1. I have dealt with the claim in the suit and I am now on the third party notice. The claim in the suit has resulted in a decree for the plaintiffs Messrs. Weld & Co. against the defendant, for a sum of, Rs. 55,000, odd. This sum the defendant claims by his third party notice from his uncle, the third party, under a contract or right of indemnity.
2. I should say, at the outset, that having regard to 'certain margin moneys, approximately Rs. 22,000, which were provided by the defendant and another sum of nearly Rs. 5,000 which represented' profit made by the defendant on his own previous transactions with the plaintiffs, and which sum of Rs. 5,000 was left as further margin money, the real sum due by the defendant to the plaintiffs and the real loss incurred by the defendant is over Rs. 82,000. This fact is material on Issues Nos. 2, 10 and 11 as to the effect of a certain compromise agreement of 2nd February 1917 between the plaintiffs and the defendant.
3. It seemed to me, however, that on the pleadings the defendant could not ask for a decree on the third party notice for this sum of Rs. 82,000. At any rate, he has not asked that, but only wishes to deal with the Rs. 2,000 as an answer to Issues Nos. 2, 10 and 11. At the outset, I asked his Counsel what he was going to do as regards the balance of the claim, viz, the difference between the Rs. 82,000 the total loss, and the Rs. 55,000, the claim on the third party notice. After consideration, Counsel for the defendant agreed to confine his claim to the Rs. 55,000 as a term of his being allowed to proceed with the third party notice. I moan by that that no other proceedings can be taken for the difference between the Rs. 82,000 and the Rs. 55,000. If the claim for the whole Rs. 82,000 had been proceeded with, I should probably have come to the conclusion that there must be one trial, and one trial only, for the whole Rs. 82,000, and that I could not allow it to be split up partly for the claim of Rs. 55,000 and partly (in other proceedings) for the balance of the Rs. 82,000. The case accordingly proceeds on a claim for indemnity as regards the Rs. 55,000 awarded by the decree in this suit against the defendant, the balance, if any of the total loss being abandoned, but with leave to prove such total loss in connection with issues Nos. 2, 10 and 11.
4. The explanation of these somewhat protracted proceedings is that the defendant and the third party are relatives, viz., uncle and nephew, and that the third party, at any rate, is disposed to fight his relative to the last possible moment. Substantially, the defendant's story, which he has told me, supported, as it is, by a large body of documentary evidence, none of which is in any way displaced, is really not contradicted by the third party In my opinion, the defendant's story as to the facts is the correct one.
5. The defendant says that, some time prior to 21st May 1916, he had certain transudations with the plaintiffs in which he and the third party were acting in partnership, the shares being four-fifths and one-fifth. The market went against them and the defendant wanted to close. The third party was averse to this and, consequently, the agreement of the 21st May 1916, Exhibit 4, was arrived at. The effect of that agreement was that the third party took over all outstanding transactions between the plaintiffs and the defendant, and for that purpose he, the defendant, was to act in effect as an intermediary between the plaintiffs and the third party for the purpose of giving orders in relation to future dealings with respect to these transactions. All matters were to be dealt with by the defendant, but it is quite clear from the agreement 'hat the third party was to keep the defendant in funds.
6. Now, on that agreement, it is contended by the third party, that the relationship of principal and agent did not exist between the defendant and the third party but that their true relationship was of vendor and purchaser, or assignor and assignee. Even if one adopts that argument, it seems to me clear, on the face of the document, that, for certain purposes, viz., the carrying out pf the terms of this agreement, the defendant had to act as the agent or the third party. I won't refer to the clauses in detail but I am satisfied that to that extent, at any rate, the defendant was the agent of the third party. Even if that is incorrect, still, having regard to the fact that he was carrying out these terms in pursuance of this agreement and under the instructions of the third party, he would. I think, be entitled to be indemnified against the consequences. So I hold that the effect of this agreement was that the defendant, if and so far as he acted on the instructions of the third party, was entitled to be indemnified.
7. I do not propose to go into the details of the transactions which, on the instructions of the third party, took place with the plaintiffs. It is sufficient to say that an agreement was entered into with the plaintiffs Weld & Co., under which they were given certain Hundis--Hundis to the extent of a lac and a half and mother ten thousand rupees, and that it was the duty of the third party to find money to meet these Hundis. He has not found a single pie. The plaintiffs naturally called for more margin, as the market was going against the defendant, but that margin was not provided by the third party, Eventually, the plaintiffs closed and the Rs. 55,000, odd, is the result of the loss sustained as at the closing date.
8. Personally, I do not think there has been any real answer in this Court to the defendant's claim and I think Counsel for the third party only acted quite properly, in stating that he really had no evidence from a legal point of view, to meet the case put forward by the defendant. However, the third party was very anxious to go into the witness-box and, accordingly, I allowed him to do so and say anything he wanted. It was irregular in view of his Counsel's admission, but I thought, under the circumstances I might overlook the irregularity. Having heard his grievances, I am quite satisfied that there is nothing whatever in them.
9. Now, turning to the formal issues that have been raised in the case, I have already dealt with issue No. 1. As regards issue No. 2, which I may take along with issues No. 10 and No. 11, this depends on a certain compromise agreement, Exhibit 1(a), of the 2nd February 1917, which was antlered into between the plaintiffs and the defendant with reference to the present suit. The effect of that agreement was that the defendant was; to pay at once Rs. 28,000 and as regards the balance of the Rs. 55,000 so mush as might be recovered from the third party was to be divided in equal shares between the plaintiffs and the defendant, and the defendant was to assist the plaintiffs by his evidence and he was, if necessary, to submit to judgment in the suit and to bring a third party notice against the third party.
10. Now, if the result of this arrangement was that the defendant as agent would make the slightest profit out of the transaction than it might very well be that at any rate, against his own principal, the third party, this agreement could not stand. But when you look at it, it is clear that, in any event, the defendant was bound to be a loser for he had already provided the difference between the Rs. 82,000 the total loss and the Rs. 55,000, odd, claimed in this suit. This difference the agreement does not touch; and accordingly he could make no profit. This difference arises from the margin money of some Rs. 22,000 and his own personal profit on another transaction of nearly Rs. 5,000. That was his own money. It has all gone. He will never get that back now from the third party.
11. Under these circumstances, I do not see anything fraudulent or collusive or against public policy whatever in this document and accordingly I shall answer issue No. 2 in the negative, and issue No. 10 in the affirmative and issue No. 11 in the negative.
12. The remaining issues I answer as follows:
4. The effect of the agreement of 21st May 1916 was that, as between the third party and the defendant, the third party took over the transactions in question.
5. Yes, including the starting balance of Rs. 29,246.
13. In conclusion, I will add that the third party is a tea merchant, living in Peshawar. I do not suppose he has any real knowledge of cotton. In the future, I think he will be well advised to leave cotton speculations alone and to attend to his own business.
14. Attorneys for the Plaintiffs:Messrs. Little & Co.
15. Attorneys for the Defendant:Messrs. Payne & Co.