1. This appeal arises out of a suit filed by the plaintiffs as rate-payers within the Municipal limits of the Nadiad city Municipality for a declaration that the order made by the officer of defendant No. 2, dated December 17, 1921, for the maintenance of primary schools within the limits of the Nadiad Municipality out of the funds belonging to defendant No. 1, i.e., the Nadiad Municipality, was illegal, and for a true and proper account of the moneys withdrawn under this order, and for refund to the Municipality of the moneys so withdrawn from the Municipal funds.
2. The defendants, the Nadiad City Municipality, and the Secretary of State for India in Council, filed a written statement in which various points were raised, including the point of limitation and the contention that the order complained of by the plaintiffs was not ultra vires.
3. It is not necessary to refer in detail to the various points which were raised in the lower Court. But the trial Judge has decided the suit on the first issue as to limitation. It has been found that the plaintiffs’ suit is barred by limitation. Issue No. 6 in the lower Court, viz., “whether the order passed by the Commissioner, N.D., on December 17, 1921, is illegal and ultra vires ? ” was not decided. The result was that the plaintiffs’ suit was dismissed.
4. The plaintiffs have appealed to this Court, and it is contended on behalf of the plaintiffs that the view taken by the lower Court on the question of limitation is not correct. It is urged that the order complained of is ultra vires, as, under Section 178 of the Bombay District Municipal Act III of 1901, there was no default on the part of the Municipality in performing any duty imposed by or under this Act. It is further urged that the order directing the Sub-Treasury Officer at Nadiad to pay a certain sum is not within the powers of the Commissioner, N.D., because the order to be legal must be directed to a person who for the time being had custody of any moneys on behalf of the Municipality as required by Sub-section (3) of Section 178, while in the present case it was directed to an officer of Government, with whom there were Municipal funds. Further, it is urged that the suit was substantially a suit for accounts of money improperly drawn by the officer appointed by the Commissioner, N.D. and applied towards expenses incurred in connection with schools which were started by Government within the Municipal area before the date of the order.
5. As regards this last argument, it may be stated at once that there is no suggestion in the plaint that any part of the funds withdrawn from the Municipal funds under the order of the Commissioner, N.D., has been applied towards the expenses of schools, which were started by Government before the disputed action was taken by the Commissioner. In the absence of any such allegation, the suit cannot be treated as being a suit to recover the amount said to have been so misapplied. The suit, as I have already stated, is directly for the purpose of testing the legality of the order made by the Commissioner, N. D., and for a proper account of the funds drawn by defendant No. 2 out of the funds belonging to defendant No. 1 under that order for the purpose of maintaining the Municipal Primary Schools,
6. With regard to the question of limitation on behalf of respondent No. 2, it has been urged that the order in question is intra vires, and that the suit brought to have that order set aside more than a year after the date of the order is beyond time under Article 14 of the Indian Limitation Act, Schedule 1. It is also urged that, even if the order were ultra vires, still the suit would be time-barred.
7. Before dealing with these points, it will be convenient to refer to the orders in question, On December 7, 1921, the Government passed the following Resolution:-
Whereas the Government of Bombay are informed that) Municipality of Nadiad have, in contravention of Rule 3 of the rules made by Government under Section 59 of the Bombay District Municipal Act, 1991, resolved in their Resolution No. 4, dated October 8, 1920, that the Municipal Schools shall not be open be inspection and examination by the Government Inspecting Staff, and have given effect be the said Resolution, and have thereby made default in performing the duty imposed on them under the and Act of maintaining primary schools subject to and in accordance with the rules made under the said section of the said Act.
And whereas the Government of Bombay after due inquiry are satisfied that the said Municipality of Nadiad have been and continued to be guilty of the said default. Now therefore in exercise of the powers conferred by Section 178 of the said Act, the Government of Bombay are pleased be direct the Commissioner, Northern Division, to fix a period for the performance of that duty.
