Statutory formality controls municipal-government contracts: correspondence may show agreement, but unauthorized execution defeats enforceability.

Correspondence between a municipality and government may disclose a contractual arrangement and sufficient consideration where the parties accept definite terms and act on them, but enforceability depends on strict compliance with mandatory statutory execution requirements. An agreement not made and signed by the authorised officers in the prescribed form is not binding, and subsequent conduct or executed consideration cannot cure that defect. The discussion also rejects act of State and later impossibility as defences where the arrangement is an administrative one and the asserted liability would, if valid, remain enforceable despite later governmental changes. The arrangement was therefore treated as unenforceable for want of legal formality.

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Issues: (i) Whether the correspondence between the Municipality and Government created a contract enforceable at law; (ii) whether the alleged agreement could bind the Secretary of State in view of the statutory requirements governing municipal and government contracts; (iii) whether the plea of act of State or subsequent impossibility of performance defeated the claim.

Issue (i): Whether the correspondence between the Municipality and Government created a contract enforceable at law.

Analysis: The exchange of letters showed a definite proposal by Government to contribute one-half of the additional expenditure on primary education if the Municipality expanded its expenditure on that object. The Municipality accepted the proposal by resolution and by letter. The promise to expend a larger sum on primary education was treated as sufficient consideration, and the terms were not found to be too vague or uncertain. The contention that there was no consensus ad idem was rejected, as the Government offer was understood and acted upon by both sides on the footing of a half share in the additional expenditure.

Conclusion: A contract was disclosed by the correspondence, but it was not enforceable against the respondent unless validly executed in accordance with the governing statutes.

Issue (ii): Whether the alleged agreement could bind the Secretary of State in view of the statutory requirements governing municipal and government contracts.

Analysis: The contract failed for want of mutuality because it was not validly executed on behalf of the Municipality in the manner required by the municipal statute. It also failed against the Secretary of State because the Government of India Act required contracts to be made on behalf and in the name of the Secretary of State and to be executed by the authorised officer. The correspondence did not satisfy that mandatory requirement, and the officer who signed the documents was not the officer authorised under the applicable resolution for the type of contract in question. The Court further held that the consideration was executory and that the doctrine of executed consideration could not cure non-compliance with the statutory formality.

Conclusion: The agreement was not binding on either side and could not be enforced against the respondent.

Issue (iii): Whether the plea of act of State or subsequent impossibility of performance defeated the claim.

Analysis: The transaction was held to be an administrative arrangement with the Municipality in time of peace and not an act of State immune from municipal adjudication. The plea of impossibility also failed because, if a valid contract had existed, the liability was sought to be enforced against the Secretary of State's revenues and not merely against provincial funds; the later transfer of educational subjects did not extinguish that liability. The Court therefore rejected these additional defences.

Conclusion: The pleas of act of State and impossibility of performance were rejected.

Final Conclusion: The claim failed because the arrangement was not concluded in the legally required form and was therefore unenforceable, notwithstanding the moral weight of the Municipality's complaint.

Ratio Decidendi: A governmental or municipal arrangement, even if substantively agreed, is unenforceable unless it is executed by the statutorily authorised officers and in the mandatory statutory form; executed consideration or subsequent conduct cannot cure the absence of such legal authority and compliance.

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