POYSER J.—Karunaralne v. Abdul Razak.
1934Present: Poyser J.
KARUNARATNE v. ABDUL RAZAK.
680—P. C. Hatton, 711.
Urban District Council—Contract with firm—Nominated member a paidmanager of firm—Not concerned or interested in contract—OrdinanceNo. 11 of 1920, 8. 237 (1).
Where a nominated member of an Urban District Council • •as thepaid manager of a firm, which tendered into a contract with the ' ’ -until,and took no part in negotiating the contract,—
Held, that the member cannot be said to be concerned or interested inthe contract within the meaning of section 237 of the Local GovernmentOrdinance.
^ PPEAL from an acquittal by the Police Magistrate of Hatton.
C. P. Ranawake (with him Kariapper), for. appellant.
H. V. Perera (with him D. W. Fernando), for respondent.
January 29,1934. Poyser J.—
The respondent, a nominated member of the Hatton-Dikoya UrbanDistrict Council, was charged under section 237 of the Local GovernmentOrdinance, No. 11 of 1920, with being concerned or interested in certaincontracts with the said Council, and was acquitted.
The complainant, having obtained the necessary sanction under section336 of the Criminal Procedure Code, appeals against this acquittal.
The accused is the son-in-law of one Jainul Abdeen, the owner of abusiness known as K. Jainul Abdeen Saibo and Company. He is themanager of this business and holds, together with another person, a generalpower of attorney from his father-in-law to manage the business, whetherthe owner is absent or not.
POYSER J.—Karunaratne v. Abdul Razak.
Jainul Abdeen was the sole owner of the business up to December 19,1932, on which date he admitted the accused and other persons intopartnership.
On December 23, 1932, the accused was nominated to the Council;he was in India on this date and returned to Ceylon on December 30.
On January 23, 1933, the partnership was dissolved and Jaimal Abdeenbecame once again the sole owner of the firm, and the accused becameonce again the manager of the firm on a salary of Rs. 150 per month.
The partnership was admittedly dissolved on account of the accused’snomination to the Urban District Council, as Jainul Abdeen had during1932 supplied goods to the Council and both he and the accused realizedthat, if the latter was a partner in the firm, they could no longer enterinto contracts with the Council.
There were two charges against the accused. The first was in regardto the tendering for and the obtaining of a meat stall in the Council’sMarket. The Magistrate acquitted the accused on this charge on thegrounds that the provisions of section 229 of the Local GovernmentOrdinance had not been complied with as the prosecution was institutedmore than three months after the commission of the offence.
I think the Magistrate was correct in coming to this conclusion. It ishowever unnecessary to consider the evidence in regard to this charge indetail, as counsel for the appellant conceded that the principal questionarising on this appeal could be more suitably considered in connectionwith the second charge.
The second charge against the accused was “ that he did tender for andenter into a contract in March, 1933, with the said Council for the supplyof cement for which he was paid Rs. 600.”
The facts in regard to this charge are as follows:—In February, 1933,the Council called for tenders for fifty barrels of cement. The lowesttender was sent in by the firm of K. Jainul Abdeen Saibo and Company,and they were awarded the contract and have been paid a sum of Rs. 600for the cement they supplied.
On these facts the Magistrate held that this charge could not be main-tained. He points out that the accused was only a paid manager of thefirm at the time the contract was entered into, and that he did not appearto have had any share in negotiating the contract, that the proprietor ofthe firm made a quotation for the supply of the cement and the Chairmanof the Council accepted it. He also held that the cancellation of theaccused’s partnership had no ulterior motive behind it, but was genuinelyintended to rectify an irregularity.
A number of authorities were cited in the course of the argument.The latest English decisions on a similar enactment are the cases of Lapishv. Braithwaite1 and Everett v. Griffiths
The former was a case under section 12 (1) (c) of the Municipal Corpora-tion Act of 1882, the material words of which are:—“has directly orindirectly by himself or his partner any share or interest in any contractwith or on behalf of the Council.”
The facts in the case were that the defendant was the ManagingDirector, on a fixed salary of £ 2,400 a year, of a Company which had a large
i (192-r>) 1 K. B. Laic Rep. p. 474.2 (1924) 1 K. B. Law Rep. p. 941.
POYSER J.—Karunaratne v. Abdul Razak.
contract with the Corporation of Leeds, of which he was alderman. Theonly evidence in reference to his taking any part in the making of thecontract consisted in the fact that he was one of the Directors of theCompany who signed the document as witnesses to the affixing of theCompany’s seal. The correspondence which led up to the contract wasconducted by the Secretary of the Company. The Court of Appeal,following the principle in Everett v. Griffiths (supra), held that the defend-ant had no interest in the contract.
Everett v. Griffiths (supra) was a case under section 46 (1) of the LocalGovernment Act, 1894, the material words of which are:—“concerned inany bargain or contract entered into with the Council or. Board or partici-pate in the profits of any such bargain or of any work done under theauthority of the Council or Board.”
In that case the defendant, who was a member of a board of guardians,was employed as manager of their wheelwright’s shop by a dairy companywhich had a considerable contract with the board for the supply of milk.The defendant wielded a powerful influence on the board, and whenseveral tenders were opened, including one from this company, which wasnot the lowest, he moved a resolution, which was carried, that amendedtenders be called for, and the tender of this company was then accepted.He received no bonus from the company, or any sum in respect of thecontract in question.
The defendant’s membership of the board stabilized his position withhis employers (the company), and gave him indirectly many possibleadvantages, but it was held that he was not concerned in the contract.It was said that a man was “ concerned ” in a contract if he was in anyway a party to it, whether as sole contractor or as a partner or as anundisclosed principal.
These and other English cases have been considered in a local case(Weerasuriya v. Seneviratne'), and Drieberg J. after considering the autho-rities holds that “ the concern or interest must be in the contract itself andnot merely an interest in the contractor or his business such as an employeewould have,” and in this connection quotes the following passage fromthe judgment of Scrutton L.J. in Lapish v. Braithwaite (supra) :—“Aman may be interested in a thing without having an interest in it. Butin any event, I cannot think that the relation of an employee, paid byfixed salary, to his company involves an interest, even indirect, in thecontracts made by his company within the meaning of a penal statute,even if he takes part in negotiating or performing those contracts.”
In this case the accused had no interest in the contract itself, nor did hetake any part in negotiating it.
The Magistrate has found that he was a salaried employee of the firmthat entered into the contract with the Council. There was ampleevidence to support his finding, and having regard to the cases abovecited, I think the Magistrate was right in acquitting the accused on thesecond charge.
The appeal is dismissed.
> i19 .V.R. p. 485.
KARUNARATNE v. ABDUL RAZAK