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The Madras Consolidated Sugar and Spirit Factories, Limited Vs. William Sissmore Shaw and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported in(1904)14MLJ443
AppellantThe Madras Consolidated Sugar and Spirit Factories, Limited
RespondentWilliam Sissmore Shaw and ors.
Cases ReferredYarmouth v. France
Excerpt:
- - i am satisfied, especially after our attention was drawn to the evidence of mr. the arrangement itself when reported to the english company for its confirmation, having been disapproved of and repudiated by it (as stated in paragraph 6 of the plaint) so far at any rate as its liability to pay for the char, &c. a reference to paragraphs 4, 5 and 6 of the written statement clearly shows that the admission therein made by the defendant company is not of the release as set forth in paragraph 7 of the plaint, but of a novation by which the english company, in consideration of the defendant company releasing in from liability to pay the defendant the sum of rs. the defendant admits the arrangement referred to in paragraph 4 of the plaint, referring to the same as an 'agreement' and adds.....bhashyam aiyangar, j.1. this is an appeal by the defendant, a company incorporated under the indian companies' act against the judgment of boddam, j., decreeing a sum of rs. 89,421-0-5 (with interest) in favour of the plaintiffs carrying on business at madras under the name and style of parry & co. the said amount represents the value of a certain quantity of char, bones, &c.;, which along with other property movable and immovable, was agreed to be sold by the plaintiffs to the defendant company, under an agreement (exhibit d) dated the 1st december 1897. the learned judge has decreed the plaintiff's claim on the ground that the plaintiffs discharged the defendant company from its liability to them(sic) n respect of the sum of rs. 7,97,460-11-0--in-cluding the above item of rs......
Judgment:

Bhashyam Aiyangar, J.

1. This is an appeal by the defendant, a company incorporated under the Indian Companies' Act against the judgment of Boddam, J., decreeing a sum of Rs. 89,421-0-5 (with interest) in favour of the plaintiffs carrying on business at Madras under the name and style of Parry & Co. The said amount represents the value of a certain quantity of char, bones, &c.;, which along with other property movable and immovable, was agreed to be sold by the plaintiffs to the defendant Company, under an agreement (Exhibit D) dated the 1st December 1897. The learned Judge has decreed the plaintiff's claim on the ground that the plaintiffs discharged the defendant Company from its liability to them(sic) n respect of the sum of Rs. 7,97,460-11-0--in-cluding the above item of Rs. 89,421-0-5--by reason of a mistake, common to both the plaintiffs and the defendant. The mistake was in believing that the East India Distilleries' Company (incorporated under the English Companies' Acts 1862 to 1893) which under an agreement (Exhibit F), dated the 14 December 1897, purchased from the defendant Company all the property which the latter had acquired from the plaintiffs, was under a liability to the defendant company in the sum of Rs. 7,97,460-11-0 including the value of char, &c.;, (besides the price fixed in Exhibit F in respect of some immovable properties, &c.;), whereas, in truth and fact, according to the proper construction of Exhibit F, the value of the char, &c.;, was included in the fixed price above referred to and the English Company was liable to pay only Rs. 7,97460-11-0 less the value of the char, viz, Rs. 89,421-0-5. The English Company repudiated its liability to pay for the char, &c.;, separately; the matter was formally referred on behalf of the two companies to the arbitration of Mr. Davey in England and an award was made by him on the 4th October 1898 in which he held that the English Company's claim was right and that the value of the char was included in the fixed price and should be deducted from the sum of Rs. 7,97,460 as. 11-0 claimed by the defendant company. The learned Judge being of opinion that the plaintiffs could not have known of their mistake until the award was given, held that the suit was not barred under article 96 of the second schedule to the Limitation Act' the suit having been instituted on the 2nd October 1901; and he awarded the amount decreed as ' compensation' under Section 65 of the Indian Contract Act, for the loss sustained by the plaintiffs by reason of the release or discharge--which, on the 4th October 1898, they discovered to be void.

