict......

It was argued that the words "works which may directlyimprove the means of communication" include a tramway system and the words"to take measures for... the construction, repair and maintenance of anyworks..." include an implied power to contract for such works to becarried out, and that the works with respect to a tramway can be carried out bythe Board or by a company with which the Board contracts and include the worksconcerned, and the facts and circumstances arising, in the present case. It wasfurther contended that the implied power for the Board to contract under S. 79is in addition to the express contractual power under S. 20 of the Act (which issubject to the rules made under S. 138) and that in regard to contracts underS. 79 the methods by which the suit agreements were executed are sufficient tobind the Board. It was also argued that the authority under S. 79 to contributeincludes power to contract to guarantee upon the terms contained in theagreements. Under Ss. 80, 81 and 82 of the Act the Board has powers, subject tothe provisions therein contained, to construct, and maintain tramways, tosubscribe to any debenture loan raised by it Government or a municipal or localauthority for the construction or maintenance of a tramway system, and toguarantee interest on capital expended on a tramway and other works which maydirectly improve the means of communication with the district. If S. 79 gavesuch wide powers, as the learned Advocate-General contended, there would be noneed for Ss. 80, 81 and 82. The authority in S. 79 "to take measures forthe construction, repair and maintenance of works" must be subject to theexpress power given in S. 20 to contract, which power is subject to the rulesmade by the Local Government. The provisions of S. 79 are not exclusive of, butmust be read together with S. 20. In my opinion there is no additional separatepower contained in S. 79 for a Board to make contracts and it has no authorityto enter into binding agreements other than, so far as is material in thepresent suit, by the mode prescribed in Rule 103. The power under S. 79 tocontribute will later be considered.

13. A further question arises with respect to the first,second and third agreements. The first two agreements were made between theBoard and promoters prior to the company coming into existence. The thirdagreement was made between the Board, the promoters and the company (after itsincorporation) by which the parties agreed that the first agreement, asmodified by the second agreement, was thereby adopted by the company and shouldbe binding on the Board and on the company in the same manner and to takeeffect in all respects as if the company had been in existence at the datethereof and the company by those presents ratified the first agreement asmodified. So far as ratification is concerned, a company, after it comes intoexistence, cannot ratify an agreement ostensibly made on its behalf before itis incorporated, vide (1867) L. R. 2 C. P. 174, Kelner v. Baxter (1867) L. R. 2C. P. 174 : 36 L. J. C. P. 94: 15 L. T. 313 : 15 W. R. 278 1904 A. C. 120 NatalLand and Colonization Co. Ltd. v. Pauline Colliery & Development SyndicateLtd. (1904) 1904 A. C. 120 : 73 L. J. P. C. 22 : 89 L. T. 678 and theobservations of Lord Davey at p. 126. A fresh agreement can, however, be made,after the company comes into existence, between the former contracting partiesand the company upon the same terms as those contained in the earlieragreement: vide (1904) A. C. 120 Natal Land and Colonization Co. Ltd. v.Pauline Colliery & Development Syndicate Ltd. (1904) 1904 A. C. 120 : 73 L.J. P. C. 22 : 89 L. T. 678. If the terms are not expressly set out in the newagreement but are ascertained by reference in it to the terms contained in theold one, the new agreement will be of full effect upon the terms in the earlieragreement. The third agreement is a contract between the parties to it by whichthe company and the Board contracted together upon the terms contained in thefirst and second agreements. The company cannot enforce these two agreements asthey were not parties to them and cannot ratify them since they were made priorto the companys incorporation. The terms contained in the first and secondagreements can only be enforced by the company under, and as, the terms of thethird agreement and, even assuming that the promoters could have enforced thefirst two agreements against the Board, the company is unable to enforce theterms in them since the third agreement is not binding upon the Board by reasonof its defective execution.

