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Kusum Chand and anr. Vs. Kanhaiyalal and anr. - Court Judgment

LegalCrystal Citation
CourtRajasthan High Court
Decided On
Case NumberCivil Special Appeal No. 30 of 1968
Reported inAIR1974Raj73; 1973()WLN408
ActsLimitation Act, 1963 - Sections 5; Code of Civil Procedure (CPC) , 1908 - Order 6, Rule 2; Contract Act, 1872 - Sections 23
AppellantKusum Chand and anr.
RespondentKanhaiyalal and anr.
Appellant Advocate M.B.L. Bhargava and; A.K. Bhandari, Advs.
Respondent Advocate D.P. Gupta, Adv.
DispositionAppeal allowed
Cases Referred(Churton v. Douglas
.....decided cases. the two concepts are, therefore plainly apart in their texture and composition.;(c) rajasthan premises (control of rent & eviction) act, 1950 - and contract act--section 23--'good will' & 'pagri' distinction between--claim beyond standard rent is against public policy & is inadmissible.;good will, therefore, is the totality of the advantages associated with the name and place of a business and carries with it the hallmark of dependability and reliability attracting customers and thus giving an initial 'edge to a man in commerce' over his other competitors. this facilitates the business & consequent probabilities of profits. it is this totality which has its mundane value in the realm of commerce. the word 'pagri' has come to acquire a peculiar connotation..........defendant for appeal. dissatisfied the defendants have preferred this appeal.3. mr. d. p. gupta, learned counsel for the respondents, raises a preliminary objection that the appeal is barred by time having been presented four days later than the time allowed for such an appeal. he further urged that if the learned counsel had cared to consult correct and authoritative sources, such as the rajasthan law times, he would have been able to ascertain what was the precise period of limitation. having failed to exercise due rare and caution the counsel's action cannot in law be considered as bona fide entitling the defendant the condonation of delay. he placed reliance on kasim khan v. chand ratan ilr (1952) 2 rai 782 = (air 1954 raj 25) and municipal board. lucknow v. kali krishna narain......

B.P. Beri C.J.

1. This is a defendants' special appeal directed against the judgment of a learned Single Judge of this Court dated July 25. 1967, whore-by he accepted the plaintiffs' case and granted a decree.

2. The brief facts which deserve to be recalled for the disposal of this appeal are that Gulab Chand carried on business in the name and style of Gulab chand Malpani at Mumbadevi. Bombay, which locality is reputed as a business centre for jewellery. Gulab Chand was a tenant of two rooms owned by Amba Laxmi Narain Gundeli on a monthly rent of Rs. 35/- apart from Municipal tax of Rs. 65/- for every half year. In St. year 2001. Gulab Chand says, he sublet these rooms to the defendants' firm carrying on business in the name of Chhaganlal Kantilal. It was agreed that besides the payment of rent to the landlord Chhaganlal would pay a sum of. Rs 700/- perannum to the plaintiff on account of goodwill. Up to the St. year 2004 and a part of St. year 2005 Chhagan Lal kept his promise and paid the amount but thereafter he neglected to do so. The plaintiff, therefore, instituted a suit in the court of the Civil Judge, Jaipur District on May 28, 1953 against Kantilal, proprietor of Firm Chhaganlal Kantilal for the recovery of a sum of Rs. 2100/- by way of goodwill and Rs. 543/15/- by way of rent and municipal tax and -/13/6- as notice expenses. The defendants admitted that they had obtained two rooms from the plaintiff on the monthly rent stated by him in St. year 2001 but added that no agreement had been reached with, regard to the payment of any 'good-will' money. It was also urged that the landlord stopped charging rent from July 15. 195] and further that a suit in regard to that property, did not lie in Rajasthan Courts.