2. Both before the learned Judge who tried the case and before us in appeal, there was a great deal of discussion as to the pleadings in the cause and as to whether the plaint disclosed any cause of action and if so what and as to whether the written statement did not admit the release pleaded by the plaintiffs. Paragraphs 4 & 5 of the plaint are not as clear as one might wish, especially in the light thrown upon it by the evidence of Mr. Yorke, one of the plaintiffs, who are themselves tha managing agents of the defendant company the company being represented in this suit by Mr. Dick, its attorney, who is also Secretary to the Commercial Bank at Madras, which with the plaintiffs practically constitute the defendant company both having an equal interest therein. I am satisfied, especially after our attention was drawn to the evidence of Mr. Yorke that the word ' arranged' in paragraph 4 and the word ' arrangement' in paragraph 5 of the plaint were advisedly used, as in reality there was no ' agreement' in any legal sense of that term between the various parties therein referred to, viz., the Bast India Distilleries' Company, the defendant company, the plaintiffs and the Commercial Bank; the arrangement itself when reported to the English Company for its confirmation, having been disapproved of and repudiated by it (as stated in paragraph 6 of the plaint) so far at any rate as its liability to pay for the char, &c.; was concerned. I take it--and I believe that was the view taken by Boddam, J.--that the cause of action on which the suit is really based is that averred in paragraph 7 of the plaint, viz., that the plaintiffs released the defendant company from its indebtedness in respect of char, &c.;, under a mistake, shared in by the defendant company, as to the liability of the English Company to pay for the value of char, &c;, taken over from the defendant company under agreement F and in the mistaken belief that the English Company were prepared to take over the indebtedness of the defendant company to the plaintiffs in respect of the char, &c.; and that they are entitled to be relieved from the consequences of such mistaken belief. The contention that the release as pleaded in paragraph 7 of the plaint is, in fact, admitted in the written statement is quite untenable. A reference to paragraphs 4, 5 and 6 of the written statement clearly shows that the admission therein made by the defendant company is not of the release as set forth in paragraph 7 of the plaint, but of a novation by which the English Company, in consideration of the defendant company releasing in from liability to pay the defendant the sum of Rs. 7,97,460-11-0 including the value of char, &c;, agreed to pay the same amount to the plaintiffs and the plaintiffs, in consideration of the defendant company having procured the English Company to undertake to pay the amount to the plaintiffs, released the defendant company from its liability to them in the same amount. Leaving out the Commercial Bank--in regard to which there was a similar arrange ment from consideration, the defendant understands the arrangement referred to in paragraph 4 and the whole of paragraph 5 of the plaint, as an agreement between the three parties and refers to it as such in both paragraphs 4 and 6 of the written statement. If the defendant company is to be held bound by the admission in the statement, the admission certainly must be taken as a whole and not merely in so far as it relates to the release of the defend-ant company by the plaintiffs. The question is not whether the defendant company rightly construed the plaint, but what the so-called admission made by it in the written statement is. The defendant admits the arrangement referred to in paragraph 4 of the plaint, referring to the same as an ' agreement' and adds in paragraph 6 of the statement, that that agreement was acted upon and carried out, as alleged in paragraph 5 of the plaint, in which paragraph it is clearly stated that Rs. 7,97,460-11-0 was entered as the loan due by the East India Distilleries' Company to the plaintiffs, the same being the amount due by the defendant com-pany to the plaintiffs. If, as stated by the defendant, the entries and the transfers of the sums, referred to in paragraph 5 of the plaint were in accordance with an agreement to which the English Company was a party, the result of course would be that the suit could not lie, inasmuch as the defendant company, by reason of its release by the plaintiffs, has released the English Company from its liability to it in respect of the same amount; and admit-tedly the English Company was labouring under no mistake as to its liability under Exhibit F. It is in this view that the defend-ant pleaded that the suit was bad for nonjoinder of the English Company which was a party to the agreement. The so-called admission of the defendant therefore is really no admission, when taken as a whole, in favour of the plaintiffs, but realty a defence in bar of the suit based apparently on a pardonable misconception of the plaint and an ignorance of the fact that there was really no such agreement as the defendant company understood the plain-tiffs to aver in paragraphs 4 and 5 of the plaint. Indeed the learned Counsel for the defendant offered and applied for leave before the learned Judge to amend the written statement.

3. Proceeding now to the consideration of the merits of the case and of the cause of action as set forth in paragraph 7 of the plaint,

4. I am satisfied, upon the evidence in the case, that the plaintiffs have entirely failed to prove that the defendant was in fact or in law discharged or released from liability to the plaintiffs, in respect of the sum of Rs. 7,97,460-11-0, or any part thereof, by reason of any undertaking of such liability by the English Com-pany. On the contrary the evidence conclusively establishes that the English Company all along regarded and treated the defend-ant company as its creditor in respect of the amount payable to it under agreement F and that the defendant company was never discharged either in whole or in part from its liability to the plain-tiffs by any release or novation, but that the indebtedness of the defendant company to the plaintiffs under Exhibit D was in fact discharged to the extent of the difference between Rs. 7, 97, 460-11-0 and Rs. 89, 421-0-5 (the amount now sued for), only by the plain-tiffs--who were also the managing agents of both the English Company and the defendant company--appropriating towards the amount due to them by the defendant company the payments and remittances made by the English Company in discharge of its liability to the defendant company under Exhibit F. If therefore the defendant company was indebted to the plaintiffs under Exhibit D in the sum of Rs. 7,97,460-11-0 for which a pro-note (Exhibit C) bearing date the 31st October 1897 was taken by the plaintiffs from the defendant company on the 23rd January 1898--the defendant's liability under Exhibits D and C would, subject to the law of Limitation, have been a subsisting one, at the date of the suit, to the extent of Rs. 89,421-0-5, the amount sued for,--the balance having been paid to the plaintiffs by the English Company on behalf of the defendant company.

