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Valli Mahomed Abu Vs. Berthold Reir - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMumbai
Decided On
Case NumberO.C.J. Appeal No. 17 of 1918
Judge
Reported in(1919)21BOMLR785
AppellantValli Mahomed Abu
RespondentBerthold Reir
DispositionAppeal dismissed
Excerpt:
debtor and creditor-interest on debt -creditor, an alien enemy firm- whether interest on debt in suspended, from the date of the hostilities is the date on which the enemy firm obtained a license to trade.;a debtor indebted to an alien enemy is not entitled to suspension of interest on his debt from the outbreak of hostilities to the date on which the enemy firm obtained a license to trade.;high stevenson and sons v. aktiengesellschaft far cartonnagen industries (1918) a.c. 239, referred to. - - he was of opinion that if the defendant had paid money due to the firm in bombay he would not have been doing anything which involved a penalty but was entitled to withhold it until satisfied that it would be retained in safe custody till the suspension of hostilities......judge followed to a limited extent a previous judgment of macleod j., who thought the plaintiffs' bombay firm was a branch of their hamburg firm, and held there was a suspension of the obligation to pay interest; he was of opinion that if the defendant had paid money due to the firm in bombay he would not have been doing anything which involved a penalty but was entitled to withhold it until satisfied that it would be retained in safe custody till the suspension of hostilities. in so holding he applied certain american cases of which brown v. hiatta (1872) 15 wall. 177, a decision of the supreme court of united states, is the weightiest. these decisions have however been questioned in hugh stevenson and sons v. aktiengesellschaft fur cartonnagen-industries [1918] a.c. 239, by several of.....
Judgment:

Basil Scott, C.J.

1. The only question to be decided on the cross-objection is whether the learned Judge in the lower Court was right in holding that the defendant was entitled in the account between the parties to a refund of any interest paid between the 10th of August 1914 and the 9th February 1915. The former date is taken as the date of the outbreak of war between England and Austria and the latter is the date when the first license was granted to the plaintiff's representative in Bombay to conclude their indent transactions. These transactions were-so far as is indicated by the specimen indent put in-indents sent from Bombay to Bradford for goods from the plaintiffs' firm at that place. One of the plaintiffs, Reif, was a naturalized British subject. The partnership of the plaintiffs being between an Austrian and a naturalised Englishman was dissolved by the outbreak of war but the plaintiff Reif was granted a license under the Proclamation of the 9th September 1914 in England.

2. Whether any of the contracts to which the accounts between the parties relate were illegal having regard to the terms of this Proclamation has not been established and the only question for consideration is, as above stated, whether the obligation to pay interest was between certain dates suspended.

3. The learned Judge followed to a limited extent a previous judgment of Macleod J., who thought the plaintiffs' Bombay firm was a branch of their Hamburg firm, and held there was a suspension of the obligation to pay interest; he was of opinion that if the defendant had paid money due to the firm in Bombay he would not have been doing anything which involved a penalty but was entitled to withhold it until satisfied that it would be retained in safe custody till the suspension of hostilities. In so holding he applied certain American cases of which Brown v. Hiatta (1872) 15 Wall. 177, a decision of the Supreme Court of United States, is the weightiest. These decisions have however been questioned in Hugh Stevenson and Sons v. Aktiengesellschaft Fur Cartonnagen-Industries [1918] A.C. 239, by several of the Law Lords : see pp. 255, 259.

4. Moreover in the Supreme Court of the United States it has been held that where the debtor resides in the same country as the creditor or his duly authorised agent, provided such agent was appointed before the war. interest on a debt is not suspended by the war: see United States v. Grossmayer (1869) 9 Wall. 72 and Ward v. Smith (1868) 7 Wall. 447. In the present case the branch firm of the plaintiffs to whose representative the defendant paid interest was established long before the war.

5. We think the safest course is in the circumstances to give effect to the opinion indicated by the Lord Chancellor in Hugh Stevenson and Sons' case that it is difficult to see on what principle interest (particularly where as here it is stipulated for by the contract) is to be forfeited if private property is to be respected.

6. In the present case it may be that even according to the proposition laid down by Macleod J. the money paid was not wrongly paid and therefore could not be recovered back.

7. We allow the cross-objection and delete the clause of the decree which varies the Commissioner's report.

8. The result is that the appeal is dismissed with costs an 1 the cross-objection is allowed with costs.


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