Skip to content


Amichand Nagindas and Co. and ors. Vs. Raoji Bhai Moti Bhai Patel and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil;Contract
CourtChennai
Decided On
Reported inAIR1930Mad714; (1930)58MLJ613
AppellantAmichand Nagindas and Co. and ors.
RespondentRaoji Bhai Moti Bhai Patel and ors.
Cases ReferredRamdoyal v. Jimmetyijoy Coondoo I.L.R.
Excerpt:
.....that in a case like this the plaintiffs cannot get their shares fixed nor get an account of the profits without making chunilal, lakshmichand and maoji bhai parties to the suit. grant points out, lays down that no suit shall be defeated by reason of the misjoinder or non-joinder of parties, and the court may in every suit deal with the matter in controversy so far as regards the rights and interests of the parties actually before it. that rule enables the court, and makes it the duty of the court, to make a decree between the parties actually before it, if that can legally and effectively be done. he expressed a strong opinion upon the real character of the enterprise. apart from this view of the case, the evidence at the trial would not, in my opinion, justify a finding that the..........raised by the defendants in this appeal.6. a more serious objection in my opinion is that to this decree chunilal, lakshmichand and maoji bhai have not been made parties. as i have said, beasley, j., accepted the defendants' case that there was a contract between the defendants, the plaintiffs, chunilal, lakshmichand and maoji bhai that they should take part in this expedition and that the profits should be divided in the proportions i have named. if that is so, how can a decree now be made for an account to which chunilal, lakshmichand and maoji bhai are not parties? if all these persons were partners, it is not disputed that no such decree could be made in the absence of those three persons. it is well known that a suit for account cannot be maintained between some only of the.....
Judgment:

Reilly, J.

1. In this case the plaintiffs, who are two brothers, sued for arrears of salary at Rs. 100 each for a certain number of months and for a commission of 2 per cent, as their remuneration for services rendered to the defendants in connection with an expedition sent in 1919 to Saigon and Singapore for the purchase of gold, which was to be brought into India. The learned Chief Justice, who tried the suit as Beasley, J., found that the plaintiffs were not entitled to the remuneration which they claimed, but that they were entitled to a share in the profits of this gold importing venture. He found that a certain number of people were concerned in the venture and that of the profits made in it the defendants themselves were entitled to one half, the plaintiffs 50-115ths of the remaining half. One Chunilal was entitled to 31-115ths, one Lakshmichand to 17-ll5ths, and one Maoji Bhai to 17-115ths of the second half; and on that basis he made a decree that the defendants were entitled to one half of the profits and the plaintiffs to 50-115ths of the other half. He referred the matter to the Official Referee for a report what those shares amounted to. The defendants have appealed. The plaintiffs, although they did not get what they had sued for, have not filed any cross appeal.

2. The defendants have raised three objections before us at the hearing of this appeal with only two of which I think it is necessary now to deal. The first objection is that this expedition for importing gold had an illegal object; the contract between the parties and any body else who was concerned in it was unlawful, because its object was that gold bought outside India should be brought into British India, and it happened that at the time with which we are concerned that was prohibited by the Government of India under Act II of 1916. The learned Advocate-General has urged before us that, if that was the object of the contract, then, even if that object was not entirely fulfilled by gold being brought into British India, it was an unlawful contract and the plaintiffs are entitled to get no relief from the Court in connection with it. In this judgment, Beasley, J., has referred in several places to this matter. In one place he says:

In my view this expedition had only one object and that was to get gold which could be purchased very much cheaper outside British India into British India.

3. Again

There is very little doubt in my mind that this was a gold smuggling expedition.

4. Again

These observations apply equally to the 2nd plaintiff, to Roopchand, to Lallubhai and to Chunilal, all of whom were clearly engaged in a smuggling enterprise

and again,

I can well understand that, as this was a smuggling enterprise, it would not be considered advisable to reduce any of the terms of the agreement into writing.