5. The material portion of the evidence of Mr. Yorke, on the question of the defendant's release is to the following effect:

6. The consolidated (defendant company) had been debited in its books with seven lakhs and odd in Parry's favour. After the arrangement of Exhibit F its liabilities were transferred to the E.I.D. Company. Loan accounts were opened in Parry's books and corresponding accounts in the books of the East India (kept here by the plaintiffs as its managing agents). The East India could not have consented to accept the liability of the Consoli-dated until the East India was itself actually formed. The circumstances of the whole affair are rather peculiar and the exact date of the East India's consent could not be given. Witness does not know whether between December 1897 and June 1898 there was any document showing the consent of the E.I.D. to take over the liabilities of the Consolidated. Witness himself was not in England any time between December 1897 and June 1898. He did not during that time consult any member of the E.I.D. with regard to the acceptance of the liability, nor is witness aware of any letter of his written during that period to Mr. Murray (the Secretary of the East India as well as the London Agent of Parry & Co.) about the consent of the East India to accept the responsi-bility of the Consolidated. Witness had no conversation either, with any member of the East India, about that matter. Witness could not find any minute of the Consolidated Directors, trans-ferring the indebtedness of the Consolidated to the East India, nor is there any resolution to that effect. Witness does not recollect whether parry & Co., as vendors, ever wrote to the consolidated asking the latter to consent to the transfer, nor whether there is any resolution in the books of the consolidated, discharging it from its liability. The books of the consolidated contain no entry regarding the transfer of its indebtedness to the East India Distil-leries. Witness does not know (or is not prepared to say) on what date or in what month or year, the Consolidated was discharged by the plaintiffs. Witness himself never used the word ' dis-charged' to his legal advisers, nor could he say what was released and what was not. Witness does not know of any discharge in fact. This discharge is purely a legal fact and witness does not know when the legal discharge took place.

7. Turning now to the entries in the account books, the matter stands thus :--In M 1--the defendant company's book--the plain-tiffs are on the 31st December 1897 credited with Rs. 7,97,460-11-0 and by a corresponding entry in the plaintiffs' book (Exhibit 130 the defendant company is debited with the same amount. On account of losses sustained in the working of the defendant company (by the plaintiffs and the Commercial Bank) before its business was transferred to the East India Company, a sum of Rs. 74, 597-2-2 (being one-half of the total loss) was debited to the plaintiffs in M 1 and credited to the defendants in Exhibit 130.

