401 -

BOMBAY HOUSING BOARD (NOW THE MAHARASHTRA

HOUSING BOARD)

' \!.

KARBHASE NAIK & CO., SHOLAPUR

January 29, 1975

[K. K. MATHEW, P. N, BHAG'YATI AND N. L. UNTWALIA, JJ.]

The Bombay Housing Board Act (69 of 1948), s. 64-'Anything done or pll.'porti11g to lwve bee11 done in pursuance of the Acl', Scope of-Breach of c1111tract if comes within_ expression.

There was a conlra1:t between the State and the respondent, which after the passing of the Bombay Housing Board Act, 1948, was deemed to have b-en 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 Schedu!e of Ra-tes 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,:harge would be at liber~ to cancel the order if h.e 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 contra.ctor ha!.i commenced work and incu.rred expenditure. the contractor shall only be entitled to be paid at su:h rate as may be fixed by the Engineer'incharge, and if the contractor is dissatisfied, he may raise a dispute about the rate and the decision of the Superintending Engineer will b~ final.

Clause 15 provided that the Engineer-in-charge has power to stop or to reduce the who'.e of the work specified in the tender or gt it done by ano!her, and the contractor has no claim to any compensation whatsoever on account of such stoppage or redudion.. But, befo:e th~ Engineer-in-charge could stop the work and get it done by another contractor, he should give the first contractor a written notice, The contrac:or sha, JJ 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 exe:ution 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 materia's or labour recruited by him.

The clame further provides that the contractor shal! not also have any claim for compensation by reason of any alteration in the original specifi.:ation 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 decred those items also.

They were : (I) 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 "pecifications in. the agreement. and that no alteration would be made therein, but in fact an alteration was made as a result of whkh 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 respon<; lent with another item of work bu, t, contrary to the

reprcsenation, got the work done by another without giving notice in writing to the respondent and hence, the High Court held that the respondent was entitied to compensation.

In appeal. to thi" Court, it was contended; (1 l. that with respect to the first 2 items in view of cl. 14 the respondent was entitled only to the rate Js fixed .by the Engineer-in-charge;

0 ('2) with respect to the 3rd item since the Engineer-in-

.chare was entitled to ':hange the specifications, the respondent was not en:1tled

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 su!t 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 th,; a:t Of entering into a •:ontract was an act done in pursuance of the Act. and so a . claim for damages for breacl) of th~ contract would come within the pu.rview two items.

[412E-F]

HELD : ( J) The High Court was wrong in allowing the claim on the first .two items.

[412E, F]

The :fligh Court erred in holding that cl. 14 was inapplicable.

The High Court was also wrong in holding that if the clause was apr; licable it gave the C Engineer-in-char2e an absolute power to fix the rate and that it was unjust. UI'til 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 sitid that in the absen:e 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 exrcise his liberty to cancel the contract after receiving notice of the respondent's rate, it cou.ld not be said that there was a concluded contract D between the parties for payment at those rates.

The fact th.at an exp!"oss power was given to the Engineer-in-charge by the clause to cancel th~ 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. In the , absence of !; ome positive act on the part of the. Engineer-in-charge agreeing to the rate, there was no agreement as to the rate "nd the respondent was not bound to carry out the work. The provision regarding fixation of rate by the Engineer-in-charge and 'by the Se.perintending Engineer was intended to cover :ases. where the notice specifying the ra_te was not given by the contractor, or when, even though the E notice was given, the Engineer-in-charge did not cancel the order in the <•vent of his not agm:ing to . the rate specified in the notice, and the contrai:tor commences work and incurs expenditure.

[412B-E]

(2) The High Court was right in its conclusion with respect 10 the 3rJ 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 specifkation, there was not only no curtailment of work but there was in fact an increase of work in vol vi11g F 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 contra.:! entered into by the Board for construction of buildin:'s is :an act done in pursuance of the provisions of the Act; and it makes no diffe1:ence 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 cast: bv the respondent was tne non-payment of the amount alleged to be due to the

respondnt on the basis of a breach of the contract; and that act .:ould no~ be said to have been done or purported to have been done in pursuance of the Act.

I~ cou!d not said that the breach complained of had any reasonable cor.nect10n with any duty cas: upon the appellant or its agents bv the Act. [ l 5 B

.:J7B] . . ,

The Trustees of Port of Bombay v. The Premier Automobiles Ltd . . .\.LR. 1974 s.c. 1123, followed.

The Municipal Borough of Ahmedabad v. Jarn11ti/a/ Cheeta/a/ Patel l.L.R. 194i Born. 841, approved. • '

Arhima1111il Muhammad v. The Malabar District Board, I.L.R. 58 Madrns 746 and Jalgaon Borough Municipality v. The Khandesh Spinning and Weal'ing' Mills Co. Ltd. I.LR. 1953 Bombay 590, referred to.