8. In pursuance of this Resolution, on December 8, 1921, the Commissioner proceeded to fix the period within which the duty was to be performed. He fixed the period ending at 5 P.M., on December 17, 1921, within which that duty was to be performed by the Municipality. The Municipality having failed to comply with that direction, on December 17, 1921, the Commissioner, N. D., made the following order :-
In the Commissioner’s order dated December 8, 1921, a period up to December 17 was fixed within which the Municipality should perform bhe duty in respect of which they have been found guilty of default by the Government of Bombay-the duty namely, of maintaining primary aohoola subject be and in aooordance with the rules under Section 53 of the Municipal Act.
It now appears from the Resolution of the Municipality that they have definitely refused to perform their duty within the period fixed and have proceeded to commit further groas illegalities.
I therefore in exeroiae of tie powers conferred by Section 138(2) of the District Munioipal Act hereby appoint the Deputy Educational Inspector of the Kaira District to perform the duty of managing, adminianering and maintaining the Nadiad City Municipal primary schools, and further direct that the Nadiad City Municipality shall forthwith pay to the Deputy Educational Inspector, an advance of Rs. 9,000 for defraying the expenses of performing that duty- such payment to be made by a deposit acoount to be opened in favour of the Deputy Educational Inspector in the Sub-Treasury at Nadiad.
9. It may be mentioned that, prior to the Government Resolution, the Municipality had resolved not to allow any inspection by the Government Educational Inspector of the primary schools in their charge. Rule No, 3 of the rules made by the Governor in Council under the proviso to Section 58 of the District Municipal Act is in these terms :-
Municipal schools shall, subject to the proviso in Rule 2, be provided for all castes and classes of the community, and shall be open to inspection and examination at) all times by the Government Inspecting Staff, The Municipality shall in each case make suitable arrangements in connection with the Deputy Educational Inspector for the annual examination required by the Educational Department.
10 .These rules purporting to be made in exercise of the powers conferred by Section 58 of the Bombay District Municipal Act, 1901, are published in the Bombay Government Gazette, 1921, Part I, pp. 1258 to 1200. It was in virtue of the position taken up by the Municipality with reference to Rule 3 that the Resolution of the Government above referred to was passed and the subsequent orders referred to above were made.
11. It may be mentioned that, under Section 54, Clause (p), of the Bombay District Municipal Act, it is the duty of the Municipality to establish and maintain primary schools. Under Section 58, the management, control and administration of every public institution exclusively maintained out of Municipal property and funds would vest in the Municipality by which it is maintained, provided that the extent of the independent authority of any Municipality in respect of public education and their relations with the Government Educational Department shall from time to time be prescribed by the Governor in Council.
12. As regards the question of limitation, it seems to me that the question whether the order of the Commissioner, N.D., is illegal and ultra vires has to be considered, Having regard to the decisions of this Court, of which Dhanji v. The Secretary of State (1920) I.L.R. 45 Bom. 920 s.c. : 23 Bom L.R. 279 is a type, the question, whether this order requires to be set aside or not, would depend upon the question whether it is intra vires and operative or ultra vires, and therefore, inoperative in law. The question, therefore, which I propose to deal with in the first instance is whether this order is intra vires or plot.
13. I may state at once that I do not think there is any substance in the point made by the learned Counsel for the appellants that this order was not directed to a person who had custody of the Municipal funds on behalf of the Municipality. It was in fact directed to the Sub-Treasury Officer who had custody of the Municipal funds on behalf of the Municipality. It is not essential under Sub-section (3) of Section 178 that the person to a whom the direction is given must be a Municipal servant. Exhibit 23 in the case, which is the order directed to the Sub-Treasury Officer, appears to me to be free from any objection, provided the main order by the Commissioner, N.D., on December 17 is shown to be intra vires.