8. This amount was deducted (after the same had been ascertained apparently about June 1898) from the above sum of Rs. 7, 97, 460-11, both in M 1 and 130, leaving a balance of Rs. 7, 22, 863-8-10. The defendant company's book was closed with this and no subsequent entries appear there. In the plaintiffs' books, however, the sum of Rs. 7,97,460-11-0 was carried over to the next year's account under date the 1st January 1898 (Exhibit DD) under the heading of the defendant company. This heading, however, was subse-quently scored out and the name of the ' E.I. Distilleries' Com-pany,' appears there in pencil; the figure 7, 97, 460-11-0 has been altered into 7, 22, 863-8-10. Mr. Knight, as plaintiffs' second wit-ness, says, in explanation of this--' The alteration was made in my own writing because the heading was wrongly made by the clerk. I can't give the exact date. When I examined the entry, I found the wrong entry in the ledger. The balance (Rs. 7, 97, 460-11-0) might have been brought forward two or three months after the 1st January it was altered into Rs. 7, 22, 863-8-10 about June 1898.' In the corresponding accounts of the E.I.D. Com-pany (Exhibit P2)--kept by the plaintiffs here--the plaintiffs are credited with the sum of Rs. 7, 22, 863-8-10 under date the 1st January 1898., Here too, as in DD, there is a scoring out of the figure Rs. 7, 97, 460-11-0, which has been altered to Rs. 7, 22, 863-8-10. If in reality there had been a discharge of the defendant's liability by the English Company undertaking the same, it is remarkable that instructions should not at once have been given to the clerk not to continue the account (in 1898) in the name of the defendant company and that the clerk should have been left to continue the account in that name and that the mistake should have been discovered only casually, some time afterwards, by Mr. Knight. Further, if it had been intended to discharge the defendant com-pany of its liability to the plaintiffs, an entry would surely have been made in Parry & Co's books crediting the defendant company with the amount and a corresponding debit entry made in the defendant's book. No such entry, however, appears in Exhibit 130 or Exhibit Ml or anywhere else and in fact the matter was left unadjusted so far as the accounts go. Mr. Knight's explanation that that is the usual method of book-keeping is really no explanation at all, if, in truth and fact, a discharge was really intended That no discharge--in any legal sense of the term--was ever intended receives farther corroboration from the fact that no discharge had been endorsed on the defendant company's pro-note, Exhibit C. Nor is it at all likely that the plaintiffs would have discharged the defendant company before the English Company--of which the plaintiffs were the managing agents--had signified its acceptance of the defendant company's liability to the plaintiffs in the sum of Rs. 7,97,460-11-0. The above entries in the accounts were no doubt made in the usual course of business under the belief that the indebtedness of the English Company to the defen-dant company on account of the articles to be paid for on valuation (under Exhibit F) was the same as that of the defendant company to the plaintiffs and; as stated by Mr. Yorke in his evidence, that the English Company would take the liability including the char and that instead of making a two-fold entry, first in the defendant's book crediting the English Company with the amount and then in the plaintiffs' books crediting the defendant company with the same, the matter might be adjusted by a single entry in the plaintiff's books (of course with a corresponding entry in the English Company's books kept by the plaintiffs here), crediting the English Company with the amounts paid--thus practically discontinuing entries in the defendant's book. That this was all that was really intended, clearly appears from Exhibit 9, dated (so late as) the 12th Septem-ber 1898--being a letter from Parry & Co. as managing agents of the defendant company to Mr. Stranack, one of the directors of the defendant company and Secretary to the Commercial Bank. There was thus in reality no transfer--in any legal sense--of any debt or liability, operating as a discharge or release of the defen-dant's liability. I may here mention that a transfer by a debtor to his creditor, of a debt due to the former, cannot operate as a discharge of his debt, unless the transfer is accepted as a satisfaction of the debt and not merely as a means whereby the creditor, on realization of the debt assigned to him, may appropriate the same towards the debt due to him from his original debtor (vide Section 134 of the Transfer of Property Act). The transfers made (in the various sets of books) by the plaintiffs, who were the managing agents of the English Company, were, as understood by the parties themselves, made subject to and in expectation of their being approved and confirmed by the company--in the mistaken belief, no doubt, that the company was, under Exhibit F, bound to pay separately, for char &c.; If the plaintiffs, as managing agents, had legal authority to bind the English Company by their act, the English company would of course be bound thereby and it could not have repudiated, as it did, its liability in respect of char. But if the plaintiffs had no such authority--and this is conceded--their acts can land their principles only if they ratify the same. And it is clear law that there can be no ratification of a, part of the agent's act except in the sense that it is a ratification of the whole (vide Indian Contract Act, Section 199, Story on Agency, Section 250). That the English Company did not ratify the whole is of course clear and is conceded. It seems to me therefore impossible to hold that there was any novation whereby the liability of the English Company was substituted for that of the defendant company even to the extent of the admitted liability of the English Company to the defendant company under Exhibit F or the defendant company discharged by the plaintiffs either in whole or in part. There is nothing in Exhibit S to which our attention was specially drawn by the learned Counsel for the respondent--which militates against this view. At the most all that can be contended is that after the English Company had repudiated its liability to pay separately for char, &c; and such repudiation had been upheld by the arbitrator, the English Company undertook the defendant's liability to the extent of the admitted sum, the liability of the defendant company to the plaintiffs, for the balance of Rs. 89,000 and odd remaining as before. As regards the remittances made by the English Company from time to time, in liquidation of its indebtedness to the defendant company, it may be taken that the appropriations thereof, made by the plaintiffs towards the debt due to them by the defendant company, were ratified by the English Company. In my opinion, however, there was, even after the award, no novation or transfer in law to the plaintiffs, of the admitted indebtedness of the English Company to the defendant company. The taking of the pro-note (Exhibit C) from the defendant company on the 23rd January 1898 is quite incompatible with any transfer prior thereto, of its liability or any discharge of such liability. The explanation given that the Commercial Bank wanted a pro-note (for the debt due to it by the defendant company) as a voucher and. that the plaintiffs also therefore took a similar pro-note (for the amount due to themselves) antedating the same to the 31st October 1897 affords no explanation for a pronote being given after the debt for which it was given had been discharged and that, with no endorsement of discharge thereon. If really the pro-note was required merely as a voucher for purposes of audit, there was no reason why the discharge should not have been endorsed thereon, if really there had been any such, by the transfer of the liability to the English Company.