The trial court decreed the plaintiffs suit on May 23, 1956. An appeal was taken in the Court of the District Judge, Jaipur District, who found that the Civil Judge had no jurisdiction on account of Section 28 of the Bombay Rent Control Act, 1947. The matter came before this Court and it was held that the Bombay Rent Control Act. 1947 had a limited applicability and could not oust the jurisdiction of the Rajasthan Courts. The case was remanded to the appellate court. The District Judge. Jaipur District heard the parties and dismissed the plaintiffs suit on August 29, 1961 for the payment of Rs. 2,100/- on account of 'goodwill' 'but passed a decree for Rs. 544/12/6. There is no dispute regarding the decree passed by the learned District Judge for the rent in the sum of Rs. 544/12/6. In the appeal which was preferred to this Court by the plaintiffs legal representatives, because the plaintiff had died by then, against the rejection of his claim in, the sum of Rs. 2,100/-, the learned Single Judge held that be cause the defendants had not produced their books of account and because the concept of goodwill included the premises the plaintiffs were entitled to the decree claimed by them. He, however, granted leave to the defendant for appeal. Dissatisfied the defendants have preferred this appeal.

3. Mr. D. P. Gupta, learned counsel for the respondents, raises a preliminary objection that the appeal is barred by time having been presented four days later than the time allowed for such an appeal. He further urged that if the learned counsel had cared to consult correct and authoritative sources, such as the Rajasthan Law Times, he would have been able to ascertain what was the precise period of limitation. Having failed to exercise due rare and caution the counsel's action cannot in law be considered as bona fide entitling the defendant the condonation of delay. He placed reliance on Kasim Khan v. Chand Ratan ILR (1952) 2 Rai 782 = (AIR 1954 Raj 25) and Municipal Board. Lucknow v. Kali Krishna Narain. AIR 1944 Oudh 135.

4. Mr. Bhargava urged that originally the period of limitation for special appeals was 60 days and it was altered to 30 days on June 17. 1965. Learned counsel appearing for the defendant was under an impression that it was two months. When he received the copy of the judgment on August 12. 1967 he Informed his client accordingly and the appeal was preferred on September 16. 1967 late by four days and, therefore, he claims that there is sufficient cause under Section 5 of the Limitation Act for condoning the delay. He placed reliance on the State of West Bengal v. The Administrator. Howrah Municipality, AIR 1972 SC 749. The learned counsel, Mr. Kasliwal engaged to prefer the appeal consulted the Rajasthan High Court Rules as amended up to 1963 and a copy of the High Court Rules published in 1967 edition of All Rajasthan Local Acts, Volume V. published by Shri Sarjoo Prasad and others and found that Rule 134 contained the period of limitation for special appeals as 60 days and he informed his client Kusum Chand accordingly. The affidavit of Kusum Chand corroborates it.

5. Quoting a decision of their; Lordships of the Privy Council In Kunwar Rajendra Singh v. Rai Rajeshwar; Bali, AIR 1937 PC 276, which held--

'Mistaken advice given by a legal practitioner may in the circumstances of a particular case give rise to sufficient cause within the section though there is certainly no general doctrine which saves parties from the results of wrong advice.'

the Hon'ble the Supreme Court came to the conclusion that 'if a party had acted in a particular manner on a wrong advice given by his Legal Adviser, he cannot be held guilty of negligence so as to disentitle the party to plead sufficient cause under Section 5 of the Limitation Act.' The affidavit filed by Mr. Kasliwal appears to be correct, if a reference is made to the All Rajasthan Local Acts published in 1967 which contains R. 134 without including the amendment. The counsel had consulted a reference hook and we cannot characterise his action as one without due care and caution. The counsel was only guilty of regulating his watch by a wrong clock. The action was nevertheless bona fide and therefore in these circumstances there is sufficient cause for condoning four days' delay in the presentation of the appeal. Learned counsel Mr. Gupta invited our attention to an unreported judgment, to which one of us was a party, that is D. B. Special Appeal No. 1700/70. The case is distinguishable. In this case it, was 7 years after the amendment had been made that the counsel continued to remain ignorant of the change in law and no affidavit was filed. Thus sufficient cause having been made out by the appellants in the appeal before us, we condone 4 days' delay in the presentation of the appeal and treat the appeal in time.

