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S.R.M.A.R. Ramasawmy Chetty Vs. A.L.K.R. Alagappa Chetty and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported in(1915)28MLJ199
AppellantS.R.M.A.R. Ramasawmy Chetty
RespondentA.L.K.R. Alagappa Chetty and anr.
Excerpt:
.....the defendant should not have done anything against the instructions conveyed by exhibit g, though it may well be that he was under the impression that the matter had not been finally settled at the time of exhibit g. in reply to communications from the defendant the plaintiff asked him to settle the matter amicably for a smaller sum than the total amount advanced to 6. koppaiya and to see that the money was collected either by getting promissory notes from solvent persons or by receiving it in cash (ebxhibit g 12). in another letter he told the defendant that the best thing to be done under the circumstances was to settle the matter amicably and recover as much as possible and asked him to do so. 113 of 1912. 10. the defendants' appeal except as to costs is clearly untenable......is willing and this may be done with the consent of the principal to take over some or all of the debts advanced by his predecessor, the latter's responsibility ceases so far, as such debts are concerned, and continues only with reference to the debts not handed over to the successor. the outstandings at the time the plaintiffs third witness took charge of the office from the defendant amounted to a little more than rs. 40,000. he valued them and took them over at a little more than rs. 10,000 and among those debts are those items now in suit. the plaintiff is of course entitled to assume that the business was carried on in accordance with his instructions and that there was no misconduct on the part of the defendant. if, there-fore, he shows that any loss was sustained by the.....
Judgment:

1. In Appeal No. 192 of 1912. The suit was brought by the plaintiff a money lender living in Kanadukathan in the Madura District against the defendant who was his agent at Thagimyo in Burma to direct him to render accounts to the plaintiff and pay a certain sum of money amounting to more than Rs. 50,000 which he is said to have misappropriated. The defence is that accounts have been rendered and no sums have been misappropriated. The Subordinate Judge passed a decree in favour of the plaintiff for a sum of Rs. 2,300-6-3 with interest. Both parties appealed.

2. It appears to be the practice among the Nattukottai Chetties, who carry on money lending business at distant places to appoint their agents for certain periods generally for three years. A salary is fixed for the entire period part of which is apparently paid at the commencement of or. soon after the engagement and a certain amount before the termination of the agency and the balance is paid after the settlement of accounts and payment by the agent of any sum that might still be due by him. The defendant was appointed agent for three years with a pay of Rs. 4,287-8-0 for that term. He received Rs. 2,860 of that salary soon after he opened an office at Thagimyo and he carried on the business for the stipulated period. See Exhibit B, dated the 5th September 1.904. He was succeeded by Chinniah Pillai, P.W. 3 about June 1908. The parties do not agree as to the terms of the arrangement under which an agent vacates his office and delivers over charge to his successor. That there is such an arrangement is conceded by both parties. As it has a material bearing on the case we will refer to the evidence on that point.

3. According to the evidence of the plaintiff's witnesses 1, 2 and 3 it appears that the successor agrees to take the debts due to the business at a certain valuation from the outgoing agent. This no doubt must have been due to the fact that these Chetties lend their moneys at very high rates of interest and not always to persons whose solvency is beyond doubt, and they expect therefore to lose in various transactions such loss being covered by the great profits made in other transactions. For this difference between the face value of these debts and the valuation at which the successor takes them, according to all these agents who are the plaintiff's own witnesses the outgoing agent is not liable to the principal, if he has not been guilty of any misconduct. According to the plaintiff the old agent is liable for that difference. His evidence is unsupported and is opposed to the evidence of his own witnesses who themselves were agents and were never held liable by their principals for such differences when they handed over charge of their offices to their successors. It is also unreasonable. It also appears that, if the successor considers that some of these debts are bad, it is open to him to refuse to take them over and hold himself responsible for their collection. In this case the old agent continues responsible to his principal for their recovery. There is, therefore, nothing unreasonable in holding that if the new agent is willing and this may be done with the consent of the principal to take over some or all of the debts advanced by his predecessor, the latter's responsibility ceases so far, as such debts are concerned, and continues only with reference to the debts not handed over to the successor. The outstandings at the time the plaintiffs third witness took charge of the office from the defendant amounted to a little more than Rs. 40,000. He valued them and took them over at a little more than Rs. 10,000 and among those debts are those items now in suit. The plaintiff is of course entitled to assume that the business was carried on in accordance with his instructions and that there was no misconduct on the part of the defendant. If, there-fore, he shows that any loss was sustained by the defendant's default in these respects, he would be entitled to recover damages. Otherwise it appears to us that the plaintiff has no reason to complain. When the defendant delivered some of the accounts to the plaintiff at Madras after the termination of the agency he promised to hold himself responsible f6r the losses that may have been sustained by the plaintiff in his having lent out money to persons contrary to instructions, Exhibit (A). The only question we have to decide is whether the defendant has acted against instructions and if so, whether he is liable to pay any damages to the plaintiff. We have to see what the plaintiffs instructions were.