9. That there was no novation in any sense or any transfer of liability is conclusively established by the fact that the English Company regarded and dealt with the defendant company as its cre-ditor, even as late as October 1898, when the question of its liability to pay for char separately was referred to arbitration.

10. In reply to Exhibit 124, dated the 12th May 1898, in which the valuation of the stocks by Parry & Co., was sent to the English Company, including therein the value of Char &c.;,--the Secretary to the English Company in his letter (Exhibit 2), dated the 29th July 1898, informs the plaintiffs of the resolution of the company that it is not bound to pay for the char separately, requesting them to communicate that decision to the defendant company--its vendors. The plaintiffs, in their reply (Exhibit 8), dated the 25th August 1898 to this letter, maintain the position that the English Company is bound to pay separately for char and express their willingness to have the matter referred to the arbitration of some independent party to be approved by their attorneys in England. It is evident that this letter was written by the plaintiffs on behalf of the defendant company--of which they were the managing agents--and they also point out in the letter that the reference already made by the English Company to Messrs. Newlands Brothers was not one to which they or their attorneys were parties. Exhibit 10, dated the 16th September 1898,is the reply (to this) ad-dressed to the managing agents of the defendant company informing them that their letter (Exhibit 8) of 25th August will be placed before the Board (of English Company) at its next meeting and intimating that the reference to Newlands Brothers was made only in accordance with the wishes of the attorneys of the defend-dant company. The resolution of the Board, dated the 28th Sep-tember referring the matter to the arbitration of Mr. Davey, with the assent of Mr. Herbert the English attorney of the defendant company (vide Exhibit 12), as well as the reference to and the award of, Mr. Davey was communicated to the plaintiffs as managing agents of the defendant company by Exhibit 14, dated the 7th October 1898. The award was in favour of the English Com-pany and it is significant that two of the Directors of the defen-dant company, who were then in England, Messrs. Shaw (the 1st plaintiff) and Orr, sent a letter (Exhibit 11) dated the 27th Septem-ber 1898, before the reference was made to Mr. Davey, to the defendant company, conveying their opinion that the contention of the English Company in the matter was right and stating that the English attorneys of the defendant company were parties to the reference to Newlands Brothers and that it was highly undesirable in the interests of the defendant company to endeavour to reopen the question even if such a course was possible. It also appears from Exhibit 9, dated the 12th September 1898, that the Secretary to the English Company desired its managing agents--the plaintiffs--to obtain receipts from the defendant company for payments made by the English Company in respect of stocks pur-chased from the defendant company.