14. This question in its turn depends upon the question as to whether the Government institution purporting to have been made in the exercise of the powers conferred by Section 178 is within the scope of the powers conferred upon the Government by that section. Under Section 178, Sub-section (1), when there is a default in performing a duty imposed on the Municipality by or under the Bombay District Municipal Act, the Governor in Council may exercise the powers conferred upon the Government under that sub-section, It is not denied in this case that there was a default on the part of the Municipality in so far as the Municipality refused to allow inspection by the Government Inspecting Staff of their primary schools as required by Rule 3 of the rules made by Government under the proviso to Section 58. But it is argued that the duty imposed by this rule on the Municipality is one which is not imposed upon them “by or under this Act.”
15. It is urged on behalf of the appellants that simply because under the proviso to Section 58 the Governor in Council has the power to prescribe from time to time the extent of the independent authority of any Municipality in respect of public education, and their relation with the Government Educational Department, it does not follow that any departure on the part of the Municipality from that prescription is a breach of any duty imposed upon the Municipality by or under the Act. It is argued that the only duty in this respect imposed by the Act is one which is stated in Section 54, cl (p), with reference to primary schools. It is true that the duty of ‘ establishing and maintaining primary schools’ is directly laid by the Act on the Municipality. It is true that in Section 58 there are no express words stating that it shall be the duty of the Municipality, not to transgress the extent of the independent “authority of the Municipality with regard to the management, control and administration of public education, prescribed by the Governor in Council under that proviso. But it seems to me a reasonable interpretation of the section that when the power is conferred upon the Governor in Council of prescribing the extent of the independent authority of any Municipality in respect of public education, the necessary implication is that the observance of that prescription is an obligation on the Municipality under the Act, even though it may not have been expressly so laid down by the Act. That being my view of Section 58, it follows that, under Section 178, there was an obligation on the Municipality under the Act to observe the rules framed by the Governor in Council for the purpose of prescribing the extent of the independent authority of the Municipality in respect of public education.
16. M. Thakor has, however, relied upon the decision of this Court in Secretary of State v. Manilal (1924) 27 Bom. L.R. 371 in support of his argument that the breach of these rules does not involve default on the part of the Municipality in the performance of any obligation under the Act within the meaning of Section 178. It may be stated that that was a decision with reference to the meaning of the word “misapplication” in Section 42 of the Bombay District Municipal Act, and the question in that case was whether the moneys used by the Municipality, which declined to observe Rule 3 of these rules, and had used these funds in maintaining primary schools, according to their view, independently of the Government control, were misapplied by the Municipal Councilors within the meaning of Section 42. It was held that there was no misapplication of the funds simply because the Municipality had refused to accept the control by way of inspection of their schools by the Inspecting Staff of the Government. This particular Rule 3 has been referred to by the learned Chief Justice in his judgment at p. 377 as merely prescribing the proper method whereby Government are enabled to satisfy themselves that the Municipality are doing their duty. In other words, it is a rule of procedure and its infringement could in no way affect the character of the schools referred to in the plaint.
17. The point that we have to consider here, however, is quite different. It is possible that if this decision in Secretary of State v. Manilal had been before the Government at the time when the Government Resolution above referred to was passed, they may not have thought it fit, in the exercise of their discretion, to take the action which in fact they did under Section 178 and they may have passed over the default without taking any serious notice of it. But we have nothing to do for the purpose of this point with the question whether, having regard to the nature of the default, the discretion was properly exercised by the authorities.
18. The question that we have to consider is whether it is within the scope of Section 178 for the Governor in Council to direct the Commissioner to fix a period for the performance of this particular duty under Section 178; and I am of opinion that it is open to the Governor in Council to direct that to be done, provided that the Municipality have made a default in performing any duty imposed on them by or under the Act, In this case it is not suggested that there is any other enactment by or under which this obligation is laid upon the Municipality. But the obligation to observe Rule 3 of the rules made by the Governor in Council prescribing the extent of the independent authority of the Municipality in respect of public education is one which appears to me to be laid on the Municipality under the Act. Therefore, the order made by the Commissioner in pursuance of the Resolution which is complained of is within the powers of that officer conferred by Sub-section (2) of Section 178. It follow, therefore, that the order is legal and operative; and the plaintiffs’ suit must fail because the whole basis of his action is that this order is illegal. It also follows that the suit, which has been filed more than twelve months after the cause of action arose, making due allowance for the period of notice as contemplated by Section 80 of the Civil Procedure Code, is beyond time.
