Statutory limits on municipal fiscal power: a pilgrim levy contract was ultra vires, and estoppel could not validate it.

A statutory corporation may exercise only fiscal powers expressly conferred by its governing statute. The court treated the pilgrim levy as a tax, not a toll, and held that the municipality had no power to farm out its collection because the leasing power extended only to tolls actually authorised by statute. The contract also could not be justified as a lease of vested property, since the collection right was not vested property for that purpose. Estoppel could not enlarge statutory power, and no restitutionary relief was granted on the record. The impugned contract was therefore ultra vires and void.

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Issues: (i) Whether the Municipality had power under the Bombay District Municipal Act to farm out the levy of the impost on pilgrims visiting the shrine; (ii) whether the contract could be justified under the provision relating to leasing of vested property; (iii) whether estoppel could validate a contract beyond statutory power; and (iv) whether relief could be claimed under the restitutionary rule for benefits received under a void agreement.

Issue (i): Whether the Municipality had power under the Bombay District Municipal Act to farm out the levy of the impost on pilgrims visiting the shrine.

Analysis: The statutory scheme distinguished between different imposts and used the word "tax" in a comprehensive sense in the charging provisions, but the specific levy on pilgrims was described by the Act as a tax rather than a toll. The power to lease under the Act extended only to tolls actually imposed under the statute. Since the levy on pilgrims was not authorised to be leased as a toll, the Municipality lacked power to farm out that part of the demand.

Conclusion: The contract was not authorised by the statute so far as it related to the pilgrim levy.

Issue (ii): Whether the contract could be justified under the provision relating to leasing of vested property.

Analysis: The relevant statutory provision permitting lease of property vested in the Municipality did not cover the impost in question, because the right to collect the levy was not vested property within that provision.

Conclusion: The contract could not be supported under the vesting-and-lease provision.

Issue (iii): Whether estoppel could validate a contract beyond statutory power.

Analysis: A statutory corporation cannot acquire by estoppel a power which the statute withholds. Where the act itself is ultra vires the corporation, conduct of the parties cannot enlarge the legal capacity given by the statute.

Conclusion: Estoppel did not validate the contract.

Issue (iv): Whether relief could be claimed under the restitutionary rule for benefits received under a void agreement.

Analysis: No restitutionary claim was raised in the lower courts, and the evidence indicated that the defendant had not made a profit under the transaction but had in fact suffered a loss. In these circumstances no remand or further inquiry was warranted.

Conclusion: No relief was granted on the restitutionary basis.

Final Conclusion: The impugned contract was held to be ultra vires and void, and the appellate challenge failed.

Ratio Decidendi: A statutory corporation can exercise only those fiscal powers expressly conferred by statute, and a levy not authorised to be leased within the statutory scheme cannot be validated by estoppel or by reliance on general contractual principles.

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