VIJAYAWADA MUNICIPALITY Vs. L RAMA MURTHY

JUDGEMENT

(1.) These three appeals preferred by the Vijayawada Municipality against the judgments & decrees dismissing its suits on the ground of limitation, can be disposed of together. A.S. 44 of 1974 arises from O.S. No. 75/1969 which is a suit for recovery of a sum of Rs. 13,012/from the defendant on account of the Public Health Establishment charges. The defendant was the contractor for the Municipal Markets for the year 1963-64. It is alleged that the defendant is liable to reimburse the Municipality for the expenditure incurred by it upon the Public Health Staff, for the said year, for purposes of the markets leased out to the defendant. A.S.No 92/1974 and A.S. 1018/-1975 arise from two suits, O.S. 78/1969 and O.S. 76/1969 whereunder the Municipality sought to recover certain amounts due towards the monthly 'Kist' payable by its lessees. The defendants in the said suits (who are common in both the suits) were the lessees of the Municipal markets for the years 1964-65 and 1965 66. Defendants in all the suits denied their liability to pay the said amounts. The trial Court, however, has found that the plaintiff is entitled to recover certain amounts from the defendants, though not in the sum claimed by the plaintiff. (The trial Court substantially reduced the claim of the plaintiff). It however, dismissed the suits altogether on the ground that they arc tarred by limitation. Two contentions are raised by Sri N.V.B. Sankara Rao, the learned counsel for the plaintiff (appellant), viz.. (i) that, the suits are not barred by limitation and (ii) that, the trial Court erred in holding that the plaintiff is not entitied to the full amounts claimed by it in the suits. It is, however, clear that the second question would arise for consideration only if we agree with him on the first question. We shall, therefore, first examine the issue of limitation.

(2.) The present suits are instituted in 1969. It is admitted that the suits are instituted beyond a period of three years from the date on which the suit amounts fell due. They are, however, filed within six years of such date. Mr. Sankara Rao contends that the suits filed within six years of the 'due date are withm time by virtue of Section 365 of the Andhra Pradesh Municipalities Act. 1965 read with Rule 11 (2) in Schedule IX to the said Act. He further contends that the suit amounts can be said to be amounts due under the Act" by virtue of the above provisions and, therefore, the suits filed within six years are within time. On account of the above provisions, it is contended, the suits are not really for recovery of amounts due under a contract, but for recovery of amounts "due under the Act". It is conceded that if we hold that the suit amounts are due not under the Act but only under the contract, the suits would be barred by limitation. For appreciating the contention of Sri Sankara Rao it is necessary to notice a tew relevant provisions of ths Andnra Pradesh Municipalities Act, 1965 as well as the Madras District Municipalities Act, 1920. Section 345 of the Madras Act provided, inter alia that no suit shall be instituted in respect of any sum due to the Municipal Council under the said Act ('under this Act') after the expiration of a period of three years from the date on which a suit might first have been instituted in respect of the said sum. The said Act was repealed by Section 391 of the Andhra Pradesh Municipalities Act, 1965 which came into force on 2-4-1965. Section 365 of the Andnra Pradesh Act corresponds to Section 345 of the Madras Act, but with a material difference. Under Section 365 the period of three years fixed under the old Act is enlarged to six years. In other words, according to the new Act, an amount due under the Act can be recovered within six years from the date on which a suit might first have been instituted.

(3.) The expression "the date on which a suit might first have been instituted" obviously means and refers to the date on which the cause of accion arises for the institution of the suit. The question that, therefore, arises is whether the amounts claimed in those suits can be said to be the amounts 'due under the Act'. The contention of the defendantsand which has been accepted by the Court below is that the said amounts cannot be so called and that, they are amounts due oniy under a contract entered into between the parties. It is not in dispute that the lease of Municipal markets was granted by auction, which is conducted every year and that, the defendants were the highest bidders in the auctions for the respective years. Before holding an auction, the Municipality notifies the conditions of auction (which are, however, not statutory) and, after the conculsion of the auction, a lease deed is executed between the Municipality and the successful bidder. Clause 2 (3) of such contract makes the lessee liable to reimburse the Municipality for the expenditure it incurs on maintenance of Public Health staff for cleaning and maintaining the said markets. The said contract also makes the lessee liable for paying the 'kist' amount on the 10th of each month. Now. section 276 of the Andbra Pradesh Act vests all the markets in the Municipality and, under Section 277 the Municipality is entitled either to collect the prescribed fees from the users, through such person as may appear to it proper, or to farm it out on such conditions as it thinks appropriate. In other words, under section 277 the Municipality may collect the fees in such markets either directly through its own officers, or it may lease out the said right of collection of fees by public auction. In this case, the Municipality has chosen the latter course, and the defendants in these suits were the successful bidders for the respective years. The lease-deed executed between the parties obliges the lessees, i. e., the successful bidders to pay certain amounts in the specified manner. It is thus clear that the amounts which are now claimed from the defendants are the amounts due under the terms of and by virtue of the lease-deed executed between the parties. They cannot be said to be amounts due under the provisions of the Act. The position, probably, may have been different if the Act directed the Municipality to farm out the said right by auction every year and also prescribed the conditions of such auction. The Act in question, however, merely empowers the Municipality either to farm out the said right by auction, or to collec: it by itself If it chooses to farm out, it is entitled to prescribe appropriate conditions of auction, which it thinks fit, in the circumstances. The auction conditions so prescribed by the Municipality are not statutory. No doubt, the conditions of auction so specified by the Municipality form part of, and are deemed to be incorporated in the lease-deed executed between the parties; yet, it does not follow that the amount due under the said contract can be said to be an amount 'due under the Act'. In other words the defendants are liable to pay the said amount not under any provision of law, but only by virtue of and under a contract entered into by them with the Municipality. We are fortified in our conclusion by two Bench decisions of the Madras High Court, which had occasion to construe identical provisions. In Re: Punya Syamalal is a case where the District Board leased out the right to collect tolls at a certain toll-gate for the financial year 1921-22. The lessee was to pay the amount due in certain instalments. He failed to do so, whereupon the District Board applied to the Town SubMagistrate to recover the amount due with interest from the lessee under section 221 of the Madras Local Boards Act, 1920. Section 221 of the said Act provided that "in default of payment of any fee, toll, costs, compensation, damages, penalties, charges, expenses or other sums due to a Local Board, under or by virtue of this Act, the same may be recovered under the warrant of the Magistrate......". The Magistrate directed the recovery, but on revision, the Sessions Judge found that the amount sought to be recovered is not an amount due under or by virtue of the said Act and tnerefore, not recoverable under section 221. The learned Sessions Judge, accordingly made a reference to the High Court, which agreed with his reasoning.