CIVIL APPELLATE JURISDICHON : Civil Appeal No. 13 of 1968.

From the judgment and order dated the 29th/30th January, 1963 of the Bombay High Court ir 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 antl Suresh Sethi. for the respondent -

The Judgment of the Court was delivered by

, . MATHEW, J.~This is an appeal by the defandant on the basis of a certificate r.galnst a decree passed by the High Court of Bombay in nppcal from a dceree in a suit for recovery 'Of balance of amount due on account of extrn construetion 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 it, s. tender on 29-7-1948.

The tender was in B-1 form. otherwise known as percentage ti:ader.

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 bie deemed to have been entered ir, Jto 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 nf the order.

The time was extended and the work was actually completed in March, 1950 F and possession was taken by the 1appel!allt 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 bv it under protest.

As the disputes between the parties in respect of the claims made by the resp'Ondent could not be settled by agreement, the respondent filed ·· the suit. -claiming under 4 items, namely, A to D, a Sll'm of

G 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 ite:ns.

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 resoondent without any agreement as to the rate to be charged and therefore the resoondent was entitled H to have the claim settled on the basis of the provision in clause 14 of the contract for rnch works and that claims in item C-1 and C-2 were not maintainable by virtne of clause 15 in the contract and that the suit was barred by limitation. ·

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 if cross appeal.

The High Court dec:reed the claims in items A-3, A-4, C-1 and B 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 thm.

The amount. claimed in item A-4 was Rs. 8,239 and that was mainly in respect of, the work of filling 11p of ditches, etc., which was done by the respondent under the order of the appellant.

The order C 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 th1~ work.

The Engineer-in-charge did not exercise his liberty to cancel the order, or give the contract for the edra

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 D 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 quesiion 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 0£ the rate quoted by it in the notice.

Clause 14 provides : E

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 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 Engincer-incharge and such alteration shall not invalidate the contract; and any additional work which the contractor may be directed t'O 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 n'O 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-incharge and the contractor; whichever are lower. If the additional or alter1ed work, fur which no rate is entered in

1-1

BOMBAY HOUSING BOARD v. K. NAIK & co. <tiathew, J.) 411

the Schedule of Rates of the Division, is ordt.ed to be carried out before the rates are agreed upon the the contractor shall, within seven days of the date of re ipt by him of the order to carry out the work, infvPm 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 menti'oned, 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 CO'atractor may, within seven days of the order, give notice of the rate he intends to charge.

Jn such •a case, the Engineer-in-charge would be at liberty to cancel the order if he does not •; gree to the rate stated by the contractor and get the work done by any other agency.

Where, however, the Engi- \1eer-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 such dispute is raised, the Superinteading Engineer will decide the same and his decision will be fin•al.

We do not think that the respondent was boµnd 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 ~1ot 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-iri-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 alteratio•as as stated in the fast 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 SUl'REME COURT REPORTS [1975] 3 s.c.R.

ractor would have to do much extra work over and above the actual work imolved. The Court also said that clause 14 gave the Engineerin-charge oan absolute power to fix the rate and that would be unjust and therefore the Court decreed in fulrthe amount claimetl 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 responde',1t 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 ra_tes, 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 aHered work on receipt of the notice specifying the rate would Mt result in an agreement as to the rate to be charged. The clause only gave the Engineer-in-charge the liberti; to cancel the order and g(:t the work done by •another contractor. 'The . fact that an express power was giw.1 to the Engineer-in-charge by t, he 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 give',1, the Engineer-incharge 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 agre.::ing to the rate. there i, vas no agreement as to the rate a'ad 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 berejected.

The next question is whether the High Court was justifi.::d i'.1 decreeing the claims in items C-1 and C-2.

Item C-1 was a claim for Rs. 9,0001-. 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 th-at

no alteration W?uld _be nade therein. According to the respondent, G as per the specificat10n. 1t 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. and the mte at which the respondent agreed to do the work was

J.3.s. 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 wol~ acl after. makbg a calculation of the profit and loss on that basis 111 different items of work and it had sustained u: loss because it had to do a different type of work for which it could "" make no estimate in a•aticipation. The-order to carry out the work in the altered form was communicated to the respondent on 27-1-1949.

It protested against it saying that it will hav.:: to use extra quantity of iron and claimed 6 annas extra per sq. ft. over the rate for 4t" slab which it had given for 'A' type block. The appellant turned dowa the demand and the respondent had to do the work with 4t" R.C.C. stabs over the area of 24,000 sq. ft. According to the re~?ondent, if it were to do the work with 5" slab according to the origina specification over the area of 24,000 sq. ft., it would have used 27,00~':lbs. of iron as re.inforcement 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 fa 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 Coui't held that clause 15 had 110 application.