6. The first argument on the merits urged by Mr. Bhargava was that the plaintiff came to the Court on the basis that he was due to be paid Rs. 700/-per year on account of goodwill; that issues Nos. 1 and 2 were framed on that footing; that the trial court came to the categorical conclusion at page 35 of the paper-book that it was not a case of goodwill; that the first appellate Court also recorded a similar conclusion. The evidence led in the case was however in relation to 'Aadat'. His main grievance is that what was pleaded was not proved and what was allowed to be' proved was never pleaded and thus there is distinct variation between the pleading and the proof which is not permitted by law. He cited Siddik Mahomed Shah v. Mt. Saran AIR 1930 PC 57 (1); Trojan & Co. v. R M. N. N. Nagappa Chettiar AIR 1953 SC 235 and Bhagat Singh v. Jaswant Singh AIR 1906 SC 1861. Mr. Gupta with a certain amount of ingenuity endeavoured to say that, the claim which was made was not for goodwill but by way of 'Aadat'. He amplified his contention by urging that when the plaintiff was carrying on the business certain jewellers from Jaipur used to sell their goods at the plaintiff's premises in question and it was this practice which acquired a reputation for the goodwill whereof the plaintiff was claiming Rs. 700/- per year.

The observations of their Lordships of the Supreme Court in Trojan and Co's case AIR 1953 SC 235 are to the effect that the decision of a case cannot be based on grounds outside the pleadings of the parties and it is the case pleaded that has to be found. In Bhagat Singh's case AIR 1966 SC 1861 it has been observed, adopting the line of reasoning in Siddik Mahomed's case. AIR 1930 PC 57 (1) that where a claim has been never made in the defence presented, no amount of evidence could be looked into upon a plea which was never put forward. Consistency between the pleading and the proof has been insisted in the trial of causes not as a matter of mere procedural ritual. It has for its foundation the first principle of natural justice. Pleadings are intended to convey to the party opposite the precise claim and the grounds on which it rests so that the opposite party may be in a position to meet it if it can. A variation between pleading and proof causes surprise and confusion and, therefore, has been always looked upon with considerable disfavour. It has the inherent mischief of springing surprise on the party pitted against the claimant and this surprise the principles of natural justice do not countenance It defeats the very, purpose of pleadings.

A perusal of the plaint in the case before us shows that, the claim in the sum of Rs. 700/- per annum by the plaintiff was plainly founded on the allegation that it was by way of a goodwill. When the plaintiff, however, appeared in the witness-box as P. W, 5 he introduced the element of 'Aadat'. The word 'goodwill' has been written in Hindi script in paragraph 3 and twice in paragraph 5 of the plaint. The draftsman of the plaint did not even endeavour to translate the word 'goodwill' and the reason, probably was to eliminate any confusion in regard to the exact nature of the claim. When the issues came to be framed issue No. 2 was cast in the following language:--

'Did the defendant promise to pay Rs. 700/- per year as charges of goodwill for the two rooms to the plaintiff.'

Plaintiff Gulab Chand (P. W. 5) stated that it was settled between him and the defendant that latter will pay a sum of Rs. 700/- annually on account of the 'Aadat' for the house. It will be easy to appreciate that Gulab Chand had considerable fund of experience of commerce when he came to depose before the trial Court on January 5, 1955. The word 'Aadat' is of common use in commercial transactions and has a definite import. It is in the nature of a commission. The word 'goodwill' has a legal concept which despite its complexity is ascertainable on account of having received repeated authoritative enunciations in a series of decided cases. The two concepts are, therefore, plainly apart in their texture and composition. We say all this to negative the ingenious argument of Mr. D. P. Gupta built on the evidence where the two concepts have been endeavoured to be synthesised. We are, however, unable to agree with the existence of any such synthesis in this case. Firstly, because the plaint which has been drafted in Hindi could have very well employed the word 'Aadat' if that was the original intention of the contract between the parties instead of resorting to the English word 'goodwill'. It appears that after having said 'Aadat' the plaintiff tried to improve upon it by fusing it with the concept of goodwill later in his own deposition. The expression 'goodwill', we might recall from, the Halsbury's Laws of England, Third Edition. Volume 29, paragraph 715 at page 360, has the following meaning:--

'The goodwill of a business is the whole advantage of the reputation and connexion formed with customers together with the circumstances, whether of habit or otherwise, which tend to make such connexion permanent. It represents in connexion with any business or business product the value of the attraction to customers which the name and reputation possesses.'