19. In this view of the case, it is not necessary to deal with the further point which has been raised on behalf of respondent No. 2, that even if the order were ultra vires, the suit would be time-barred in view of the decision of this Court in Ganesh Shesho v. The Secretary of State for India (1919) L.L.R. 44 Bom. 451 s.c. : 22 Bom. L.R. 212. I feel considerable difficulty in following this argument. If the order is ultra vires, it is void and has no operation in law. If any action is taken in pursuance of the order, it is such action that gives rise to the cause of action ; and appropriate relief can be claimed with reference to such action. But there would be no order to be set aside. If the decision in Ganesh Shesho v. The Secretary of State for India is to be read as the learned Advocate General has asked us to read it, it would be difficult to reconcile it with the decisions of which Dhanji v. The Secretary of State for India is a type. In this connection I desire to add a word with reference to the reasoning of the learned District Judge. He says:-
On a careful consideration of these authorities I am of opinion that if the order of the Commissioner was not) immediately acted upon, and was merely an administrative order, limitation would not run from that date. On the other hand, if the order was immediately acted upon, and the plaintiff could not seek relief without having it set aside, limitation would run from the date of the order as per Article 14 of the Limitation Act.
20. I am not satisfied that this is a correct test to apply, if it is meant to convey that an illegal order requires to be set aside. This reasoning of the learned District Judge may derive some support apparently from the observations in Ganesh Shesho v. The Secretary of State for India. But I have indicated the difficulty with reference to that case, if it is sought to be read as laying down that even though the order be illegal it requires to be set aside if it is acted upon. I do not propose to pursue this point any further, as I hold that the order in question is intra vires. Thus the suit fails on the merits as also on the point of limitation.
21. I would, therefore, dismiss the appeal with costs to repondent No. 2. Respondent No, 1 to bear his own costs.
1. I agree that the suit fails both on its merits and on the point of limitation, and that the appeal should be dismissed, as proposed by my learned brother. That there was a duty imposed on the Municipality by Rule 3 of the Government rules under Section 58, and that there was default in performing that duty, cannot be, and is not, controverted, for Rule 3 is put in a direct imperative form, viz,:-
Municipal schools shall, subject to the proviso in Rule 2, be provided for all castes and classes of the community, and shall be open to inspection and examination at all times by the Government Inspecting Staff, The Municipality shall in each case make suitable arrangements, in communication with the Deputy Educational Inspector, for the annual examination required by the Educational Department.
2. It is not denied that the Municipality deliberately departed from that rule, so that really the whole question is whether this duty can be said to be one imposed on the Municipality ” by or under” the Municipal Act within the meaning of Section 178, Sub-section (1). The learned Advocate General’s contention was that the duty under this rule was one ” imposed by” the Act within the meaning of Section 178; but I do not concur with that contention. There are no provisions in the Act similar to this Rule 3, saying that the Municipality shall keep schools open for Government inspection, nor is there any provision which necessarily implies such a duty. The words of the proviso to Section 58 are wide and confer on the Government a general power to prescribe to what extent and in what manner Government or its Educational Department can exercise authority over educational institutions of a Municipality, The rules prescribed by Government for this purpose might rely on other means than inspection of Municipal Schools for the exercise of that control. Accordingly, I think it cannot properly be said that the duty is one ” imposed by ” the Act.
