1. The defendants who are called United Brokers sold 700 ordinary shares of the Steel Corporation of Bengal, Ltd., to the plaintiff-corporation. The sales were on 11th May, 1945 of 100 shares at Rs. 33-1-0 and 200 shares at 33-1-6, 100 shares at Rs. 33 per snare on 12th May, 1945, and 200 shares at Rs. 33 per share on 16th May, 1945. Besides these transactions of sale, the defendants took upon themselves the liability to deliver to the plaintiffs 100 ordinary shares of the same Steel Corporation at Rs. 31-11-0, which was an obligation of Messrs. Dalal & Co. The suit is to enforce specific performance of the contract to sell and, in the alternative for damages of Rs. 13,506-4-0, on the basis of the value of the shares at Rs. 52 per share on the date of the plaint. There is also a claim for the recovery of Rs. 612-8-0, being the dividend which has accrued due on the 700 shares. In addition, the plaintiffs seek payment of a sum of Rs. 484-6-0, being the amount due to them on statement of account, after giving credit to a sum of Rs. 500 which the defendants paid on 24th October, 1945.
2. The defendants have raised several pleas in answer to the claim. In the first place they say that Dr. Sir Alagappa Chettiar is not the sole proprietor of the plaintiff-firm as is alleged and that the suit is therefore not maintainable. The second contention which practically is the primary defence, is that the plaintiffs and the defendants were both acting as Brokers and were intermediaries for principals for the purpose of bringing about contracts between them and that therefore neither of them were parties to the contract for sale or purchase. The plaintiffs knew that the defendants were to get delivery of the shares from their sellers and that therefore there was no liability whatever either for specific performance or damages on their part until their sellers delivered the shares to them. The plaintiffs purchased some of the shares themselves and thus acted in breach of the contract between the parties, which was that they should act as the defendants' agents for sale to third parties. They are not liable for the dividends. The plaintiffs are not entitled to any damages, nor to specific performance.
3. It would thus be seen from what has been stated above and a study of the written statement that there is really no answer to the plaintiffs' claim for payment of the sum of Rs. 484-6-0 said to be due on account. As a matter of fact, when the plaintiffs sent a statement of account to them, for Rs. 984-6-0, on 18th October, 1945, the defendants forwarded a cheque for Rs. 500 on 22nd October, 1945, adding these words:
With regard to the outstanding transactions in Steel Corporations kindly wait till the next week when we shall arrange to square up the transactions.
The defendants did not plead that the statement of account was in any way wrong and that they were not liable for this sum of money.
4. At the trial, the plaintiffs abandoned their relief for specific performance of the contract to sell and for delivery of the shares. It is easy to understand why they did so. The shares were selling at Rs. 52 per share on the date of the plaint as alleged, there has been a fall in prices now and they do not want to take the shares at the current market rates. A partner of the defendants, who was the only witness examined on the defendants' side, was questioned by me whether he had any shares ready to be delivered to the plaintiff and he said that he had none because his customers had not given delivery of the shares to him. Moreover there is in the written statement a plea raised in paragraph 11 that the plaintiffs were not entitled to claim specific performance of a contract for the sale of shares. In view of this defence, the inability of the defendants to deliver shares to the plaintiffs if there was to be such a decree, and in view also of the fact that the plaintiffs are entitled even at the trial to elect whichever of the two remedies would be advantageous to them, the suit has to be treated, as matters stand-at present, as a suit for the recovery of damages. Viewed in this light, it was urged for the defendants that the breach of contract on the part of the defendants, if any, took place on the expiry of a week from the date of the contracts and as the plaintiffs have not adduced any proof that the price of the shares on the date of the breach was higher than the price or prices mentioned in the contracts, they must fail. This line of argument is not as formidable as it looks for it will be shown presently that though the time for delivery was mentioned in the contracts as a week, the time for performance was extended by agreement between the parties far beyond the period stipulated in the contracts and the breach, consisting in the failure to deliver the shares, was really a continuing one. The correspondence between the parties will be referred to presently.
5. As stated already, the main point taken by the defendants is that the action does not lie because the plaintiffs and the defendants were both brokers for third parties and the purchases were made by the plaintiffs in their capacity as brokers. In other words, the plaintiffs bought the shares from the defendants as their agents for the purpose of being sold on their behalf to third parties and that therefore they had no right to sue in their own name in respect of these contracts. It is also urged that the plaintiffs knew perfectly well, as would be seen from the correspondence, that the defendants themselves were in their turn agents of their customers for selling these shares. I am however of the opinion that there are no merits in this defence which is not sustainable either in law or on facts. In the first place while it is perfectly true that in the correspondence mention is made of the fact that the shares which the defendants sold to the plaintiffs were not got by them from the sellers and that the plaintiffs in their turn were taxing them with delay in delivery stating that the buyers from them who wanted the shares could not be put off any longer, both the parties to the contracts proceeded in the formation of the contracts as if they were the principals and not as if they were the agents of any one else. If there were principals, they were not disclosed on either side The contracts do not refer to the existence of any such principals or to the fact that the parties signed the contracts as agents on behalf of some others. D.W. 1, stated:
I looked to the plaintiff for payment of price and not to any buyer or buyers from him. Because he had not disclosed the price he must make good the transaction, if he does not pay the price I would ask him to pay in whatever manner he may adjust with his buyers.
6. These answers show how the parties dealt with each other. Where the agent does not disclose the name of his principal, there is a presumption that the agent can personally enforce the contracts entered into by him and that he is personally bound by them. There is nothing in this case to displace this presumption. The fact that the defendants were asking for time stating that their sellers did not deliver the shares, or the plaintiffs were pressing for the delivery of the shares stating that buyers from them would not brook further delay, does not alter the intrinsic nature of the contracts themselves.
7. This defence failing, there is little else that could be urged for the defendants in answer to this action. The defendants were repeatedly pressed to deliver the shares, that they had sold to the plaintiffs under the contracts and there were even threats by the plaintiffs of covering the sales by making purchases from third parties against the suit contracts. The defendants did not agree to the proposal and were telling the plaintiffs that they would deliver the shares as soon as they got them from their sellers and that the plaintiffs were not entitled to enter into any covering transactions. It is enough to refer in this connection Exhibit P-27 dated 18th October, 1945, under which the defendants were called upon to deliver the shares and were told that if they did not give delivery within four days, shares would be bought in the open market, and the reply of the defendants dated 22nd October, 1945, sending a cheque for Rs. 500 and asking the plaintiffs to wait till the next week by which date, they hoped to arrange to square up the transaction The plaintiffs gave the time required. Nothing was done and so there was the letter of the 9th November, 1945, Exhibit P-30, again demanding delivery, which met with the answer Exhibit P-31.
We have not yet received the relative documents from our sellers and we shall complete delivery, Of the same immediately we receive the same from our sellers. Please note that your clients, Messr s. Alagappa Corporation cannot cover our sales at the peak levels now existing. If however, they wanted to cover our sales, they should have covered our sales even on the eighth day from the date of the contract.
The last sentence in this reply does not come with any grace from the defendants who repeatedly asked for time to deliver the shares and got it from the plaintiffs. On 22nd December, 1945, the plaintiffs sent them a fresh contract form No. D-3391, in respect of the 700 Bengal Steels with a rate of Rs. 46 delivery to be on 25th December, 1945 ; but the defendants refused to accept the contract stating:
We shall deliver to you the 700 Bengal Steels at the original sale rates immediately the documents for 700 shares of Steel Corporations are received by us from our sellers.
8. There is the evidence of the Secretary of the plaintiff-corporation to the effect that Dr. Alagappa is the sole proprietor of the Corporation and that the price of shares on the date of the plaint was Rs. 52. This evidence is uncontradicted. D.W. 1, is not in a position to say that the price quoted was wrong and that on the date of the plaint it was lower than Rs. 52.
9. The claim have been restricted at the trial to damages, the defendants are not liable to give the plaintiffs the dividends received on the shares.
10. The findings on the several issues will be as follows:
Issues 1 and 2 : Dr. Alagappa Chettiar is the sole proprietor of the plaintiffs' firm and the suit therefore maintainable.
Issue 3 : The contract between the plaintiffs and the defendants in respect of the sales in Bengal Steels were as principals and not as brokers or agents.
Issue 4 : The defendants committed default in delivering the shares.
Issue 5 : The plaintiffs having given up the relief for specific performance are entitled to sue for damages.
Issue 6 : The suit is not bad for the grounds stated in paragraph 7 of the written statement.
Issue 7 : The plaintiffs are entitled to damages and the an3bunt of Rs. 13,506-4-0 claimed in paragraph 13 on the basis that each share was worth Rs. 52 on the date of the plaintiff is correct.
Issue 8 : The defendants are not liable to pay Rs. 612-8-0.
11. The plaintiffs will therefore have a decree for the said sums of Rs. 13,506-4-0 and Rs. 484-6-0 mentioned by me together with interest on the said amounts at six per cent, per annum from this date till date of realisation and costs.