11. If the defendant company had been discharged and its liability to the plaintiffs undertaken by the English Company, it is incon-ceivable that Exhibit 8 would have been dealt with as a communi-cation made on behalf of the defendant company, or the dispute submitted to arbitration as. one between the English Company and the defendant company. The parties to the arbitration were only the two companies, neither the plaintiffs nor the Commercial Bank being made parties thereto and the award would not have bound the plaintiffs--if really the delt due by the English Company to the defendant company had been transferred to them. Exhibit 11 also shows that two of the Directors, at any rate, of the defendant company considered that the defendant company was then the creditor of the English Company. These circumstances and the fact that the English Company desired the plaintiffs to obtain receipts from the defendant company completely negative the theory of novation and with that, the alleged discharge or release of the defendant company by the plaintiffs necessarily falls to the ground. Even assuming that there was a release or discharge of the defendant company as pleaded in paragraph 7 of the plaint, the suit is, in my opinion, clearly barred by the Law of Limitation under Articles 96, 52 and 73 of the second schedule to the Limitation Act. As regards article 96 it is impossible to accede to the contention that the mistake as to the extent of the English Company's liability must be taken to have been discovered only on the date of Mr. Davey's award (Exhibit W) viz., the 4th October 1898--though the plaintiffs themselves were no parties thereto. The mistake which led to the release of the defendant company in respect also of the value of char, &c.;, is, as alleged in paragraph 7 of the plaint, the supposition by the plaintiffs and the defendant company that under Exhibit F the English Company was liable to pay separately for char, &c.;, taken over from the defendant company and the belief that the English Company was prepared to take over the indebtedness of the defendant company to the plaintiffs in respect of such char, &c.; Assuming that such a mistake on the part of Mr. Yorke should be treated as the mistake of all the plaintiffs and that it would therefore render the lease void under Section 20 of the Contract Act, the mistake must be taken to have been discovered on or about the 15th August 1898 at the latest when Exhibit 2, dated the 29th July 1898, would in the ordinary course have reached Mr. Yorke, communicating the decision of the English Company that it repudiated its liability to pay separately for the value of char, &c.; In fact, the mistake must, in law, be taken to have been discovered on the 2lst June 1898--the date of Exhibit 3--when Mr. Shaw (the 1st plaintiff who was then in England) knew that the English Company objected to its having to pay separately for char, &c.; and wrote to Mr. Yorke (in Madras), who, he knew, was labouring under a mistake that he (Mr. Shaw) had always entertained the opinion that char, &c;, was included in the fixed price. If in a case in which the right of action is in two or more partners, one of them discovers the mistake, by reason of which a contract--in respect of which relief is sought--has been entered into by another of the partners, on behalf of the partnership, the period of limitation prescribed. by Article 96 will begin to run from the date of such discovery notwithstanding that the latter partner chooses to persist in his mistake, even after the mistake is pointed out to him by the other. In the present case even after the receipt of Exhibits 2 and 3, Mr. Yorke, as agent of the defendant company, addressed a letter (Exhibit 8) to the Secretary to the English Company maintaining his former mistaken position and demanding a reference to an independent arbitrator. The argument that the repudation by the English Company, communicated to the plaintiffs by Exhibit 2, should not be taken as final, but only provisional pending the reference to arbitration proposed in Exhibit 8 and acceded to by the English Company (vide Exhibit 14) and that therefore the mistake should be taken to have been discovered only when Mr. Davey's award was made, is entirely inadmissible. So far as the English Company was concerned, the repudiation (in Exhibit 2) was distinct and final, though notwithstanding such repudiation the defendant company maintained its own position. In the ordinary course of things, the dispute would have necessitated recourse to a court of law, but in lieu of it the parties agreed to submit it to arbitration, the award wherein binds the parties, sub-stantially in the same way as a judgment of court, but so far as the plaintiffs--who were no parties to the submission to arbitration--are concerned) it is difficult to see on what principle the date of Mr. Davey's award can give them a starting point of limitation. No doubt, as between the parties thereto, the period of limitation for a suit to enforce or set aside the award will begin to run from the date of the award. But so far as the plaintiffs are concerned, it would have been perfectly open to them to have sued the English Company the very next day after the award for the value of char, &c;, if, as alleged by them, they had become the transferees of the defendant company's claim (under Exhibit F) against the English Company and in such a suit the plaintiffs would not have been bound by Mr. Davey's award and would have been entitled to a decree if the Court accepted Mr. Yorke's construction of Exhibit F. In the present suit likewise the defendant company would not, for the like reason, be bound by Mr. Davey's award, if a question had been raised as to the right construction of Exhibit F and the Court should hold that, under that agreement, the English Company was liable to pay separately for char, &c.; Mr. Yorke was fully in possession of all the facts as to the discovery of the mistake, as early as July and August 1898, but if in spite of it he persisted in his mistake, he must take the consequences and the operation of the law of limitation will not be postponed for him.

12. Even if the 4th October 1898 be taken as the date of discovery of the mistake and therefore the starting point for limitation under Article 96, the suit so far as it seeks to recover from the defendant company the sum of Rs. 89, 421-0-5--whether this be regarded as the balance due under the agreement (Exhibit D) or the promissory note (Exhibit C)--is clearly barred under Articles 52 and 73 of the Limitation Act, though the suit may be within time so far as the setting aside of the alleged release is concerned. The relief contemplated by Section 65 of the Contract Act and Article 96 of the Limitation Act is that the party prejudiced by the mistake should be relieved from the consequences thereof. In the present cise the direct consequence of the mistake was the alleged release of the defendant company and the plaintiffs would be entitled to be placed in the same position as they would be in if there had been no release and also compensated for any loss which may have necessarily resulted from the mistake. The question, therefore, is whether the sum sued for was lost to the plaintiffs by reason of mistake or whether the same has been lost by reason of their laches even after the discovery of the mistake, on the 4th October, 1898. If at the time of the discovery of the mistake the remedy of the plaintiffs against the defendant company to recover the debt which had been released by reason of the mistake, was not barred, the plaintiffs could not be regarded as having by reason of the mistake lost the money due to them and they could therefore claim no com-pensation for loss sustained; the only relief they would be entitled to, on the score of mistake would be a declaration that the release is void and should be cancelled (if in writing). If, however, the plaintiffs' remedy had become barred at the date of the discovery of the mistake, they could no longer have sued for the recovery of the debt and such loss being the necessary result of the mistake, relief against the mistake would comprise not only a cancellation of the release, but also compensation for the loss. Even if the mistake is taken to have been discovered on the 4th October 1898--the date of the award--the plaintiffs' remedy against the defendant company, whether under Exhibit D or Exhibit C, was not then barred and they had nearly two years thereafter within which they might have instituted a suit to have the release declared void in toto or inoperative, so far as the claim for char was concerned and to recover the sum now sued for. If at the date of the present suit their claim under Exhibit D or C is barred, the loss is the result not of the mistake, but of their own laches, after the discovery of the mistake. The sum of Rs. 89, 421-0-5 claimed by the plaintiffs in the present suit cannot therefore be awarded as ' compensation ' for loss sustained by reason of the alleged mistake, within the meaning of Section 65 of the Contract Act and Article 96 of the Limitation Act but only as balance of the price or debt due under Exhibit D or C if the recovery of the same had not already been barred by limitation.