3. In this view, the main question is whether it is a duty ” imposed under ” the Act. I think it is obvious that the legislature in using the expression ” by or under this Act” did not use the word “under” simply to repeat what would be expressed by the word “by.” The word ” under” must have been intended to include Borne duties which would not be covered by the words ” duty imposed by the Act.” In its primary meaning the word ” under ” does, I think, cover the case of a duty imposed by some authority which is recognised by the Act, for instance, the common case of the Act giving power to Government or some person or body to make rules for the purposes of the Act. In such a case there may be duties imposed by those rules, and certainly such duties can be said to be Imposed ” under the Act,” although they are not imposed ” by the Act.” I reject the contention of Mr. Thakor for the appellant that the words “by or under this Act” are limited to duties imposed by some provision of the Act itself. That, I think, obviously cannot have been intended. For instance, proviso (a) to Section 51 of the Act provides that “nothing in this section or in Section 60 shall in any way affect any obligations accepted by or imposed upon any Municipality by any declarations of trust executed by or on behalf of such Municipality, or by any scheme settled under the Charitable Endowments Act, 1890, for the administration of any trust.” That recognises that the Municipality may accept a, duty under some declaration of trust or by a scheme settled under the Charitable Endowments Act. Suppose, for instance, the Municipality accept an obligation to pay annually a sum of Rs. 1,000 in support of some institution, say a hospital, and the Municipality make default in paying such sum, and suppose the founder of that institution, or somebody interested in its maintenance, makes a complaint to the Government and asks them to exercise their powers under Section 178 to enforce payment, is it to be said that in such a case the Government and the Commissioner cannot act under Section 178, because this is n duty imposed not by any provision of the Act, but by a declaration of trust or by a scheme ? The answer is obviously in the negative, because the duty is one ” imposed under ” the Act by virtue of the authority conferred in proviso (a) to Section 51.
4. Again take Section 55 of the Act which says:
Every Municipality shall also out of the Municipal property and fund, make payments at such rates as the Governor in Council from time to time by general or special orders prescribes, for the maintenance and treatment either in the municipal district or at any asylum, hospital or house…(a) of lunatics’ …and (6) of lepers.
5. Suppose that the Governor in Council prescribes such rates at Rs. 10 a month per lunatic or leper, and the Municipality deliberately decline to pay at that rate, can it be said that the duty of paying at the rate prescribed by the Governor in Council is not a duty imposed on the Municipality ” under” the Act ? To my mind, it is clearly a duty so imposed, in view of Section 55 giving express authority to the Governor in Council to prescribe the rate.
6. In Section 58, which is the one with which we are now concerned, authority is given to the Governor in Council to make rules as regards the extent of the independent authority of a Municipality in respect of public education and their relations with the Government Educational Department, That, I think, clearly implies that the Government have power to impose certain obligations or duties upon the Municipality for the purpose of the exercise of the Government control which is authorised by the section, The prescription of a duty to keep open Municipal schools for inspection is a fundamental method of exercising such control. In England it is a statutory obligation on the local education authority maintaining a public elementary school to keep it open to Government inspection : see Elementary Education Act, 1870, 33 & 34 Vic. c. 75, Section 7(3). Rule 3, therefore, follows a well-established precedent. Section 58, to my mind, directly authorises a rule like Rule 3 ; and in such a cage the duty imposed on the Municipality is, in my opinion, a duty imposed upon it under the Municipal Act. In support of this view, I may refer to the case of The Fulham (1899) P. 251 An Act used the words ” salvage due under this Act”, and the Court of Appeal in England held that those words covered ” salvage recoverable in a Court recognised by the Act”. That is a very different thing to saying that the words should be construed as ” salvage recoverable by virtue of an express provision of Act”.
7. Accordingly, I think that the order complained of was intra vires, and also that the suit is barred by limitation. The case of Secretary of State v. Manilal (1924) 27 Bom. L.R. 371 dealt with an entirely different point, as has been shown by my learned brother.