We do not think that the High Court was hi. error. Clause 15 empowers the Engitteer-incharge to step or to reduce the whole 0£ 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 watractor 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 o'.1

account of materials purchased or agreeld 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 rcason of any alteration having been made in the original spccificatim1s, drawings, design or in8truction which may involve curtailment of work as originally contemplated.

Jn its evidence, the respondent staled that it put slabs of 41'' thick- ',1CS'> in an. area mcasi; ring 24.000 so. fl. oat of a:1 area of 61.000 sq. ft. and that it hml w put ~4,000 ivs. f rcinf,_; rcc:nc::nt 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 curt2ili;1ent in thC' wNk and as the alteration involwi a.dditional cost to the respondent. it c2nnot be said that there was reduction or curtailn1cnt.of work. h othc-l' words, the H'r:h Court was of the view that the n-ature of the work was such that there was not only no crniailment of work but an increase of work involving additional cost. We think the High Court was right in its conclusion that clause 15 h:ls no application and that the c12.im was well fouaded.

The respondent had claimed Rs. 9,097 /- from the appellant in respect of item C-2. n the plaint the respondent stated that the appel- H lant represented to 1t that the appellant would entrust the respondent with the pipeline work menti011ed 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. 12-423SCil75

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

dm1e 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 notke was not mandatory. We see no force ia the argument that the written notice was not necessary as that was i; pecifically 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 Houshlg 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 oflicer 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 thf: cause therMf, nor after six months from the date of the act Complained of.''

"Anld 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 C'11tering 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 olf the section.

The Preamble of the Act provides :

"Whe:reas 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 tliat the Board ma:; enter into all such coi1tracts 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

and execution of any housing scheme. Therefore, the Board has statutory duty to frame schemes for construction of houses and execute them. Section 24 (f) would also indioate that the purpose of a scheme is construction of houses. In these circumstances, we think that the contract entered rato by 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 the contract was enten::d into with the Board or whether it was deemed to be entered. into with the Board under s. 54 of the Act. But the question is whether the act complained of, n•amely, the no'a-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 doubtthat the act complained of by the respondent was the no•a-payment of money . as damages or compens•ation resulting from an alleged breach of contract.

ln 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 e'aforce 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 Bomboay 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 the,1 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 st•atute, that in forfeiting the deposit, the municipality was not acting in purslia',1ce to the power given to it under statute but was doing so in pursuance of a power given to it undi:r the contract and, therefore, the suit to enforce rights under the contract entered into with the municipality which the municipality was 'L10t 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 referre'd to the decision of the Madras High Court . in Athimannil Muhammad v. The Malabar Di!iitrict Board(2) and said that the decision therein would 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 actim, claiming damages on the ground that its P1esident 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 "'.ice President. The President in performance of what he thought was !us duty under the Madras Local Boards Act accepted a higher offer by another persm1 and the necessary consequence of it was cancellation o.f !he .acceptance of t?e plaintiff's offer. It was held that though the d1stmct1on between act10ns on contract a'i1d actions independent of con-

(!) (I.L.R.) 1947 Born. 841

(2) J.L.R. 58 Madras 746.

tract mav be convenient enough as a working rule, the real test to be applied was whether what -was complained of -:vas. some at done in pursuance of a statute. Varadachariar, J. in delivermg the iudgrnent of the Court saitl that the cancellation of the acceptance of the offor was the necessoary result of what the President thought was his duty 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 !hat 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 authoriz~'d. 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

1,10t consider the correctness of this decision as, ev1:n on the &ssumption 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 fade illegal act in this context has been clearly pointed out in the decision in Jalgao11 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 f acie illegal is not within the category of acts done or purported to have bee'i1 done in pursuance of that Act, and that it is only an act do1nc 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 do_ne or purported to have been done in pursuance of the Act could only be those which were done under a vestige or sembhmcc of authority, or with some :; how of a right and that the distinction between ultra vires and illegal acts on the one hand and wrongful acts on th~ othe; wrongful in the sense that they purport to have ben done in pursuc'ace of the Act is that they arc 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 Tmstees of Port of Bombay v. The Premier Automobiles Ltd.e) section 87 of the Bombay Port Trust Act 1879 which is in pari materia with s.64 .of the Act fell for cons.ideratin ana' the question was whethr short del!very by a statutory bailee was something done or purportmg to have been done under the proviions of that Act. In the course of the judgment, Krishna Jyr., T., speaking for the Court,

(l) l.L.R. (1953) Bombay 590

(2) A.LR. 1974 S.C. 923

said that a suit for damages for breach of contract would not attract the sectior. (see para 46 of the judgment).

As we said, the act complained of in this case was the n0\1-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 h•ave been done or purported to have been done in pursmrace of the Act. 1 By no stretch of imagination could it be said that the breach complained of had any reasonable connection with any duty cast upon the appell•ant or its agents by the Act.

In the result, we disallow the clainis of the respondent in 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.