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P.D. Shamdasani Vs. the Central Bank of India Ltd. (No. 2) - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 108 of 1943
Judge
Reported inAIR1944Bom197; (1944)46BOMLR335
AppellantP.D. Shamdasani
RespondentThe Central Bank of India Ltd. (No. 2)
Excerpt:
.....enunciated are clearly principles which draw the line between a cause of action arising on a breach of contract and a cause of action arising in tort. 13. as i have pointed out above, in the second case the paragraphs complained of were ordered to be struck out on the ground that they were irrelevant, although brett j. in my opinion the statement complained of as set out in the summons is scandalous per se, and inasmuch as it does not form any part of the cause of action set1 out in paragraphs 3, 22 and 213 nor paragraph 20, which claims damages, the statement is entirely irrelevant and has no bearing upon the four issues that would arise, which i have set out above. 5,500, and that that was done, according to the paragraph, with an ulterior object, namely, of getting rid of the..........in prayers (a) and (b) of the plaint are evidently based on the ground that there has been a breach of contract by the defendant. this contract and its breach are set out in paragraphs 3, 22 and 23 of the plaint. paragraph 3 of the plaint says that the memorandum and articles of association of the defendant bank were registered under the provisions of section 21 of the indian companies' act, 1913, and the effect of it is that the same constitute the whole contract between the parties and that the contract is in writing and registered. paragraph 22 says that the contract between the plaintiff and the defendant is contained) in and evidenced by the memorandum and articles of association, and paragraph 23 says that the breach of his right under the contract is the gravamen of this.....
Judgment:

Coyajee, J.

1. This summons is taken out by the defendant bank for striking out and expunging a certain portion of paragraph 21 of the plaint under Order VI, Rule 16, of the Civil Procedure Code, 1908. The words complained of are :

Inter alia of exposing the malpractices, window-dressings, illegalities, etc. in the management and accounts of the defendant bank so as to enable the members of the defendant bank to assert their rights in the matter.

2. The summons is supported on the ground that the statement referred to is, first of all, scandalous, and, secondly, irrelevant to the issues that must arise on the pleadings in the case.

3. The suit is filed by the plaintiff for the return of certain five shares of the bank standing in the name of the plaintiff alleged to be illegally sold by the defendant bank in February, 1937, and for Rs. 50,000 as damages. This is contained in prayer (a) of the plaint. Prayer (b) of the plaint, in the alternative, asks for Rs. two lacs as damages. The reliefs claimed in prayers (a) and (b) of the plaint are evidently based on the ground that there has been a breach of contract by the defendant. This contract and its breach are set out in paragraphs 3, 22 and 23 of the plaint. Paragraph 3 of the plaint says that the memorandum and articles of association of the defendant bank were registered under the provisions of Section 21 of the Indian Companies' Act, 1913, and the effect of it is that the same constitute the whole contract between the parties and that the contract is in writing and registered. Paragraph 22 says that the contract between the plaintiff and the defendant is contained) in and evidenced by the memorandum and articles of association, and paragraph 23 says that the breach of his right under the contract is the gravamen of this complaint. Then paragraph 20 asks for general damages and paragraph 21 makes certain statements, and exception is taken by the defendant bank to certain portions of the statements made in paragraph 21.

4. The plaint and the written statement show that four issues would arise on the face of the pleadings. The first issue would be :

Whether the sale is illegal and in breach of the contract referred to in the plaint ?

5. The second issue would be ;

Whether on the defence taken up in paragraph 1 of the written statement viz. whether Article 32 is ultra vires the powers of the bank under the provisions of the Indian Companies Act ?

6. The third issue would be as set out in paragraph 1 of the written statement, namely :

Whether the suit is barred by the law of limitation ?

7. The fourth issue would be':

What would be the damages the plaintiff would be entitled to ?

8. The question before the Court is, whether the words complained of as set out in the summons amount to an allegation necessary for the formulation of the plaintiff's case, either in the way of establishing a cause of action or relevant for the purpose of the decision of any of the issues that I have indicated above. As regards the question whether the statement, to which objection is taken, supports the cause of action or is relevant to any of the issues, the test would be whether the allegation or the statement could form part of the evidence-in-chief which the plaintiff would be bound to lead for the purpose of obtaining the relief asked for. I have already indicated the four issues. I have already indicated the paragraphs in which the contract is set out and the breach of the contract complained of. This is purely all action for breach of a contract. It is not an action in tort, where further statements for the purpose of obtaining higher damages on the ground of aggravation would be necessary, and where the plaintiff would be entitled to set those out for the purpose of obtaining such relief. In my opinion if the plaintiff establishes what he complains of in paragraphs 3, 22 and 23 as set out by me above, it is unnecessary for him to make the statements made in paragraph 21 because, if he succeeded on the statements and allegations made in paragraphs 3, 22 and 23, what is said in paragraph 21 is entirely unnecessary. If on the other hand he fails to prove what is stated in paragraphs 3, 22 and 23, the proof of what he alleges in paragraph 21 would not entitle him to any relief at all. Mr. Vakeel for the defendant bank has relied on two authorities. The first is Addis v. Gramophone Company, Limited [1909] A.C. 488 where it was laid down that where a servant is wrongfully dismissed from his employment, the damages for the dismissal cannot include compensation for the manner of the dismissal, for his injured feelings, or for the loss he may sustain from the fact that the dismissal of itself makes it more difficult for him to obtain fresh employment. In that case the principle applicable is laid down, and Lord James of Hereford said that as a junior at the bar, when he was drawing pleadings, he often strove to convert an action for a breach of contract into an action in tort in order to recover a higher scale of damages, although it was then, as it is now, the general impression of the profession that such damages cannot be recovered in an action for breach of contract as distinguished from tort, and that therefore it was useless to attempt to recover them in such cases, and that thatremains true to this day. Lord Atkinson in a considered judgment said (p. 493):

I have been unable to find any case decided in this country in which any countenance is givento the notion that a dismissed employee can recover in the shape of exemplary damages for illegal dismissal, in effect damages for defamation, for it amounts to that, except the case of Maw v. Jones' (1890) 25 Q.B.D. 107.