14. The contractual rights of the company against the Boarddepend upon the enforceability of the third, fourth, fifth and sixth agreementsand since these agreements are not binding upon the Board as they were notexecuted in accordance with the statutory requirements and also were notsanctioned by the Board, the company cannot succeed in its claim under theagreements for contributions alleged to be due pursuant to the guaranteescontained in those agreements. A short reference is necessary to one furthercontention regarding the agreements, which was made upon S. 31A, Bengal LocalSelf-Government Act, of which the material provisions are:

Subject to the provisions of any rules made under S. 32, theChairman of a District Board.... shall, for the transaction of the businessconnected with this Act, .... exercise all the powers vested by this Act in theDistrict Board....

15. It was argued that "business" in the sectionincludes anything which the Act empowers the Board to do and it enabled theChairman to bind the Board when he signed the suit agreements. It issufficient, in regard to this contention, to point out that S. 31A was insertedin the Act by S. 28, Bengal Local Self-Government (Amendment) Act, 1932, longafter the six agreements were made. It was not suggested that the section hasretrospective effect and its provisions therefore are not applicable to theagreements in suit. The next matter to be considered is the effectiveness ofthe guarantee which the Board purported to give. The first claim in the suit ismade upon the terms of the guarantee contained in the second agreement and notupon those set out in the earlier agreement. In this respect reference has tobe made to Ss. 81 and 82 of the Bengal Act. The provisions of these twosections, as they now appear, are as follows:

Section 81. It shall be lawful for a District Board, withthe sanction of the Provincial Government to subscribe to any debenture loanraised by the Central Government or any Provincial Government or by anymunicipal authority or local authority for the construction or maintenance ofany railway or tramway which, in the opinion of such District Board, is likelyto be of direct benefit to the district.

Section 82. It shall be lawful for the District Board, withthe sanction of the Provincial Government from time to time to guarantee thepayment from the District Fund of such sums as it shall think fit as intereston capital expended on any railways, tramways or other works which may directlyimprove the means of communication within the district or between the districtand other districts.

16. The wording of these two sections has been slightlychanged. As regards S. 81, in place of "Provincial Government" thewords "Local Government" appeared from 1933 to 1937, and prior to1932 "Lieutenant-Governor" appeared. Prior to 1937 the words"Government of India" appeared in place of "Central Governmentor any Provincial Government." As regards S. 82, in place of the words"Provincial Government" the words "Lieutenant-Governor"appeared until 1908 and from that date until 1937 the words "GovernorGeneral in Council" appeared. Prior to 1907 sanction of theLieutenant-Governor, and between 1908 to 1937 sanction of the Governor Generalin Council were required to enable a Board to guarantee interest on capitalexpended on a tramway.

17. By the guarantee, cl. 4 in the first agreement the Boardguaranteed to supplement the net earnings of the company by such annual subsidyas might be necessary to allow the company to pay a dividend of four per centper annum upon its share capital of Rs. 7,28,000. At the date this agreementwas made the sanction of the Lieutenant-Governor was required under S. 82 inrespect of any guarantee coming within it. As mentioned above, this guaranteewas changed by the second agreement which substituted in its place a guaranteeto supplement the net earnings of the company such by annual subsidy as mightbe necessary to make its net profits equivalent to Rs. 1500 per mile of thetramway provided that the total liability incurred by the Board in any one yearshould not exceed the sum of Rs. 38,000, being four per cent on the amount ofthe companys share capital. This form of guarantee is also contained in 4th,5th and 6th agreements and is that upon which the company is suing. Thequestion whether the guarantee in the first agreement is in the form and uponthe terms which are authorised need not be considered since it is not thesubject of a claim in the suit.

