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Bhawanilal Lachchi Ram and ors. Vs. Badri Lal and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial;Limitation
CourtMadhya Pradesh High Court
Decided On
Case NumberSecond Appeal No. 43 of 1961
Judge
Reported inAIR1964MP153
ActsLimitation Act, 1908 - Schedule - Articles 60, 62, 97 and 115; Partnership Act, 1932 - Sections 4 and 69; Companies Act, 1956 - Sections 11(2)
AppellantBhawanilal Lachchi Ram and ors.
RespondentBadri Lal and ors.
Appellant AdvocateA.N. Kak, Adv.
Respondent AdvocateR.S. Bajpai, Adv.
DispositionAppeals dismissed
Cases ReferredBadri Prasad v. Nagarmal
Excerpt:
- - 4. the lower courts have concurrently held thatthe defendants have failed to establish that a theft toolsplace at their shop in the course of which the moneysclaimed by the plaintiffs in the suits, out of which theseappeals arise, ware stolen. in a suit brought by the plaintiff for return of the money it was held that the cause of action for the suit did not arise merely on payment of the money and that the claim was for money paid upon an existing consideration which had afterwards failed, in that the payment was made in consideration for the promise to execute the lease and the promise was afterwards repudiated, or that it was a claim for compensation for the breach of any contract express or implied not in writing registered and not especially provided for......to supply cloth to the plaintiffs after purchasing it from the manufacturers. on receipt of the moneys bhawanilal set up a false story about the moneys deposited by the plaintiffs having been stolen and he on this ground resiled from his promise. in abdul shakur khan v. rajendra kishore, air 1935 all 759 the plaintiff had paid consideration and the defendants had promised to execute a lease, but they afterwards resiled from the promise and refused to execute the lease. in a suit brought by the plaintiff for return of the money it was held that the cause of action for the suit did not arise merely on payment of the money and that the claim was for money paid upon an existing consideration which had afterwards failed, in that the payment was made in consideration for the promise to.....
Judgment:

P.R. Sharma, J.

1. These three appeals, which have been preferred by the defendants, arise out of suits for recovery of money. Since they all involve common questions of fact and law and the appellants in all of them are the same, they are being disposed of by a common judgment.

2. The facts material for the disposal of these appeals may briefly be stated as follows: A Cloth dealers' Association (hereinafter called 'the Association') of which the plaintiffs in these suits along with certain others, were the members, and Bhawanilal defendant No. 1 was, at the relevant time, the Chairman, was formed at Rajgarh. On a quota of cloth being allotted by the Central Government to the Association it was distributed among its members. The Association used to collect the price of the cloth from such of its members amongst whom it was to be distributed, and thereafter obtained the: cloth directly from the manufacturers. The price to be paid for the cloth as also the margin of profit chargeable thereon was fixed by the Central Government. The case for the plaintiffs in each of these suits is that Bhawanilal, in his capacity as the Chairman of the Association, called upon them to deposit money for purchase of cloth for them in his own firm styled as 'Laxmiram Bhawanilal'. After the plaintiffs had done so Bhawanilal set up a false story that a theft was committed at his shop by certain persons and a sum of Rs. 15,620/- was stolen which according to Bhawanilal included the moneys deposited in his firm by the plaintiffs.

The cloth, for the purchase of which the plaintiffs had paid the moneys was thus never purchased by the Association and, therefore, no question of its supply to the plaintiffs ever arose. The plaintiffs sued the present appellants for rafund of the moneys deposited by them along with interest thereon.

3. The suits were contested on various grounds, only some of which are material for the decision of these appeals. It may be mentioned at the outset that the defendants admitted that Bhawanilal called upon the plaintiffs to deposit the price of the cloth to be purchased for them, in Bawanilal's firm; that the sums of money claimed as principal in these suits were deposited by the plaintiffs in the said firm and a receipt therefor was issued by Ramchandra, one of the sons of Bhawanilal.

4. The lower Courts have concurrently held thatthe defendants have failed to establish that a theft toolsplace at their shop in the course of which the moneysclaimed by the plaintiffs in the suits, out of which theseappeals arise, ware stolen. Ramchandra was no doubt-acquitted of the offences under Sections 406 and 182 I. P. C.but the certified copies of the judgments passed by thecriminal Courts which were filed as Exs. D/2 and D/3 inthese cases are irrelevant in the present suits, in viewof the provisions of Section 43 of the Evidence Act. Bhawanilal did not himself enter the witness-box in order tostate on path that the moneys deposited by the plaintiffswere stolen.

5. In the circumstances stated above there can be no doubt that the moneys deposited by the plaintiffs with the defendants' firm were never passed on by Bhawanilal to the Association, nor was any attempt made by him to utilise the same for purchase of cloth for the plain-tiffs. The facts that no independent evidence was tendered by the defendants in order to prove that a theft took place at their shop, after they had received the moneys deposited by the plaintiffs, and that Bhawanilal did not have the courage to state on oath that any such theft actually took place, wherein the plaintiffs moneys were stolen, unmistakably point to the falsity of the defendants' version on this point. It is on this factual basis that the points of law urged in support of these appeals have, in my opinion, to be considered.