13. Article 97 of the Limitation Act has no application whatever to the present case, for in no view can the plaintiffs be regarded as suing for the recovery of money paid by them to the defendant company upon an existing consideration which has afterwards failed. In Bassu Kuar v. Dhum Singh I.L.R. 11 A. 47 which was relied upon on behalf of the respondent, the debtor was allowed to retain the debt due by him as part of the purchase money pending the completion of an agreement for sale of lands by the debtor to the creditor. The Privy Council held that the debt so obtained was real part-payment of the consideration for the sale and that a suit by the vendee-creditor to recover the amount on failure of the sale (by the decree of the Appellate Court in a suit for specific performance brought by the debtor-vendor against the creditor vendee) was governed by Article 97 of the Limitation Act and having been brought within three years from the date of the decree was not barred. The decision of the Privy Coun-cil in Hanuman Kamat v. Hanuman Mandur I.L.R. 19 C. 123 relied on on behalf of the appellant, is also a decision on Article 97; and neither of these decisions has any bearing upon the question of limitation arising in the present case. The latter case, however, lends some support to the appeallant's contention that the plaintiffs must be taken to have discovered the mistake when the English Company repudiated its liability to pay for char, &c.; It was also urged on behalf of the respondents that the suit might be viewed as one for damages for breach of implied warranty by reason of the defendant company having assigned and transferred to the plaintiffs a larger debt than was really due to it from the English Company. I have already stated at sufficient length that there was no transfer or asignment in law of any debt due by the English 'Company to the defendant company. Even in the view contended for, the breach of warranty would have occurred at the date of the transfer and the suit would bo barred under Article 115 and would not be governed by the six years' rule of limitation prescribed by the residuary Article 120.