18. The suit guarantee (it is convenient to refer to allguarantees, upon which the company is suing, in the singular as they are in thesame form) is to make the annual profits of a trading undertaking equivalent toRs. 1500 per mile (subject to the limitation of Rs. 38,000 per annum). There isno provision in the Act which permits a District Board, whose resources arepublic funds, to guarantee or to pay to a trading undertaking, any sum toincrease its trading profit or to convert its trading loss into a tradingprofit. The reference to four per cent on the amount of the companys sharecapital does not make the guarantee to be in respect of interest on capitalexpended on the tramway, which S. 82 permits; it is an explanation how thelimit of Rs. 38,000 was ascertained. The guarantee is not a provision for asubscription to a debenture loan and, therefore, does not come within the ambitof S. 81. Section 79 of the Act gives a District Board permissive power tocontribute towards construction, repair and maintenance of any works which maydirectly improve the means of communication. It was argued that this sectionenabled the Board to enter into the guarantee. This section does not empower aguarantee to be given and the power to contribute is limited as stated in thesection. The guarantee is not for contribution towards the construction, repairand maintenance of any works and is, therefore, not covered by S. 79. There isnot any provision in the Act which either expressly or impliedly empowers theBoard to give the guarantee upon which the company is suing, the terms of whichare contained in 2nd, 4th, 5th and 6th agreements. In the absence of anyauthorisation to guarantee or contribute out of public funds towards thetrading profits of an undertaking, no guarantee or payment of this kind can begiven or made. The position is succinctly summarised in Halsburys Laws ofEngland (Edn. 2, Vol. 8 at p. 73) in which it is stated "what the statutedoes not expressly or impliedly authorise is to be taken to beprohibited." Reference is now required to the material part of S. 3,Bengal Tramways Act of 1883, as it was enacted in 1903; it is as follows:

An order made by the Local Government authorising theconstruction of any tramways.... may be obtained by.... any persons,corporation or company with the consent of such local authority....

Section 5 of the same Act enables the Local Government toconsider an application for such an order and to grant it. On 15th May 1903,through its Railway Department, the Local Government made an order under theTramways Act authorising the construction of the tramway system. This order waspassed before the incorporation of the company. Clause 5 of the order providesthat

the promoters shall construct and maintain.... subject tothe agreements made between the promoters and the Local Authority (defendantBoard) which are set forth in the first schedule attached to this order.... thetramway hereinafter described....

By cl. 4 of the order the expression "thepromoters" include the company to be formed and on whose behalf theapplication was stated to be made. No point is made that the order did notauthorise the company to carry out its effect. The first suit agreement dated14th December 1897 alone is given in the schedule to the order. The terms ofthe agreement are fully set out save that, in place of the original guaranteein cl. 4, the terms of the guarantee contained in the second agreement are givenas if they formed part of the first agreement. Since the order authorising thetramway construction was made subject to the agreement set out in the scheduleto the order, the Local Government must have approved and sanctioned the termsof the agreement, including the Boards guarantee to the company. It wascontended on behalf of the Board that, since the order was made and thesanction for the guarantee was given under the Tramways Act and not under theBengal Local Self-Government Act, this is not sanction under the latter Act andthe guarantee has not been accorded the sanction which the statute requires.

19. Section 82 of the Act which alone enables a guarantee tobe given, does not specify any particular form or method by which sanctionshould be accorded but requires only that sanction should be given. If the formor method by which approval or sanction was given were the only point arising Ishould have been inclined to the view that, assuming the guarantee came withinS. 82, it was effectively sanctioned although this is contained in an ordermade under the Tramways Act. The matter, however, does not rest there. Theorder dated 15th May 1903 was made by the Local Government by whom sanction wastherefore given to the guarantee. Sanction under S. 82 was required to be givenby the Lieutenant-Governor and not by the Local Government at the dates whenthe first and second agreements were made, and sanction by the Local Governmentis not sanction by the Lieutenant-Governor. The Lieutenant-Governor nev(sic)(sic)gave his sanction either for the guarantee contained in the first, or inthe second agreement. In the absence of the Lieutenant-Governors sanction theguarantee, upon which the company is suing, is ineffective and cannot beenforced. The 4th, 5th and 6th agreements, dated respectively 6th November1907, 12th December 1908 and 7th August 1914, provide for extensions of thetramway, and contain guarantees by the Board similar to that in the secondagreement. At the date of the fourth agreement the sanction ofLieutenant-Governor was required; when the fifth and sixth agreements weremade, the sanction of the Governor-General in Council was necessary to enable aBoard effectively to give a guarantee authorized under S. 82. No sanction wasgiven either by the Lieutenant-Governor or by the Governor-General in Council,as the case may be, to any of the guarantees and the absence of such sanctionsrenders them ineffective. Before proceeding further it is convenient tosummarise the conclusions to which I have arrived upon the matters which havebeen discussed:

(1) The guarantees, as they appear in the second, fourth,fifth and sixth agreements, and upon the terms of which the plaintiff companysclaim is made under the agreements, are not authorized by the Act.

(2) Even assuming the guarantees are covered by S. 82, nonehas been sanctioned by the specified authority.

(3) The second, third, fourth, fifth and sixth agreementswere not sanctioned or executed by the Board as required by the Act and ruleand therefore they are not binding upon and not enforceable against the Board.

(4) Although the first agreement complied with the statutoryrequirements regarding sanction and execution, the company was not in existenceat the time it was made, was not a party to it and therefore cannot enforce it;also it cannot enforce the second agreement for the same reasons.

(5) The third agreement, by which the company purported tomake a new agreement with the Board upon the terms contained in the firstagreement as modified by the second agreement, being unenforceable the companycannot enforce the terms of the earlier agreements as the terms of the thirdagreement.

20. Since the third, fourth, fifth and sixth agreements(which the company might enforce as parties to them) are not binding upon theBoard and are not enforceable against it, they are therefore void, vide S. 2(g), Contract Act, and they always have been void. The second agreement alsois, and at all times, was void for the same reasons. Since the third, fourth,fifth and sixth agreements, upon which the plaintiff company makes the originalclaim in the suit, are not binding upon and enforceable against the Board, itfollows that this claim by the company must fail. The agreements being void,reference is now required to the provisions of three sections of the ContractAct. They are:

Section 65-When an agreement is discovered to be void, orwhen a contract becomes void, any person who has received any advantage undersuch agreement or contract is bound to restore it, or to make compensation forit to the person from whom he received it.

Section 70-Where a person lawfully does anything for anotherperson, or delivers anything to him, not intending to do so gratuitously, andsuch other person enjoys the benefit thereof, the latter is bound to makecompensation to the former in respect of, or to restore, the thing so done ordelivered.

Section 72 - A person to whom money has been paid, oranything delivered, by mistake or under coercion, must repay or return it.

21. In para. 13 of the amendment to the plaint the companyclaims, under S. 65, for compensation totalling Rs. 35,36,072 in respect of theadvantages (therein specified) which it alleged the Board received under thevoid agreements. In paras. 9 and 10 of its further written statement the Boardalleges that the company, in its turn, received advantages from the Board whichare therein set out and which it contends the company is bound to restore or inrespect of which payment should be made; the value of such advantages is saidto amount to over Rs. 41,00,000. Further the company claims, in thealternative, in para. 14 of the amendment of the plaint Rs. 30,00,000 under S.70 and, in para. 15, Rs. 5,36,072 under S. 72. Considerable argument wasdirected as to the alleged advantages; whether the advantages were received byone party from the other; the dates when it should be deemed the agreementswere discovered to be void; the relevant Articles of the Limitation Act whichshould apply to these claims; and the dates from which limitation shouldcommence. After the conclusion of all arguments referable to the several claimsand the matters arising out of and in connection therewith, objection was takenon behalf of the Board to the jurisdiction of this Court in respect of claimsmade in the amendment to the plaint. At the time when the question of amendmentarose and when leave was given on 17th November 1943, for the amendment to bemade, the question of jurisdiction was not raised, this took place on 24th November.But jurisdiction which the Court does not possess cannot be conferred by aparty postponing to take the objection and unless there is jurisdiction in theCourt, it has none to exercise.