5. Those are strong expressions of opinion. But I think it is quite clear that Beasley, J., did not arrive at any definite finding that the object of this contract was unlawful, as, if he had, he could not have made the decree which he has made in favour of the plaintiffs. No doubt, there is, as has been freely admitted for both sides before us, a certain amount of suspicion about the proceedings of the parties in connection with this gold--a suspicion that they must have intended that eventually it should be brought into British India, where the defendants conducted a business of dealing in gold and where they could make a very large profit from it. But the contract as shown by the evidence was not necessarily an unlawful one., It is not shown definitely that the object was to bring gold further into India than into French India, Pondicherry or Karaikkal. It must be noticed that the defendants never pleaded that the object was to bring the gold into British India. By some curious process, which has not been explained to us thoroughly and which I do not understand, an issue was raised by consent whether this contract was unlawful. How that appeared upon the issue paper without any pleadings, it is difficult to understand. But, when we look at the actual evidence in the case, defendant 2, defendant 3, and their munim Chunilal all describe the contract as one for bringing gold into Pondicherry. Apart from all that, this matter has been before the Court in a previous litigation between the same parties. In C.S. No. 212 of 1921 the present defendants sued the present plaintiffs and other members of their family and another defendant called Besson for damages in respect of the first consignment of gold, which was sent as a result of this expedition from Saigon to Pondicherry. In that suit, which was tried by Coutts-Trotter, J., the defendants described this contract as one for bringing gold into Pondicherry. The present plaintiffs strangely enough described the contract as one for bringing gold into British India and pleaded that it was, therefore, unlawful. But Coutts-Trotter, J., found that the contract was only for bringing gold into Pondicherry and on that finding he was able to give a decree to the present defendants against Besson, though he made no decree against the present plaintiffs. Mr. Grant, who appears for the plaintiffs, has reasonably urged before us that this question of the nature of the contract and its legality is res judicata, having been decided in the previous suit by Coutts-Trotter, J., and that the defendants cannot now succeed by turning round in this curious way and saying that they got -a decree in that suit on an unlawful contract. I do not think I need spend any more time on the first objection which has been raised by the defendants in this appeal.

6. A more serious objection in my opinion is that to this decree Chunilal, Lakshmichand and Maoji Bhai have not been made parties. As I have said, Beasley, J., accepted the defendants' case that there was a contract between the defendants, the plaintiffs, Chunilal, Lakshmichand and Maoji Bhai that they should take part in this expedition and that the profits should be divided in the proportions I have named. If that is so, how can a decree now be made for an account to which Chunilal, Lakshmichand and Maoji Bhai are not parties? If all these persons were partners, it is not disputed that no such decree could be made in the absence of those three persons. It is well known that a suit for account cannot be maintained between some only of the partners of a firm, but that every partner must be made a party. The reason is that every partner has an interest in the determination of his share in the profits and in the working out of that share by the account. If a decree is made in the absence of one of the partners, then in a sense that is a decree against that partner, limiting his interest, limiting the amount which he has to recover and determining the amount which he has to contribute to the other partners, and it would be obviously improper and illegal to make such a decree against him without impleading him. But in this case it is urged for the plaintiffs that they were not partners with the defendants and the other three men I have named. Beasley, J., has found that they were not partners in the full sense. His finding is that the plaintiffs were 'working partners,' which he explains as partners who have shares in the profits but have no share in the losses of the business. Mr. Grant has urged that persons in that position are no more than servants. I do not know that it makes any difference whether they are described as working partners entitled to share in the profits but not sharing in the losses or as servants who are to be remunerated by a share in the profits. Servants who are to be remunerated by shares in the profits are entitled to sue for account. But, if there are several servants in one business, each entitled to remuneration by a share in the profits, can they sue separately? I think it is clear that they can do so, if their engagements are separate. If a master engaged several servants successively and independently, each to be remunerated by a share in the profits, and if one of those servants wished to sue him for his share in the profits, it would not be necessary for that servant to implead all the other servants. But the position is very different when by one arrangement or contract a master and a number of servants agree that they will work together for a certain time or for a certain venture and that the whole profits will be divided among them in certain proportions. If that is the contract between them and one servant is allowed to sue for his share without impleading the others, we reach the same difficulty as in a case where there is a suit between some of the partners leaving out the other partners. The suit could only result, if it were possible and successful, in a decision which would be against the servants who were not parties to the suit. Now that that is impossible was decided so long ago in Ramdoyal v. Junmenjoy Coondoo I.L.R. (1887) C. 791 from which no dissent has ever been expressed. In the present case was there one contract between the parties before us and Chunilal, Lakshmichand and Maoji Bhai, or were the (plaintiffs engaged by the defendants separately from the engagements of those other three persons? As 1 have said, the plea of the defendants, which Beasley, J., has found to be true, is that there was only one contract, to which they were all parties. According to the evidence, before this expedition set out to buy gold in foreign parts, there was a meeting at the house of defendant 2 in Madras, at which plaintiff 1, his father, who is not a party here, the defendants and Chunilal were present, and the terms of the arrangement as to sharing profits were settled then. Plaintiff 2 was not present, according to the evidence, on that occasion, but he appeared the next day or the day after that and agreed to the arrangement. Lakshmichand and Maoji Bhai, who under the arrangement were each to get 17-1 115ths of half the profits, were not, according to the evidence, present. But it appears that they are members of defendant 3's family and there is no question that they did go out on this expedition, and the reasonable inference from that is that they also accepted this arrangement and entered into this contract. It may also be noticed that the arrangement divides up the whole of the possible profits into specific and rather unusual fractions. I find nothing in the evidence to suggest that in this case the defendants engaged the plaintiffs as servants on a certain share of the profits as remuneration and afterwards engaged Chunilal or afterwards engaged Lakshmichand and Maoji Bhai. That is not the defendants' case, which has been accepted by Beasley, J., nor is it the case as shown in the evidence, though it must be noticed that the evidence on this subject is not very full or explicit because it happened that this aspect of the case was not very prominently before the parties or the Judge at the trial. I think it is clear on principle that in a case like this the plaintiffs cannot get their shares fixed nor get an account of the profits without making Chunilal, Lakshmichand and Maoji Bhai parties to the suit.

