1. The plaintiff sues to recover Rs. 5000/- with interest and notice charges Rs. 256-15-6 on the allegations that this amount had been advanced as a loan to the defendant on 25-4-1957 and 26-4-1957 by three different cheques receipt of which had been admitted by him. The advance of loan was, according to the plaintiff made on defendant's representation that he would utilize the amount for securing contract for exploiting the areas in certain blocks for Tendu leaves, secure removal of the leaves to Guna and adjust the advance against the cost price of the leaves making them over to the plaintiff. This latter representation or promise, it is said, could not he fulfilled. The plaintiff thus, plainly put, sues for the recovery of a loan advanced to the defendant.
2. The defendant contended that he had not borrowed the aforesaid amount as a loan. It was the amount made over by the plaintiff to the defendant as his share of capital contribution in a partnership venture for exploiting forest produce of Tendu leaves in the areas for which the defendant would secure a contract from the Adivasi Bahu Karya Karini Samiti for the purpose. The defendant it is said did secure contract with respect to Umri and Bajrang Gath Blocks, license for exploitation of which had been granted to Adivasi Bahu Karya Karini Sahakari SamitI of which he was the President and the work of engaging labour for removal and collection of leaves actually had been commenced but a short while later it was cancelled by the Government and the venture therefore could not be carded to fruition. The legal relationship between the plaintiff and the defendant in this business was that of partners and not that of creditor and debtor. It was denied that the defendant had taken the amount as a loan for doing his own Individual business of Tendu leaves and that he had assured the plaintiff to deliver Tendu leaves removed and collected as a result of this business at the cost price. The plaintiff, therefore, could not sue him for the money as a loan.
3. The issues trained by the trial court on the basis of these contentions covered (1) Plaintiffs version of loan and promise to supply Tendu leaves at cost price, (2) Receipt of money by the defendant on that basis, and (3) Defendants' version as to payment being in pursuance of a partnership venture in Tendu leaves. The trial court on evidence found that the advance of Rs. 5,000/- proved to have been made by the plaintiff was not as a loan to the defendant. It was pursuant to a partnership venture and in the absence of any definite evidence as to independent right and obligation to claim back the amount advanced as aforesaid apart from the rights and obligations us between partners the plaintiff could not recover. His only remedy was to sue for accounts. The suit was accordingly dismissed.
4. This is a plaintiffs appeal.
5. Mr. Motilal Gupla for the plaintili appellant contended that the finding as to existence of a partnership is clearly unsustainable in view of the fact that on defendant's own version a draft agreement incorporating proposed terms on which the venture was to proceed had been handed over to the plaintiff and before any final terms had been agreed to and put in writing the whole thing fell through due to cancellation of the licence in favour of the Adivasi Balm Karya Karinl Samiti. Therefore even if there was some kind of venture in the nature of partnership or otherwise in contemplation of the parties it was wholly stillborn and did not see the light of the day. The money therefore taken by the defendant ought to have been returned, lie also contended that in fact the amount ought to have been held as having been advanced as a loan. The learned counsel particularly emphasised the undertaking given by the defendant in his letters Exs. P. 2 and P. 3 that he would he personally responsible to pay whatever amount was received from him and utilized in the leaves business. This, he said, clearly affirms the plaintiffs version that the amount of Rs. 5000/- had been given to the defendant on his personal undertaking to pay, as a loan. He further urged in the alternative that even it is not considered as a loan, the plaintiff's right to claim it back due to frustration of contemplated 'leaves business' was undeniable. The defendant could not keep money after such frustration which in no way belongs to him and is admittedly the plaintiffs money.
6. First question to be considered in view of the trial court's finding and the contention raised on behalf of the appellant is whether the amount of Rs. 5000/- was advanced as a loan.
7. As to this the plaintiff's own pleading about this matter is halting. Paragraph 1 of the plaint contains an averment that the defendant requested the plaintiff to give money to him for utilizing the same for the business in Tendu leaves and that he would give the Tendu leaves plucked and collected by him to the plaintiff at the cost price to be mutually settled later on and incorporated in a written agreement. The plaintiff in para 6 claimed interest on the advance at Annas 12% P. M. by way of damages. These averments in plaintiffs own pleadings indicate that it was not a simple money lending transaction for interest. It was some kind of business venture undertaken by the plaintiff with a view to acquire Tendu leaves for their sale later on at profit. It is an admitted tact that the Government had decided to give license to the Adivasi Balm Karya Karimi Samiti to exploit forest produce of Tendu leaves in the nearby area including the forest blocks of Umari and Bajarangarh. The defendant was at the material time the President of the said Samiti and it is with reference to these blocks that the work of plucking and collecting leaves had begun alter the money was advanced to the defendant, it further seems that the plaintiffs own trusted servant Kasturchand bad accompanied the defendant at the time of initial deposit of Rs. 1500/- on 25-4-1957 in the joint names of the plaintiff and the defendant. The Khata Ex. P. 1 produced by the plaintiff initially contained no reference to the money being taken from the plaintiff. The plaintiff's version is that this reference was added due to suggestion of Fulchand at the time the Khata was opened and not subsequently, while the defendant's version is that this was done subsequently as Kastoorchand who was the writer of the same was a trusted servant of the plaintiff and was in his employment. Fulchand supported the plaintiffs version. Fulchand's presence, there, is on his own statement a pure chance. His taking up the Khata reading it and making a suggestion that it should contain reference to payer's name is somewhat unnatural. Although no substantial