22. The defendant Board neither resides nor carries onbusiness within the jurisdiction and it is common ground that only part of thecauses of action, whether the original or by amendment, arose within thejurisdiction and that leave of the Court is required before the Court canentertain any of the claims in the suit. Leave was obtained under Cl. 12 of theLetters Patent to institute the suit at the time when the only claim made wasunder the agreements. So far as this claim is concerned, and it has not beenargued to the contrary, the Court has jurisdiction to entertain it. By theamendment, the company, in the alternative, claims relief under Ss. 65, 70 and72, Contract Act. Under these sections claims are made upon the basis, and inthe event of the suit agreements being void. These alternative claims are not, aswas argued, different forms of relief in respect of the cause of actionoriginally contained in the plaint, but each is a fresh cause of action forwhich leave is required under Cl. 12. The original claim is under the writtenagreements whereas the other claims are made under statutory enactments andwhich are alleged to arise upon the failure of the first claim by reason of theagreements being void. The first claim is to enforce the terms of theagreements but the other claims are dehors the agreements and seek to enforceother rights. Leave under Cl. 12 is a condition precedent to jurisdiction andunless this condition is fulfilled the Court has no jurisdiction to entertain asuit for which leave is required. The material provisions of the clause are

... the said High Court of Judicature at Fort William inBengal... shall be empowered to receive, try, and determine suits of everydescription if... the cause of action shall have arisen, either wholly, or, incase the leave of the Court shall have been first obtained, in part, within thelocal limits of the ordinary original jurisdiction of the said High Court....

Jurisdiction is conferred to receive, try, and determinesuits provided the leave of the Court is previously obtained when the cause ofaction arises in part within the territorial limits. Leave must be obtainedbefore the suit can be received. In 15 Bom. 93 [LQ/BomHC/1890/1] Rampurtab Samruthroy v. PremsukhChandamal (91) 15 Bom. 93 [LQ/BomHC/1890/1] it was held that the grant of leave is a judicialact relating solely to the cause of action set forth in the plaint at the timeit was obtained, it affords the very foundation for jurisdiction and is notavailable to confer jurisdiction in respect of a different cause of actionwhich was not considered at the time; and subsequently the plaint cannot beamended so as to alter the cause of action; the Court cannot try a differentcause of action save in another suit. In 41 Bom. L. R. 536 Motilal Tribhovandasv. Shankerlal Chhaganlal (39) 26 : A.I.R. 1939 Bom. 345 [LQ/BomHC/1938/143] : 184I. C. 520 : 41 Bom. L. R. 536 it was held that when a suit was instituted withleave under Cl. 12 by several persons as partners and by amendment of theplaint was converted into a suit by only one of them, the cause of action isaltered and does not lie in the absence of fresh leave. In the course of hisjudgment Kania J. observed that if an amendment altering the cause of action ismade it follows that fresh leave should be obtained in respect of the alteredcause of action. Upon this authority it was contended that in the same suit,for which leave has previously been obtained, fresh leave can be given inrespect of a new cause of action introduced by an amendment. Leave to amend theplaint was given on 17th November 1943. The plaint with the amendment waspresented on 22nd November without verification. On 24th November the questionof jurisdiction was argued upon which date I was asked to give leave under Cl.12 to the claims in the amendment. The amendment was verified on 25th November.Reference was made to 43 C. W. N. 1015 Amullya Chandra Ghose v. SuprokashChandra Mitra (39) 43 C.W.N. 1015 to support the application for leave to theamendment. In this suit Lort William J. by way of obiter, observed thataccording to the practice on the Original Side of this Court in cases whereleave under Cl. 12 of the Letters Patent has been granted, a suit is deemed tobe instituted on the date of the presentation of the plaint and not on the datewhen leave is obtained. The learned Judges observations were directed upon thequestion of limitation and he did not say that leave could be granted after asuit has been instituted.

