(1.)This is an appeal from a decision of Mr. Justice Kania by which he dismissed the suit on the preliminary point of limitation. He held that the plaintiffs' suit was barred under Section 527 of the City of Bombay Municipal Act, 1888. That section provides that no suit shall be instituted against the corporation in respect of any act done in pursuance or execution or intended execution of that Act or in respect of any alleged neglect or default in the execution of that Act unless it is commenced within six months next after the accrual of the cause of action. Three points, I think, arise for consideration. First of all, what is the plaintiffs' cause of action Secondly, does it fall within the terms of Section 527 And, thirdly, if so, did the cause of action accrue more than six months before the suit was filed
(2.)Upon the first question as to what is the cause of action one has to look at the plaint, and for the purposes of the preliminary point we must assume that the allegations in the plaint are true. Put quite shortly, the plaintiffs' case seems to me to come to this. They say that eight debentures of the Municipal Corporation for the City of Bombay were either issued directly, or endorsed over, to the plaintiffs and one Y. v. Nene, on such terms that any of those three persons could deal with the debentures. Nene died on July 13, 1930, and some time about July, 1930, the debentures, which were then in the hands of one Acharya for collection of interest, were wrongfully dealt with by him. The allegation is that he forged an endorsement of the debentures by Nene in favour of himself or of a nominee for himself, and subsequently endorsed the debentures over to the Bank of India. The Bank of India lodged the debentures with the defendant Corporation, and the defendant Corporation cancelled those debentures, and issued fresh debentures to the Bank of India. The plaintiffs say that as Nene's endorsement was forged, the debentures remain their property, and they ask, first, for a declaration that the endorsement of Nene on the debentures was a forgery, and that the plaintiffs are the owners of the debentures, and then they ask that the defendants may be ordered to transfer and hand over to the plaintiffs the said eight debentures, or alternatively, to pay the plaintiffs the market value thereof, together with accrued interest. In my opinion the cause of action is clearly in tort. The declaration is really ancillary to the other relief asked for, and the other relief is in detinue for the return of the actual debentures, or alternatively in conversion. It was argued for the appellants that the cause of action was in contract, because the Municipality as borrowers would be bound to hand over the debentures to the true owner. No doubt it may have been part of the original contract on the issue of the debentures that the security should be handed over to the lender. But there is not, in my opinion, any contract on the part of the Municipality that directly they get a debenture into their hands they will hand it over to the true owner. They are bound under the general law to hand debentures over to the true owner, but there is not, in my opinion, any contract by them to do so. I think, therefore, that the cause of action is clearly in tort and not in contract.
(3.)The next question is, does the cause of action fall within the terms of Section 527, that is to say, was the wrongful act complained of done in execution or intended execution of the Act Now the House of Lords in Bradford Corporation v. Myers, (1916) 1 A.C. 242 had to consider the true construction of Section 1 of the Public Authorities Protection Act, 1893, which seems to me to be worded in substantially the same language as Section 527 of the Bombay Act, and what the House of Lords decided was that the protection of the statute extended to acts done in direct execution of the powers conferred by the particular Act of the local authority, but that it did not cover acts which were done in pursuance of a contract which the local authority was empowered to enter into, but was not required to enter into, by its Act. I think that that principle applies to the construction of Section 527 of the City of Bombay Municipal Act, and one has to see whether the act complained of was done pursuant to the direct requirements of the Act, or was done under some contract which the Corporation entered into under the powers conferred by the Act but which it was not compelled to enter into.