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Mukat Lal and ors. Vs. Gulab Singh-pran Mal - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1931All229
AppellantMukat Lal and ors.
RespondentGulab Singh-pran Mal
Cases ReferredSheo Pratap Singh v. Brij Kishore
Excerpt:
.....that in case the defendants failed to pay further sums the plaintiffs were authorized to sell the grain pits. plaintiffs' witness ram rich-pal also deposes that in case of failure the plaintiffs were entitled to sell the khattis. on the evidence on the record we are not satisfied that such a contract has been clearly made out. 14. on the merits also we are of opinion that the plaintiffs' claim should fail. the defendants also felt that their claim for a suit on account of the forward contract of 17 grain pits would fail if it were held to be a wagering transaction and therefore did not put forward that case. as however neither party has put forward the case of a wagering contract, which is a mixed question of fact and law, we do not think it safe to base our judgment on any such..........to summarize the cases as follows:2. according to the plaintiffs the defendants purchased 20 grain pits from the plaintiffs, which are ready for delivery, paying rs. 500 per pit as margin money, and promising to pay the balance with interest at rs. 0-12-6 per cent per mensem. only 18 out of the 20 grain pits were filled up and were actually ready for delivery. they however remained with the plaintiffs. when the price of grain fell the plaintiffs made a demand to the defendants to deposit more money which they failed to. do and consequently the plaintiffs sold the goods on 10th november 1922 and realized the price. the last payment of the price was however received on 18th december 1922 and the suit was instituted within three years from that date for the loss. the 18 khattis were.....
Judgment:

Sulaiman, J.

1. This is a defendants appeal arising out of a suit for recovery of a principal sum and interest pendente lite and future. The pleadings in this case were so badly drafted that we had to spend a considerable time in trying to understand them. It was after a great deal of difficulty that even the counsel for the parties agreed as to the respective cases of the parties put forward by their clients. It would be convenient to summarize the cases as follows:

2. According to the plaintiffs the defendants purchased 20 grain pits from the plaintiffs, which are ready for delivery, paying Rs. 500 per pit as margin money, and promising to pay the balance with interest at Rs. 0-12-6 per cent per mensem. Only 18 out of the 20 grain pits were filled up and were actually ready for delivery. They however remained with the plaintiffs. When the price of grain fell the plaintiffs made a demand to the defendants to deposit more money which they failed to. do and consequently the plaintiffs sold the goods on 10th November 1922 and realized the price. The last payment of the price was however received on 18th December 1922 and the suit was instituted within three years from that date for the loss. The 18 khattis were divided into 2 khatas, one of 12 and the other of 6.

3. The plaintiff did not suggest that there was any other parallel contract with the defendants at the time.

4. The defendants' case is that the 18 grain pits referred to by the plaintiffs were of ready delivery, and shortly after that contract there was a further contract between the parties under which the defendants undertook to supply 17 grain pits of wheat in the month of September 1922, that the defendants instructed the plaintiffs to sell the grain pits in the open market and four pits out of the first khata of 12 grain pits were sold by the plaintiffs; the defendants however then changed their minds and asked the plaintiffs not to sell the grain pits to the third parties in the open market but to appropriate the remaining 14 grain pits towards the account of the forward contract relating to the 17 grain pits; and to make a further purchase of the three grain pits in order to square the account of this forward contract.

5. When the contract relating to the 17 grain pits was disclosed, the counter-case put forward by the plaintiffs was that there was a practice in the market under which there could be no delivery or purchase after the fixed date and that under the decision of a panchayat of commission agents all business transactions were closed after Asoj Badi first. Up to that no definite instructions were received from the defendants to dispose of the 14 pits which had remained in the custody of the plaintiffs.

6. The learned Subordinate Judge has thought that the defendants gave instructions for the delivery of only 8 khattis out of the first khata of 12 khattis and not the remaining 6; their instructions with regard to the entire lot of 14 pits 'were sent on 4th October, but were received by the plaintiffs on 6th October, which was just one day too late. It is on this ground that he has not compelled the plaintiffs to give credit for the entire lot of 14 pits in the forward contract account, but has only given credit for the eight pits of the first khata.

7. The defendants have appealed and the plaintiffs have filed a cross-appeal.

8. The first question to decide is the question of limitation. The plaintiffs are suing on the basis of the purchase made by the defendants of 18 grain pits in April 1922 which were admittedly of ready delivery. As a simple transaction of sale by the plaintiffs to the defendants, there can be no doubt that the liability to pay the full price accrued on the date of the sale. No doubt the defendants not having all the money in their hands got an advance made by the plaintiffs on which they agreed to pay a certain rate of interest, but that fact did not prevent the accruing of the plaintiffs' right to recover the whole price on account of this purchase. The plaintiffs are suing to recover the principal amount and interest and it seems to us that if the transactions were to be treated as a simple transaction of sale of goods, part of the price of which had not been paid, the time began to run from the date of the sale by the plaintiffs to the defendants and they had to sue within three years of that date in order to get a personal decree against the defendants.