difference arises due to this circumstance on account of variety of other facts, the anxiety felt by the plaintiff about the nature of super-scripture in Ex. P. 1 suggests that it could not have been a purely loan transaction. Plaintiffs own witness Motilal, who was examined to prove the compromise reached between the parties in July 1957 under which the defendant had agreed to pay to the plaintiff Rs. 1800/- in the form of a cheque and Rs. 1200/- worth of Bardana stated that it was the plaintiff who had initially expressed a desire to have a dealing in Tendu leaves and wanted him to find a suitable party. lie then took the defendant to the plaintiff and introduced him as a dealer in Tendu leaves. The defendant too when he met him first had told him that he was in need of money for the trade in Tendu leaves. Later he had accompanied the defendant to the plaintiff's place and in his presence a draft of partnership agreement had been handed over to the plaintiff by the defendant and the plaintiff had then agreed to look into it. Later after the venture had discontinued the plaintiff had asked him to require the defendant to pay whereupon he had seen the defendant. The defendant then had told him that the dealing was of partnership. Having regard to this evidence coming from the plaintiffs own side it appears clear that the transaction in suit was not one of loan simpliciter. It was a business in Tendu leaves in which the plaintiff was to contribute substantial part of the investment and there was to be some kind of agreement between them for the acquisition of the Tendu leaves. The defendant's own idea, from the nature of draft spoken to by the defendant as well as Motilal, was that of some kind of partnership, terms of which had been set out in the draft. The plaintiff had not assented and agreement in its final form was not written out and executed. This however did not prevent the parties from commencing the joint dealing in which both the plaintiff and the defendant made a joint deposit of Rs. 1500/- and spent some money in distributing the same to labourer who were engaged in plucking and collecting leave and for some other purposes including procurement of gunny cloth (Bardana).
8. In this state of things it is not possible to accept the plaintiff's contention that it was a purely loan transaction. The finding of the trial court is that it was not a loan but a capital advance for partnership dealing. This is the defendant's stand and is a probability though the absence of acceptance of terms contained in the draft referred to by the defendant and Motilal, it 'cannot indicate certainty. Probably the pkintiff envisaged either partnership in the business of Tendu leaves or some kind of joint acquisition on certain understanding constituting co-ownership.
9. Next thing to be considered is as to the two letters dated 16-5-1957 and 18-5-1957 sent by the defendant to the plaintiff .
10 It seems from the first letter that the defendant when he wrote it, was apprehensive of some serious obstacle in the venture undertaken by them and had realised that the plaintiff had been feeling anxious about the amount advanced by him till then. The defendant however was hoping then to get over the difficulty. He made reference to the necessity of calling for the gunny cloth. Having regard to this his assurance to the plaintiff cannot be construed as abandoment of the deal and settlement between the plaintiff and the defendant, the latter making a specific promise to pay in supersession of their prior relationship. It was at the most intended to reassure the plaintiff and cannot amount to novatio. The second letter was sent three days later. There was no indication either in evidence or elsewhere that the parties met between these three days and any fresh agreement had been reached. The letter again emphasises his hope regarding at least Umari block being availabe for proceeding with the venture. The last clause about his responsibility for the outlay proceeding from the plaintiff under the circumstances could be nothing else than a kind of guarantee or indemnity, The plaintiff has also not put forward these letters at involving novatio and has not based his suit on them. No reference to them is made in the pleadings and no attempt is made to amend them.
11. It is undoubtedly true that the venture has fallen through due to cancellation of license by the Government. The defendant had with him part of the plaintiff's money meant for the dealing. In this state of facts it is clear that no decree can be granted in plaintiff's favour treating the transaction as a pure loan. Nor can anything be awarded for interest by way of damages since interest by way of damages cannot be granted.
12. What should be our course then is one to dismiss the suit on the simple ground that the plaintiff had failed to make out his case of loan. The other is to accept the defendant's own case that it was a partnership and hold him accountable. On our finding the relationship between the parties could either be of partners or that of co-owners. In either case he would be accountable. There could possibly be no defence if this court proceeds on such a basis. The claim of the plaintiff ought therefore be allowed in a modified form by awarding a decree for accounts, Such a course appears to be permissible having regard to the principle deductible from the decision of the Supreme Court in Firm Shrinivas Ram Kumar v. Mahabir Fraud, AIR 1951 SC 177. In that case the plaintiff had filed a suit for specific performance of contract for the sale of a house. The defendant denied the contract for sale but admitted to have received money as a loan. The Supreme Court held that the alleged contract had not been established. Even then in view of the defendant's acceptance of his having taken the amount as a loan and in the absence of any bar of limitation the Supreme Court passed a decree treating the advance as a loan even where the plaintiff had failed to make such a claim in the pleading in the alternative. In this case the defendant could not be prejudiced in case he is held accountable to the plaintiff for the money taken by him. On the other hand in case the suit is dismissed the plaintiff would be greatly injured.
13. I would therefore deem fit to pass a preliminary decree for accounts. The trial court will appoint a Commissioner who will be empowered to go through the accounts of the parties and to record evidence regarding the amounts alleged to have been spent and submit his report. The trial court then after hearing parties objections pass a final decree. The appeal is partially allowed in these terms. The appellant will be entitled to his costs.
14. I agree.