14. On the question, which was argued to considerable length on both sides--as to whether the defendant company is really liable to pay separately for char, &c.;, under Exhibit D,--if the English Company was not so liable under Exhibit F,--I am of opinion that, according to the right construction of Exhibit D, the defendant company was not so liable and that, in regard to Exhibit D, both the plaintiffs and the defendant company acted under the same mistake as in regard to Exhibit F. If the plaintiffs are entitled to relief as against the defendant; on the ground of mistake, the defendant company is equally entitled to counter-relief in respect of the mistake, under which it undertook to pay separately for the char, &c.; and gave a pro-note including the value of char, &c.; In the amalgamation agreement Exhibit A 'stores' were included in Clause (b) of paragraph 5, but in the corresponding clause, paragraph 1 secondly, of Exhibit D, that term is omitted. Whether the omission was accidental or intentional does not, in my opinion, make any difference as to the question whether the char, &c;, should be paid for separately or its value is included in the fixed price. Both under Exhibit A (paragraph 5, Clause (d) and under Exhibit D (paragraph 1 fourthly) 'all stocks of sugar, raw or refined, jaggery, spirits, molasses, coal, coke and other stocks used in connection with the business,' were to be valued and paid for separately. These are referred to as 'stock-in-trade' both in Exhibit A (paragraph 9) and Exhibit D (paragraph 3). There is no evidence in the case to show that ' char, &c.;,' has any technical or provincial moaning. 'Char, &c.;,' are used as aids to the manufacture of sugar and are not intended for sale. They are not therefore ' stock-in-trade' and cannot be comprised in the expression 'other stocks' occurring in 'paragraph 1 fourthly'of Exhibit D. I therefore hold on the authority of Re Richardson1 44 L.T. 404 that 'char, &c.;,' are not 'stocks' (see also per Lindley, L.J., in Yarmouth v. France 19 Q.B.D. 647 vide the term 'stock in trade' in Stroud's Judicial Dictionary) and cannot therefore be required to be separately paid for. In Exhibit A they will properly be included in the term ' stores' occurring in Clause (b) of paragraph 5 and in Exhibit D in the expression 'all other property' occurring in ' paragraph 1 fifthly'--as the term ' stores' is omitted in paragraph 1 ' secondly' whether accidentally or intentionally. In Exhibit F--which was executed in England on the 14th December 1897, before D could have reached England--the term ' stores' is reproduced from A in Clause (b) of the 1st and 2nd Schedules thereto, Clause (d) being identical with paragraph 5, Clause (d) of Exhibit A and paragraph 1 ' fourthly' of Exhibit D (already referred to). Not-withstanding that the word ' stores ' is specifically included in Clause (b) of Schedules 1 and 2 to Exhibit F, in the list of articles not to be paid for separately. Mr. Yorke and the defendant company maintained, though unsuccessfully, that under Exhibit F, ' char, &c; ' should be paid for separatey as coming under the head of 'stocks' and this is the very identical mistake under which they laboured with reference to Exhibit D. Having regard to the conduct of the parties, I find it impossible to conclude that in giving effect to A (the amalgamation agreement), they in any way intended to vary the same in Exhibit D as to the items to be included in the fixed price and those to be paid for separately on valuation. Had there been any such intention, the recitals in the preamble to Exhibit D would not have run as they now do, vide also paragraph 6 of the proceedings of the defendant company, dated 19th October 1897); on the contrary it would have been expressly recited that the amalgamation agreement was being carried out with a variation (in regard to the matter in question) as agreed to between the parties. Further, if the term 'stores' had been omitted in para-graph 1 'secondly' of Exhibit D, in order that the same might be included among the articles to be valued and paid for separately, one would expect to find ' stores' transposed to and included in paragraph 1 'fourthly' just as 'molasses, coke and coal' which are only aids to the manufacture and not 'stock-in-trade' are included there, as also in paragraph 5, Clause (d) of Exhibit A. If there was any such intention and it was supposed that the intention was effectuated by the omission of the word ' stores' in Exhibit D, it is also inconceivable that in transferring the business from the defendant company to the English Company, care would not have been taken to omit that word in Exhibit F also. The truth, is that

15. Mr. Yorke and the defendant company and the Commercial Bank were all along under a common mistake that, under all the agreements, via., Exhibits A, D, E and F, ' char, &c.;' was among those items to be paid for separately, as 'stock'--though Mr. Shaw and two of the directors of the defendant company were all along of a contrary opinion (vide Exhibit 11)--and the mistake in respect of Exhibit F cannot be distinguished from the mistake in respect of Exhibit D. The result therefore is that if the plaintiffs released or discharged the defendant company from their liability to pay for char, &c.;, under the mistaken belief that the English Company was liable to pay for the same under Exhibit F, the release was really in respect of a non-existent liability, which, however, the parties erroneously supposed to exist. In this view also the plaintiffs' suit fails.

16. The questions as to what are mistakes 'of fact' and 'of law' within the meaning of Sections 20 and 21 of the Contract Act, whether a mistake in the construction of an instrument is ' a mistake of fact' or ' of law' and whether independently of the Contract Act, relief can be given against mistakes of law--with reference to Section 21 (h), 26 (a), (b) and (d), 28 (c), 31, 33 and 36 of the Specific Relief Act and other equitable principles--and if so, in what cases, are points of considerable difficulty and import and as the question does not really arise in the case and the materials on record with reference to which the question has to be decided are imperfect, I refrain from considering the cases cited and expressing any opinion on the point.

17. I would therefore allow the appeal with taxed costs and reversing the judgment appealed against, dismiss the suit with taxed costs. Having regard to the length and importance of the case the costs will include the cost of the English Commission and of interlocutory applications the costs of which were to be costs in the case. Costs throughout will be allowed on the higher scale admissible under the rules and two counsel throughout.

Benson, J.

18. I concur throughout.

Russel, J.

19. I concur with the main conclusions and the reasons given therefor, arrived at by my learned colleague in the judgment just read.

20. I do not, however, agree with the construction which has been placed on Exhibit D as to the liability or otherwise of the defendant company to pay separately for ' char.' In my opinion, under Exhibit D, the parties deliberately arranged and contracted that 'char' should be paid for separately and the document is legally capable of being interpreted in that sense. I will not labour the point further than merely to express my opinion. The point is not now material in this case owing to the views taken by the Court as regards the other portions of the case. I desire, however, to express myself as being strongly of opinion that it would be a great misfortune if mercantile people or others were led to entertain the view that a document deliberately drawn up and acted upon could be readily set aside at the instance of either in a court of law.


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