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Issues:
Recovery of dues by Municipality from defendants based on tolls and taxes granted. Validity of resolution for remission of obligations. Proper constitution of the meeting. Communication of resolution to defendant. Authority to pass resolution. Compliance with statutory provisions for contract formation. Discharge of surety from liability. Variation of contract. Analysis: The plaintiff Municipality filed a suit to recover dues from the defendants, alleging that the amount was owed by defendant 1 for tolls and taxes, with defendant 2 as a surety. The defense claimed a resolution by the Municipality dispensed with defendant 1's obligations, citing Chapter VIII of the Indian Contract Act. The lower court decreed in favor of the Municipality, but due to uncertainties regarding the meeting's constitution, several issues were referred back to the High Court. The High Court found in favor of the Municipality on the issues of notice, constitution, and authority of the meeting, with the resolution communicated to defendant 1 post-meeting. The Court deliberated on the meeting's legality, emphasizing the requirement for the President to call meetings as per statutory provisions. The Court concluded that the meeting was not properly convened by the President, and the subsequent resolution lacked legal effect due to non-compliance with statutory requirements. Regarding the formation of a contract for toll collection, the Court discussed the necessity of consideration for an agreement under the Indian Contract Act. It highlighted that a dispensation or remission requires an agreement or contract, which was absent in this case due to non-observance of statutory provisions. The Court also addressed the argument on the contract's validity, emphasizing the presence of an executed consideration allowing the Municipality to claim dues despite the lack of a sealed contract. In the context of the surety's discharge from liability, the Court dismissed claims of variation or a new contract between the parties. It reiterated the importance of compliance with statutory provisions for contract formation, concluding that the lower court's decree in favor of the Municipality should be upheld with costs. The judgment emphasized adherence to legal requirements for contract formation and the limited scope for discharging sureties without proper legal grounds.
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