6. The suits out of which these appeals arise were brought within 3 years of the date on which the deposits were made by the plaintiffs. The payments were made in consideration for an implied promise by Bhawanilal to supply cloth to the plaintiffs after purchasing it from the manufacturers. On receipt of the moneys Bhawanilal set up a false story about the moneys deposited by the plaintiffs having been stolen and he on this ground resiled from his promise. In Abdul Shakur Khan v. Rajendra Kishore, AIR 1935 All 759 the plaintiff had paid consideration and the defendants had promised to execute a lease, but they afterwards resiled from the promise and refused to execute the lease. In a suit brought by the plaintiff for return of the money it was held that the cause of action for the suit did not arise merely on payment of the money and that the claim was for money paid upon an existing consideration which had afterwards failed, in that the payment was made in consideration for the promise to execute the lease and the promise was afterwards repudiated, or that it was a claim for compensation for the breach of any contract express or implied not in writing registered and not especially provided for. The suit was, therefore, held to be governed by Article 97 or Article 115 of the Limitation Act.

7. The cause of action for the present suits for return of advance-deposits made by the plaintiffs towards the price of the cloth arose not on the date on which the payments were made, but when the defendants falsely alleged that the entire amount had been stolen and on this ground Bhawanilal repudiated his implied promise to purchase cloth from the manufacturers and supply it to the plaintiffs. Article 62 would apply only to those cases where a sum of money has been received by me defendants for the plaintiffs use, or in other words, which the law says he must hold for the use of the plaintiff. The sums of money deposited by the plaintiffs in the defendants' firm in the instant cases were not received by the defendants for being held for the use of the plaintiffs, but for purchase of cloth. As long as Bhawanilal did not resile from this promise the plaintiffs could not sue for return of the moneys paid by them. The claim for refund of the moneys deposited by the plaintiffs is, therefore, not one for money which was initially received by the defendants for the use of the plaintiffs. The moneys became returnable to the plaintiffs only after repudiation by Bhawanilal of his promise to utilise the moneys for the purpose for which the same were obtained by him. In my opinion, therefore, these cases would be governed either by Article 97 or Article 115 and not by Arts. 60 or 62 of the Limitation Act. The suits having been filed within 3 years of. the date on which the moneys were paid by the plaintiffs, would, in either case, be within the limitation.

8. The next point urged in support of these appeals was that since the Association was a partnership which was not registered under the Indian Partnership Act these suits could not lie. It was also urged that the number of partners being more than twenty the Association had to be registered under Section 11 (2) of the Indian Companies Act. In the first place the Cloth Dealers' Association cannot be called a partnership merely because its members shared the profits earned by the Association. The members of the Association could buy cloth only from the quota allotted to the Association by the Central Government. The margin of profit was also fixed by the Central Government. The doctrine of partnership necessarily involves mutual agency between the parties. If the relationship constituted between the parties in respact of a certain matter does not expressly or by necessary implication involve the right of one party to pledge the other as an agent, there is no partnership. See Chimanram v. Jayantilal, AIR 1939 Bom 410. The Cloth Dealers' Association had for its object only a fair distribution of the quota of cloth allotted by tne Central Government amongst its members. After the cloth allotted had been so distributed each one of the members of the Association dealt with the cloth supplied to him in his own right He no longer acted as an agent of the other members of the Association and had no right to bind them as their agent in respect of his own dealings in cloth. The Association could, therefore, not be a partnership. The suits would in the result not be barred by the provisions of Section 69 of the Indian Partnership Act and the Association would not, even if its members exceed twenty in number, require registration under Section 11 (2) of the Indian Companies Act.

Even if it were to be assumed that the Association was a partnership, these suits, not being for the enforcement of the terms of the partnership agreement or for accounts' of the partnership business, would not be barred by the provisions of Section 69 of the Indian Partnership Act. If a person pays money to another for being applied by him to an illegal purpose it is competent for the payer to require the payee to hand back the money if the payee has not already parted with it and the illegal purpose has not been carried out. (See Greenberg v. Cooperstein, 1926-1 Ch 657). In the present cases it was not disputed by the defendants that the moneys paid by the plaintiffs were never applied to the purchase of cloth for the plaintiffs. Bhawanilal merely sought to evade his liability to utlise the moneys paid by the plaintiffs for the agreed purpose, or to refund the same to the plaintiffs, on the ground that the entire amount had been stolen. On proof of the fact that no such theft actually took place at Bhawanilal's firm, with which the moneys were deposited, it cannot avoid his liability to return the money paid by the plaintiffs in each case, along with interest by way of damages. The principle laid down in Greenberg's case, 1926-1 Ch 657 (supra) was, it may be noted, cited with approval by their Lordships of the Supreme Court in Badri Prasad v. Nagarmal, AIR 1959 SC 559.

9. Lastly it was contended that Bhawanilal's sons could not be held to bei liable for the claims in these suits. The receipts for moneys paid by the plaintiffs were passed by Ramchandra s/o Bhawanilal. The moneys were, admittedly deposited in the firm 'Laxmiram Bhawanilal' of which all the present appellants are the owners. There is no evidence to show that the1 moneys were personally appropriated by Bhawanilal after being withdrawn from the accounts of the firm. In this state of things I am of the opinion that the liability for the plaintiffs' claim in each of these suits will rest on all the owners of the firm into whose account the moneys were paid by the plaintiffs.

10. In the result these appeals have no force andare hereby dismissed with costs.


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