Then the learned law Lord sets out the three exceptions to that rule at p. 495, and says that apart from these exceptions there is no case in which the exception to the principle can be applied, namely, that aggravated damages can be obtained on allegations which savour more of defamation than anything else, and he observes (p. 495):

For instance, in actions of tort motive, if it may be taken into account to aggregate damages, as it undoubtedly may be, may also be taken into account to mitigate them, as may also the conduct of the plaintiff himself who seeks redress. Is this rule to be applied to actions of breach of contract ?

9. The judgment proceeds to say that that is not possible in cases based on a breach of contract, the test being whether the plaintiff is to be paid adequate compensation in money for the loss of that which he would have received had his contract been kept alive, and no more. This principle is enunciated by Lord Gorell in the same case that (p. 501):

The general rule is clear that damages' in contract must be such as flow naturally from the breach, or such as may be supposed to have been in the contemplation of the parties as the result of the breach.

As I have already pointed out, the plaintiff, in paragraph 20, has clearly-claimed general damages for the breach and nothing more.

10. The next case supports the test I have already referred to, namely, whether the plaintiff would in this case be entitled to lead such evidence for the purpose of establishing his case, and that case in Blake v. Albion Life Assurance Society (1876) 45 L.J. C. P. 663. In that case the portion complained of was ordered to be struck out on the ground that it was irrelevant, although Brett J. went to the extent of saying (p. 667): '

I do not put this case upon the ground of the statements in these paragraphs being scandalous, although I agree with my Lord that we should be very careful not to allow scandalous matter to be imported into pleadings where it conies within the rule that it is not only scandalous but irrelevant.

11. In delivering the judgment in that case, Lord Coleridge, Chief Justice, pointed out that (p. 666):

If the cause of action, as I have stated it, is proved, then the plaintiff does not want what is stated in these four paragraphs at all. If on the other hand the plaintiff proves these four paragraphs, and does not prove his cause of action-against the defendants in this particular case, then it is plain that he does not succeed in the action, and he proves that which is only irrelevant to his claim.

Then he also observes that the paragraphs complained of contain a statement of facts which was not even evidence-in-chief in the case.

12. In the light of these observations although the first case referred to is a case of master and servant, the principles enunciated are clearly principles which draw the line between a cause of action arising on a breach of contract and a cause of action arising in tort.

13. As I have pointed out above, in the second case the paragraphs complained of were ordered to be struck out on the ground that they were irrelevant, although Brett J. went to the extent of saying that in his opinion they were not scandalous. In my opinion the statement complained of as set out in the summons is scandalous per se, and inasmuch as it does not form any part of the cause of action set1 out in paragraphs 3, 22 and 213 nor paragraph 20, which claims damages, the statement is entirely irrelevant and has no bearing upon the four issues that would arise, which I have set out above.

14. Mr. Bhagwati has argued the summons with some force and he has tried to support his case on this ground : He says that the statements are there only for the purpose of setting out history and secondly for the purpose of the enumeration of rights and is not a matter of substance or proof by itself. He has maintained that if you look at paragraph 21, first of all it sets out the motive of the directors of the bank in selling these shares for a paltry amount of Rs. 177-8-0 when the claim of the bank was more than Rs. 5,500, and that that was done, according to the paragraph, with an ulterior object, namely, of getting rid of the plaintiff, so that he should ' no longer be able to attend the general meetings of the members of the defendant bank as he was able to do continuously from 1923 to 1936.' Then follow the words complained of ' inter alia of exposing the malpractices, window-dressings, illegalities, etc., in the management and the accounts of the defendant bank.' Mr. Bhagwati's contention is that first the motive is indicated, then the previous conduct of the plaintiff from 1923 to 1936 in his attempts to expose the malpractices is set out, and then the further words used, according to Mr. Bhagwati, show that he is deprived of his rights as a member and a shareholder, viz. to expose the bank, if necessary, under the heads set out therein, and that therefore the whole paragraph properly read, and read as a whole, should only mean that these statements are made for the purpose of setting out the history, also the motive and for the purpose of enumerating the rights which the plaintiff is deprived of. In my opinion the proper reading would be to take into account the words ' no longer be able to exercise his rights, namely of exposing malpractices, window-dressings and illegalities in the management and accounts of the defendant bank in the future,' as they stand. In the circumstances, and in the light of what I have said above, in my opinion this statement is entirely unnecessary and unwarranted, looking to the nature of the case and the frame of the suit. But I may say that Mr. Bhagwati's argument, which was certainly cogent and very forceful, is not borne out by the affidavit of the plaintiff himself, because in his affidavit in reply the plaintiff does not support this contention, and after referring1 to the affidavit made on behalf of the defendant, he says :

The said allegations refer to the motives which prompted the directors of the defendant bank in purporting to sell off my shares as they did, and thereby committing the wrongful acts mentioned in the plaint and to substantiate the fact and the quantum of damages that should be awarded to me, I submit that the said allegations are both necessary and essential.

15. What is more important is the next statement made in that affidavit. He says that he is entitled to prove the truth of the same as matters in aggravation so as to claim higher damages in any event. In the light of this affidavit of the plaintiff, I am afraid I cannot accept the contention put forward by his counsel with a certain amount of skill and adroitness, In my opinion the words complained of are both scandalous and irrelevant.

16. In the circumstances the only order the Court should make is that the summons be made absolute, with costs. Counsel certified.


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