7. In Inland Revenue Commr. v. Muller etc. Ltd. 1901 AC 217 at pp. 223-24, their Lordships observed as follows:--

'It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation and connexion of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old established business from a new business at its first start.'

And here we might observe that when the defendant started the business in the premises where the plaintiff was carrying on his business earlier he did so under a different name.

'The goodwill of a business means every affirmative advantage that has been acquired by the old firm in carrying on the business, whether connected with the premises of the business, in which the business was previously carried on, or with the name of the late firm or with any other matter carrying with it the benefit of the business.'

(Churton v. Douglas' (1859) 28 LJ Ch. 841 (845)). Goodwill, therefore, is the totality of the advantages associated with the name and place of a business and carries with it the hallmark of dependability and reliability attracting customers and thus giving an initial edge to a man in commerce over his other competitors. This facilitates the business and consequent probabilities of profits. It is this totality which has its mundane value in the realm of commerce. Here it will be relevant to remember that Gulab Chand's son-in-law Balkishan, who has appeared in this case as P. W. 8, has stated that the offered Rs. 2000/-to Rs. 3000/- by way of a lump sum 'Pagri' to his father-in-law which he declined to accept and preferred to receive a periodical payment of Rs. 700/-per annum from the defendant. The prospect of periodical payment displaced even the delicate relationship between P. W. 5 and P. W. 8. This gives us a deep insight into what the plaintiff was anxious to receive. The word 'Pagri' has come to acquire a peculiar connotation born of the paucity of accommodation in urban areas. It means a 'premium payable for the benefit of a roof on ones head. Thus it appears to us that in Mumbadevi which is a reputed centre of the jewellery, the defendant wanted two rooms, the plaintiff had them but he would not part with them unless he was paid something for this favour. It was no goodwill but just housing accommodation for business for which he was prepared to pay the price.

We might here consider also the argument on which great emphasis was made by the learned counsel for the respondent that the Jaipur jewellers used to go to this premises and pay certain commission to the plaintiff when he was carrying on the business. It was 2 per cent on the sales and. 'therefore he urges that it was this goodwill stemming from the transactions of those Jaipur jewellers that was sought to be equated to Rs. 700/- per annum. Assuming that it was so, we would have expected the plaintiff to have come out with such a simple case rather than springing surprise in the witness-box and that too in instalments. The trial Court as well as the first appellate court have found that the transaction was anything but that of goodwill. It was payment for sub-tenancy charges. That sub-tenancy charges is merely an euphemistic expression for 'Pagri'. The learned Single Judge, however, took the trouble of reappraising evidence in second appeal and came to the conclusion that it was a case of goodwill. We are afraid, we are unable to agree with him for the reasons which we have already indicated.

8. In the alternative the argument of the learned counsel for the appellant was that assuming it to be a case of goodwill fused into 'Aadat' then too the contract being opposed to public policy was not enforceable at law. Mr. D. P. Gupta raised an interesting question that the Rajasthan Premises (Control of Rent and Eviction) Act was limited in its applicability to the premises situate within Rajasthan as laid down by Section 2 thereof and the Bombay Rent Act could not apply because the contract was made in Rajasthan. It is| not necessary to examine this argument resting on conflict of laws because the question can be disposed of on the simple ground that any premium over and above the standard rent is opposed to public policy and cannot be enforced at law. Almost throughout India to regulate the relationship between landlord and tenant particularly in urban areas there are provisions Which lay down that any claim beyond the standard rent permissible under the law by whatever name called was prohibited. Public policy in such a situation can be easily gathered from the will of legislatures in various States and can be certainly taken notice of and on that ground the alternative argument of the appellant must succeed. The contract is void under Section 23 of the Contract Act

9. We accordingly accept the appeal and dismiss the suit in regard to the claim of Rs. 2,100/- both on the ground that the pleading and proof varied and also on the ground that such a contract is opposed to public policy. Because the defendant, who is the appellant before us, has denied even the existence of the contract and persisted in this untrue plea, we must deprive him of all thecosts despite his success. The costs in this case will be easy throughout.

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