7. It has been urged before us by Mr. Grant that, whatever the plaintiffs should have done in the suit, the defendants did not take this particular objection of the non-joinder of Chunilal, Lakshmichand and Maoji Bhai explicitly at the trial and that under Rule 13 of Order 1 no such objection can be raised now. An objection was raised in the suit about non-joinder; but I agree with Mr. Grant that that was not an explicit objection relating to this particular point that in a suit for account it was necessary to add Chunilal, Lakshmichand and Maoji Bhai. It was a rather futile objection on another question of non-joinder, that the plaintiff's father and other members of their family had not been brought in. Now Rule 9 of Order 1, as Mr. Grant points out, lays down that

No suit shall be defeated by reason of the misjoinder or non-joinder of parties, and the Court may in every suit deal with the matter in controversy so far as regards the rights and interests of the parties actually before it.

8. Would that enable an effective decree to be made in this case in the absence of Chunilal, Lakshmichand and Maoji Bhai. That rule enables the Court, and makes it the duty of the Court, to make a decree between the parties actually before it, if that can legally and effectively be done. But that rule was never intended, and could never have been intended, to direct the Court to make an illegal decree--a decree which would violate the elementary principle that a decree shall not be made against a person behind his back. If no decree fixing the shares in the profits or for an account can be made in this case in the absence of Chunilal, Lakshmichand and Maoji Bhai without affecting them and to make such a decree without impleading them would be to make a decree against them behind their backs, Rule 9 of Order 1 can never give the Court power to make such a decree.

9. Mr. Grant also urged that the defendants had treated the plaintiffs very unfairly in this case by raising indeed a plea of non-joinder not directed to this particular point but keeping this particular plea of non-joinder, that Chunilal, Lakshmichand and Maoji Bhai ought to have been impleaded, up their sleeves for use at a later stage. If they had done that, it would certainly have been very unfair and improper. But we must remember that the suit which the plaintiffs brought was one for remuneration by salary and commission; to that suit an objection that Chunilal, Lakshmichand and Maoji Bhai were not joined would have been no objection. We cannot reproach or penalise the defendants for not raising in the suit, as it then was, an objection which would have been wholly inapplicable to it. It happens unfortunately in this case that the suit was never regarded, so far as we can see, at the trial as a suit for an account of the profits on the basis of the contract which the defendants set up. It only became a suit of that nature at the time of the judgment.