23. The wording and meaning of Cl. 12 is clear, namely, thatthe Courts leave shall previously be obtained before it has jurisdiction to receivea suit for which leave is required. The grant of leave is a condition precedentto the Court having jurisdiction to receive a suit. An amendment to a plaintraising a new cause of action upon which a claim is made is not a fresh suitbut is an additional claim made in an existing suit. The Courts leave ispreviously required in respect of a cause of action before the Court can havejurisdiction to receive the suit in which it is alleged. Further, in thepresent case leave to sue was not sought with respect to the causes of actionin the amendment either at the time application was made to amend or when leavewas given for the amendment or when the plaint with the amendment was presentedto the Court. I do not consider that postponement of verification affects theposition. My attention was not called to the authorities and the question ofleave being required in respect of the amendment was not raised when I grantedleave to amend the plaint. But this omission and the grant of leave to amendthe plaint cannot confer upon the Court jurisdiction which it does not possess.

24. In my opinion the Court has no jurisdiction to receive,try and determine the claims upon the causes of action in the amendment to theplaint since leave was not previously obtained in respect of those causes ofaction before the suit in which they are made was instituted in this Court.Learned counsel for the Board conceded that if the Court has not jurisdictionin this suit to entertain the companys claims to compensation under S. 65,Contract Act, then it must follow it has no jurisdiction to consider similarclaims by the Board. The question of jurisdiction does not affect the claimmade by the company under the agreement. There is no doubt the Court hasjurisdiction to entertain this claim. I have already indicated that this claimmust fail and it is therefore dismissed. In light of the conclusion to which Ihave arrived regarding jurisdiction, the alternative claims raised in theamendment to the plaint must fail in the present suit but in dismissing them Ido so without prejudice to, and, if necessary, with liberty for, the plaintiffto prefer them in a fresh suit. There will also be liberty for the Board tomake its claims under S. 65, Contract Act, in a fresh suit. Ordinarily it isdesirable for a Judge to express his views upon all matters in issue arising ina suit although his opinion may not be necessary for the decision since he mayhave disposed of the suit upon one issue, for example, limitation. In thepresent suit I do not consider that this course is proper. The claims by thecompany under Ss. 65, 70 and 71, Contract Act, and by the Board under S. 65 maybe the subject of future litigation. In these circumstances, and as I am unableto dispose of these claims myself, it is most desirable that all issues shouldbe at large between the parties and that the Court before which they may comeshould be unfettered to determine all questions arising in connection withthem. I propose, therefore, not to express any opinion upon the issues or uponany matters relating to the claims under the above sections of the ContractAct, including the dates when the suit agreements were discovered to be voidand with respect to the law of limitation. Eleven issues were settled, whichwill be attached to the pleadings. I express no opinion with regard to issues 5to 10 inclusive.

25. In regard to costs: In the ordinary course theplaintiffs suit having failed the usual consequences would follow. There are,however, in this case some special circumstances. The first adjournment wasgranted by reason of the validity of the suit agreements being raised by theBoard for the first time on the second day of the hearing. Further, notinconsiderable time was occupied with regard to the advantages which, in para.9 of the Boards further written statement, it is alleged were received by thecompany and the recoverability by the Board in respect of those advantages, andwhich cannot be decided in the present suit. It is not possible to allocate theperiod of time which was occupied in dealing with the argument upon the mattersset out in the Boards further written statement but I do not consider that thecompany bear the costs in respect of these matters or of the adjournment whichwas occasioned by the Board. Upon consideration I have come to the conclusionthat the proper order to make is that each party should respectively bear itsown costs. It is with regret that I have been forced to hold that the suitagreements are not binding upon, and enforceable against the Board, and thatthey are void. During a period of about 40 years the tramway system has beenmaintained within the area of the defendant Board resulting in considerableprofit not only to the company but also to the Board; it must also have been agreat boon and benefit to members of the public. It is unfortunate that afterthe lapse of this long period the District Board has been successful incontending that it is not bound by the agreements which it made and pursuant towhich the tramway has been conducted for so many years and has provided cheapand useful amenities for the public.

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Baraset Basirhat Light Railway Co. Ltd. vs. District Board of the 24-Pergunnahs (15.12.1943 - CALHC)