4. The plaintiff gave instructions to the defendant on the 28th of November 1904 (See Ex. G) according to which the business was to be carried on. He wrote there that as Thagimyo was a small place and the persons there were only fit to be entrusted with small sums (as Rs. 100, 200, 300, 400 up to 500) the defendant was not to lend anybody sums like Rs. 1,000 or 2,000 and the dealings were to be carried on only up to a total of Rs. 50,000. He was also directed to advance loans only upon good security. In reply to this the defendant wrote (see Ex, H. 3, dated 24-3-1905) that in accordance with the plaintiff's instructions he would recover the larger sums that had been already advanced and would lend out only small sums in future. He also suggested (See Ex. H, 4 of the 12th May 1905) that larger sums might be lent on good security to which the plaintiff replied (See Exhibits Gl, and G2 of 21-2-1905 and 2-5-1905), that that should not be done and that he should not lend more than Rs. 500, to any person. We will now proceed to consider, how far these instructions have been violated and whether the defendant is liable to pay the plaintiff anything on account of such misconduct if any.

5. Item No. 8. The plaintiff claims Rs. 12,807-9-10 on account of loss sustained in the transactions carried on by the defendant with Sinna Koppaiya. The defendant lent him Rs. 2,000 on a promissory note on the 21st November 1904, Rs. 3,000 on the 6th December 1904, Rs. 2,000 on the 3rd January 1905, and again Rs. 2,000 on the 1st February 1905. It will be observed that the first amount of Rs. 2,000 was advanced before the plaintiff gave his instructions on the 28th of November, (Ex, G.) There is no evidence to prove whether Ex. G. reached the defendant, before the date of the second advance on the 6th December 1904. It certainly must have reached him before the date of the third advance. No difference is made by the plaintiff between the advances. The defendant contends that final instructions were only given in May 1905 (Ex. G 2). But it is dear that pending the plaintiff's final orders the defendant should not have done anything against the instructions conveyed by Exhibit G, though it may well be that he was under the impression that the matter had not been finally settled at the time of Exhibit G. Apart from the fact that the plaintiff made no distinction between advances made before his instructions and after his instructions, there is clear evidence which shows that he is now precluded from questioning the validity of these transactions so far as the defendant is concerned. The various letters that passed between the parties place this matter beyond any reasonable doubt. We will ony refer to a few of them. In reply to communications from the defendant the plaintiff asked him to settle the matter amicably for a smaller sum than the total amount advanced to

6. Koppaiya and to see that the money was collected either by getting promissory notes from solvent persons or by receiving it in cash (Ebxhibit G 12). In another letter he told the defendant that the best thing to be done under the circumstances was to settle the matter amicably and recover as much as possible and asked him to do so. (Exhibit G. 15). The plaintiff sent his own agent from Rangoon for the collection of the money. It may be that if the plaintiff was only endeavouring to collect the amount advanced, he might not be estopped from recovering damages that he might have sustained from the defendant, i.e., the difference between the amount recovered and the total money advanced. But in this case he took an active part in the settlement of the matter; he gave instructions as to how matters were to be settled. The amount to be recovered was settled between the parties; the defendant recovered a certain sum of money, took promissory notes from the debtor for the balance due under the settlement and those debts were finally taken over by his successor. We have very little doubt that if it had been the intention of the plaintiff to hold the defendant liable for damages sustained, he was bound to have given notice to the defendant of the same in the circumstances and he should not have allowed his agent to take over this debt.

7. We will not deal with item 15. The plaintiff claims Rs. 12,057 on account of loss sustained in dealings with one. Thakki Mowyechan. Thakki Mowyechan had entered into a contract with the sircar to build a bangalow at a cost of about Rs. 18,000. The defendant undertook to advance moneys to him whenever they were needed up to Rs. 6,000. The cheque which he was to receive on account of his work from the Government officials was to be handed over to the defendant. Accordingly various sums were advanced from March 1905 up to the 25th August 1906. The plaintiff was informed of the nature of the Contract (See Exhibit H5). He not only took no exception to it but told the defendant that advances might be made if proper security was taken. Advances of various sums of money were being made on 10 or 15 occasions after July 1905. It is clear, therefore, that he ratified the defendant's conduct. It also appears that this was one of the debts taken over by the defendant's successor, and as it was taken with knowledge of the circumstances under which the debt was contracted the plaintiff is now precluded from claiming any damages from the defendant on account of this transaction.

8. The other items are comparatively smaller sums. We think it unnecessary to go through them all. The nature of the evidence is the same. The plaintiff was informed of these debts. He did not raise any objection. The cases show that silence itself has been held to be acquiescence in commercial transactions. But in these cases the plaintiff not only did not object to the propriety of the 1st defendant advancing these loans and did not tell him that he would hold him responsible for any loss that he might sustain thereby but went further, he interfered with the collection of the debts, dictated his own terms and allowed with full knowledge of the circumstances the defendant's successor to take the debts at a certain valuation after which it was no longer open to the defendant to attempt to collect the debts himself. In these circumstances we are of opinion that he is precluded by his acquiescence from questioning the validity of these transactions and we must therefore confirm the decree of the lower Court in so far as it disallows the plaintiff's claim and dismiss the plaintiffs appeal with costs.

9. In Appeal No. 113 of 1912.

10. The defendants' appeal except as to costs is clearly untenable. We are of opinion that the plaintiff is only entitled to his costs on the amount decreed. With this modification we confirm the decree and dismiss the appeal. The parties will receive and pay proportionate costs in appeal.


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