9. Even if we assume that it was agreed that the goods would remain in the custody of the plaintiffs as security for the advance made by them, and this appears to have been so, the amount advanced by the plaintiffs would still be a loan on the security of certain goods pledged to them. The present suit is not for the enforcement of any charge on that security but for a decree against the defendants personally. Article 120, Lim. Act would therefore not apply to the suit, but there would again be the three years rule of limitation so far as the personal liability of the defendants is concerned. This was clearly laid down in the case of Saiyid Ali Khan v. Debi Prasad [1902] 24 All. 251, in which Article 57 was applied against a pawnee who was trying to recover the amount due to him and the terminus quo was taken to be the date of the loan.

10. It may be conceded that the plaintiffs were entitled to retain the goods in their hands so long as full price had not been paid. So long as the goods remained in their possession they could have exercised their lien on it.

11. They have now disposed of the goods and have realized as much as they could. The present suit is one for recovery of the balance from the defendants personally. The ruling quoted above therefore applies with full force. This view has been accepted by the Bombay High Court in Yellappa v. Desayappa [1906) 30 Bom. 218. The learned Subordinate Judge has applied the rule of law laid down in the case of Sheo Pratap Singh v. Brij Kishore [1912] 15 I.C. 336. In that case the contract between the parties was for the initial purchase by the defendants of goods from the plaintiffs and then a re-sale of those goods by the plaintiffs, it being understood that the account was to be settled after this composite transaction was completed. It is obvious that if the original contract between the parties had been that the plaintiffs would purchase goods on behalf of the defendants, retain them and then re-sell them on instructions from the defendants and then only the account would be settled, time would not begin to run from the date of the initial purchase. The learned Subordinate Judge in his finding on issue 1 has assumed this to be so, for he says:

It is clear that the grain had to be sold through the plaintiff himself and unless it has been sold and its price was ascertained and paid the plaintiff could not sue the defendants for the losses.

12. No doubt a case of that kind was attempted to be set up in para. 5 of the plaint, but there is no satisfactory evidence to show that the original understanding was that the transaction was not to be completed till the goods had been actually re-sold. Mannu Lal, one of the proprietors of the plaintiffs' firm, stated that it was agreed that in case the defendants failed to pay further sums the plaintiffs were authorized to sell the grain pits. Plaintiffs' witness Ram Rich-pal also deposes that in case of failure the plaintiffs were entitled to sell the khattis. This was admitted by Mukat Lal, one of the proprietors of the defendants' firm who stated that it was agreed between the parties that the plaintiffs would sell the goods as soon as the losses per khatti amounted to Rs. 500. The right of the seller to sell the goods which remained in his custody on account of the non-payment of the price exists under the law. What the plaintiffs had to establish was that there was an initial understanding between the parties that the goods would be purchased and then sold by the plaintiffs and the account would be settled after both these transactions had been completed. On the evidence on the record we are not satisfied that such a contract has been clearly made out. We are therefore of opinion that the plaintiffs' claim for the recovery of the balance of the price of the 18 grain pits, which were sold by them to the defendants in April and May 1922, corresponding to Baisakh Sudi 1979, is barred by time.

13. An additional ground for holding that the claim is barred by time is that the goods were actually re-sold by the plaintiffs in November ' 19 2. The plaintiffs suggest that its re-sale was subject to the goods being passed by the Karachi authorities and that the plaintiffs only received 90 per cent of the price in November and the balance of 10 per cent was received later in December after the goods had been passed. It is however to be noted that the goods had been supplied by the plaintiffs themselves and had bean filled in 18 grain pits, which had been sold to the defendants. The re sale of these goods took place in November at a fixed rate. The amount of the sale proceeds therefore became ascertainable in November although one-tenth of the amount was not received till later. The plaintiffs were in a position to make up an account as soon as the goods were re-sold by them. If there was to be any reduction on account of the inferior quality of the wheat supplied, the plaintiffs were themselves responsible for it because they had procured the grain themselves.

14. On the merits also we are of opinion that the plaintiffs' claim should fail. We have a feeling in our minds that the transaction in question was in reality a gambling transaction, but in their own interest neither party has thought it prudent to disclose its true nature. The plaintiffs when asked to make a statement were understood by the learned Subordinate Judge to say, p. 8, that as regards the remaining 14 grain pits the defendants directed the plaintiffs to deliver them in connexion with the wagering contract for the month of Asauj. The word used by the plaintiffs in vernacular was 'satta' which was capable of another interpretation. The point does not appear to have been pressed any further. The defendants also felt that their claim for a suit on account of the forward contract of 17 grain pits would fail if it were held to be a wagering transaction and therefore did not put forward that case. It is possibly due to the concealment of the true nature of the transaction that the pleadings are so confused and there is so much difficulty in understanding the case of the parties. The statement of Mannu Lal goes to some extent to suggest that the idea was that the contract of purchase by the defendants would remain in force so long as the margin of the security did not fall below certain level and that the defendants need not pay the whole price of the goods but would only be liable for the differences. As however neither party has put forward the case of a wagering contract, which is a mixed question of fact and law, we do not think it safe to base our judgment on any such hypothesis.

15. Mannu Lal plaintiff in his statement of 22nd March 1926, as well as in his deposition of 16th December 1926, admitted that the defendants had directed the plaintiffs to deliver the remaining 14 pits in connexion with the forward contract, i.e. had given instructions for the appropriation of those pits towards this other contract. But this admission probably related to the first instruction. In para. 23 the defendants admitted that after having directed the plaintiffs to sell all the grain pits they sent a letter to the plaintiffs instructing them not to sell the remaining grain pits in future, though they go on to add that they asked the plaintiffs to deliver the grain pits to the defendants for the month of Asauj. The plaintiffs were not questioned in detail about these instructions, and we do not think that the admissions are so clear as to conclude the matter.

16. The correspondence which passed between the parties in this connexion is on the record. Ex. 5 (p. 42) is a postcard of 5th September 1922 sent by the defendants to the plaintiffs stating that 4 grain pits out of the khata of 12 grain pits had already been sold, and that the defendants had agreed to supply, 17 grain pits in Asauj, and asking the plaintiffs to accept the 8 grain pits of the first contract towards the partial discharge of the second forward contract of 17 grain pits and that the credit and debit entries should be made on Asauj Sadi first. They promised to deliver the remaining 9 pits on Asauj Sudi 15th, that is on the last day of the month fixed for delivery. The learned Subordinate Judge in the Court below construed this letter as amounting to an instruction for the delivery of only 8 grain pits out of the 12 grain pits. We agree with his view. This letter contains no reference to the 6 grain pits of the second khata. Although the defendants alleged in their para. 23 of the written statement that there was a promise to deliver the goods to the defendants they have produced no documentary evidence in support of it. But the letter dated 4th October 1922 (p. 41) does show that on that day the defendants asked the plaintiffs to appropriate the remaining 6 grain pits of the second khata towards the remaining part of the forward contract, namely 9 grain pits, and further instructed them to purchase three more grain pits at the market rate and appropriate the same towards the remaining three pits. If these instructions were received in time and carried out, obviously both the transactions would be squared and the defendants' liability would be confined to any loss that might accrue on the purchase of the last three grain pits. The learned Subordinate Judge in his judgment has conceded that this was the effect of the letter of 4th October 1926.

17. He has however not given effect to it on a ground which was nowhere put forward by the plaintiffs themselves. The ground is that this letter was received by the plaintiffs on 6th October 1926 instead of on 5th October and was therefore too late by one day. It is on this ground alone that the learned Subordinate Judge has not given the defendants credit for the 6 grain pits. As we are treating the transactions between the parties as bona fide transactions of sale and purchase and not a mere wagering contract, we must examine the legal consequences of the delay of one day in sending instructions to the plaintiff. On 5th October 1926 the plaintiffs had in their possession 6 grain pits belonging to the defendants, which they were bound to deliver to them on demand or to re-sell to third parties on instruction. By that date the defendants had to supply to the plaintiffs 9 grain pits. The due date having approached the defendants sent the letter of 4th October which however did not reach the plaintiffs on 5th October. But on 6th October the plaintiffs still had in their possession 6 grain pits belonging to the defendants and there was the default on the part of the defendants to deliver the goods on 5th October. If the 9 grain pits belonging to the defendants had been sold to the third parties in the market or had been purchased by the plaintiffs themselves the liability of the defendants was to make good the, loss on account of the breach of contract in not. supplying the goods on the due date. In our opinion the default only made the defendants liable for the difference in the prices which might have prevailed on 5th October and 6th October and no more. What the plaintiffs have done is to hold on the grain pits belonging to the defendants till November, whereas they ought to have squared the transactions on 6th October by selling the 6 grain pits of the first contract against 6 grain pits out of the second contract. They have not led any evidence to show that there was any differences in prices prevailing in the market on 5th October and 6th October. In the absence of any proof of any variation in the rate during the interval of twenty-four hours their claim for damages cannot succeed if they had one..

18. We may further note that the Court below has found that, after crossing a few-transactions, the plaintiffs themselves were left as purchasers and had themselves to take delivery of some of the defendants' khattis. As a matter of fact the plaintiffs have utterly failed to earmark the goods. The sale of Messrs. Louis & Co. was of a large stock of wheat, without showing that any particular bag of that stock came out of the grain pits belonging to the defendants. The plaintiffs have not been able to earmark these grain pits as they were mixed up with their own goods and the plaintiffs had in their possession the goods belonging to the defendants. This is an additional reason for not allowing their claim when they failed to give credit for the 6 grain pits subject to the instructions which were sent by the defendants on 4th October. In our opinion therefore the suit ought to be dismissed. But having regard to the fact that the pleadings were not clear we would direct that both parties should bear their own costs in both Courts.

19. The result therefore is that appeal No. 114 of 1927 is allowed and appeal No. 115 of 1927 is dismissed, but both parties should bear their own costs in both the Courts.


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