10. Mr. Grant has also urged before us that by reason of Section 99 of the Code of Civil Procedure we have no power to interfere in appeal on the ground of non-joinder. But I cannot agree that in this case we have no power to interfere, as that section does not prevent the Appellate Court from interfering on the ground of mis joinder or non-joinder which affects the jurisdiction of the Trial Court. As I view this case, Beasley, J., had no, jurisdiction to make a decree for the division of the profits of this enterprise in the absence of Chunilal, Lakshmichand and Maoji Bhai, who were found to be entitled to certain shares in those profits. Unfortunately the matter cannot be put right now as the time for impleading those three persons has long gone by and the bar of limitation prevents them from being impleaded now. I have no doubt myself that the decree was made in the form it was made by Beasley, J., by inadvertence and that when he came to the end of his judgment, he had forgotten for the moment in deciding between the plaintiffs and the defendants that there were these three other persons concerned in the matter. And it appears to me extremely unfortunate that no one who was appearing in the case brought that to the learned Judge's notice when he was delivering his judgment. If that had been done, a great deal of time, trouble and money might have been saved.

11. In my opinion this appeal must be allowed and the plaintiffs' suit dismissed. As to the costs, there are in my opinion two reasons why we should not award costs to the defendants. One is that, as Beasley, J., has pointed out, their conduct in the suit was in some ways reprehensible; and the other is that I think it is largely due to them that they have had to bring this appeal, which they might have avoided by making suitable representations to the learned Judge when he was delivering his judgment. In my opinion, therefore, the proper order will be that each party shall bear his own costs throughout. The Official Assignee may take his costs out of the office charges fund.

Cornish, J.

12. I am of the same opinion. I think the question whether the agreement between the parties was or was not for an illegal purpose must be treated as re judicata by the finding in C.S. No. 212 of 1921. The defendants in that suit, who are the plaintiffs here, definitely averred in their written statement that the agreement being for the purpose of importing gold into British India was an illegal agreement and, therefore, unenforceable. The learned Judge who tried that suit found that the agreement was to bring gold from Saigon into French Indian and was not illegal, though' he expressed the opinion that it was probably the intention to smuggle gold into ' British India as opportunity offered. That finding was not disturbed by the Appellate Court, and it was, of course, present to the mind of the learned Judge who tried this suit. He expressed a strong opinion upon the real character of the enterprise. But it is clear that he felt himself bound by the finding in the previous suit; otherwise, he would not have passed a decree upon the footing that the parties were co-adventurers in the enterprise and entitled to shares in its profits. Apart from this view of the case, the evidence at the trial would not, in my opinion, justify a finding that the agreement between the parties was for an illegal purpose, although I agree that the evidence gives rise to a very strong suspicion.

13. On the other point, that of non-joinder, I have felt some doubt upon the evidence. There is no question that on the finding of the learned Trial Judge the plaintiffs were employees whose remuneration was fixed on the basis of a share of the profits and that they were not partners with the defendants. And it is conceded by Mr. Somayya, the learned Counsel for the defendants, that if the plaintiffs were servants or employees and the defendants had entered into separate agreements with them, for their remuneration, it would not have been necessary for the plaintiffs in a suit to recover that remuneration to implead the other employees who were engaged on similar terms of remuneration. Three witnesses for the defendants have given evidence as to the circumstances in which this agreement was entered into; and I think, on the whole, that it is probably correct that their agreement with the plaintiffs and the other three persons, Chunilal, Lakshmichand and Maoji Bhai, was entered into at one and the same time, or practically at one and the same time, so that, in fact, they are to be regarded as joint contractors in a common undertaking. The agreement was not in writing. It was merely a verbal agreement. I think that it must certainly have been completed before the expedition left Madras for Pondicherry, and that the version given by the 3rd defendant may be accepted. That being so, it appears to me that the case in Ramdoyal v. Jimmetyijoy Coondoo I.L.R.(1887) C. 791 applies, and, as was there observed, at page 794:

That being the state of things, the. suit, as originally framed, was clearly defective, because, when there are three persons who, under one and the same agreement amongst themselves, are entitled to share in the proceeds of a fund which they hope will be brought into existence, it is obvious that all these three persons must be necessary parties to a suit, the object of which is to take an account necessary for the purpose of ascertaining the assets of the fund, and dividing them.

14. On that ground, in my opinion, the plaintiffs' suit was defective without impleading the other three persons and should have been dismissed; and I have no doubt that it would have been dismissed if the objection as to necessary parties not having been impleaded, which is made to us in additional grounds of appeal, had been brought to the notice of the learned Judge at the trial.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //