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S. Sama (Died) and ors. Vs. Presidency Talkies (Pte.) Ltd. - Court Judgment

LegalCrystal Citation
SubjectCommercial;Contract
CourtChennai High Court
Decided On
Case NumberO.S. Appeal No. 5 of 1964
Judge
Reported inAIR1966Mad184
AppellantS. Sama (Died) and ors.
RespondentPresidency Talkies (Pte.) Ltd.
Cases ReferredIn Gemini Picture Circuit v. Commr. of Income
Excerpt:
.....useless to plaintiff and they would be useful to him in shipping industry - where chattel has no market value it has no market in goods - where davits is of no use to owner proper measure of damages would be price which plaintiff would get when chattel sold to solvent buyer - plaintiff may be entitled to some damages when materials of negative could be used for such miscellaneous use. - - the picture was released in 1942, and was run till september 1945. the picture proved to be disappointment and a great failure. 91 of 1955 was filed in september 1955, for recovering from the respondents compensation or value of the 38 reels on the ground that the respondents had failed to deliver the 38 reels, 19 sound reels and 19 picture reels in pursuance of the decree for redemption. as we..........of this decision will have no application to the instant case. in a case where the chattel has no market value, it has no market in the goods and where it is of no use to the owner the proper measure of damages would be the price which the plaintiff would get if he sold the chattel to a solvent buyer. reference may be made to the statement of the law in 38 halsbury, 3rd edn. at page 794, para 1320:'1320. assessment of value: subject to the rules already mentioned the value of goods converted or detained is ordinarily assessed by reference to their market value. where there is no market in the goods, the value is assessed by the cost of replacing them; and, if no market exists in which to replace them, their value is to be fixed at what the plaintiff could get by sale to a solvent.....
Judgment:

Ramamurti, J.

(1) This appeal arises out of execution proceedings in a suit, C.S. 262 of 1945, filed by one S. Sama, the first appellant, now represented by his legal representatives, appellants 2 to 5. This Sama produced a picture 'Rajasuyam' in 1941-42 and in connection therewith he entered into a financing agreement for securing a loan of Rs. 51,000 under which the distribution and the negative rights of the picture were pledged and the respondents herein are the pledgees. The picture was released in 1942, and was run till September 1945. The picture proved to be disappointment and a great failure. It has been fully exploited by September 1945, and its earning capacity was nil at that stage. The first appellant thereupon filed C.S. 262 of 1945, for redemption of the pledge and also for taking the accounts of the exploitation of the picture by the pledgees. As a result of the account taking it was found that the moneys advanced by the financier (the pledgee) had been completely repaid and that the first appellant was further entitled to get a sum of Rs. 3,250 from the defendants. Panchapagesa Sastri J. directed as a part of the redemption decree that the defendants should deliver to the plaintiff (Sama) the negatives, 19 sound reels and 19 pictures reels in all 38 reels. Even during the course of the trial the defendants had delivered to the plaintiff 16 reels of which 10 reels were picture negatives and six reels were sound negatives, and the learned Judge directed that part satisfaction should be entered and the same incorporated in the decree to the extend of the delivery of the 16 reels as aforesaid. At this stage it may be mentioned that the ten picture reels and the six sound reels did not correspond and they were therefore absolutely useless to the plaintiff. He took up the matter in appeal and in O.S.A. 97 of 1949, the decree of the trial court directing recording of part satisfaction was modified with the result that the plaintiff was left to work out his rights in execution with regard to the return or the delivery of the reels.

(2) The preliminary decree by the trial Court was passed on 15th September 1949, while the appeal, O.S.A. 97 of 1949, was disposed of on 8th October 1952. The present execution petition E.P. 91 of 1955 was filed in September 1955, for recovering from the respondents compensation or value of the 38 reels on the ground that the respondents had failed to deliver the 38 reels, 19 sound reels and 19 picture reels in pursuance of the decree for redemption. Both before the Master and on appeal before Sadasivam J. the first appellant claimed his original cost of production of the picture as the correct measure of compensation or damages, relying on the principle of restitutio in integrum as the defendants were not in a position to return back the negatives. In the course of the hearing of the appeal it was stated before us that during the pendency of these proceedings the respondents were since able to trace the missing negatives and that they are now in a position to return back all the 38 reels. But learned counsel for the appellants stated that at this belated stage they are of no use whatsoever as negatives, and that the appellants would be entitled to the original cost of production of the picture. In other words, learned counsel for the appellant contended that the offer to return the 38 reels at this stage is futile, serves no purpose, and cannot improve the position of the respondents and that the matter should be dealt with on the footing that the respondents are in default in the matter of compliance with the terms of the decree for redemption. As we are of opinion that the appellants are bound to fail on the larger question touching the measure of compensation or ascertainment of damages it is unnecessary to consider how far the defendants could be absolved and be held to have complied with the terms of the decree for redemption in the light of the subsequent events.

(3) The first appellant examined eight witnesses and also filed some correspondence in support of his claim, and the Master on the evidence found that the value of the negatives is nil and the plaintiff-appellant was not entitled to any compensation and this view was affirmed by Sadasivam J. We are in entire agreement with the learned judge's appraisal of the evidence which has been adduced by the first appellant. On this evidence it is clear that the picture was a total failure, that by exploitation till 1944 it realised only a sum of Rs. 38,000 and that there were no demands for the purchase of the negative rights. The realisations even in the first week in important theatres of Madras like Paragan Talkies and Majestic theatre in Bangalore and in such other important places have been very poor and meagre and that during the course of three years till September 1945, the picture has been exploited to its utmost and there was no question of its being exploited any longer in any theatre. In fact both before the learned Judge and before us learned counsel for the appellants accepted the position that there was and is no question of the picture being exploited by exhibition after September 1945, with the result that the matter has to be disposed of on the footing that its earning capacity became nil as early as September 1945. The first appellant produced some correspondence and examined himself, as well as P.W. 2, N. S. Iyer to establish that the plaintiff had received an offer for the purchase of the negatives for a sum of Rs. 85,000, but the learned Judge disbelieved and rejected the story on the ground that it was totally false and that even the correspondence has been got up for the purpose of this proceeding. The learned Judge has adverted to the fact that the person from whom an offer for the purchase of Rs. 85,000 was made was not even worth 85,000 pies and that this man had no experience and no knowledge whatsoever about the earning capacity of this picture. The plaintiff has not adduced any other evidence, of any other enquiry.

In view of this the main stand of the plaintiff had been throughout that the true measure of the compensation is his original cost of production of the picture even if it turned out that the picture was not capable of earning any income. The main argument of the learned counsel for the appellants was that whatever may be the earning capacity of the picture as a wasting asset under the terms of the preliminary decree the first appellant was entitled to a return of the 38 reels in specie, and that if the defendants-respondents defaulted to comply with the terms of the decree the plaintiff will be entitled to his original cost of production on the basis that it represents the cost of replacing the lost reels. In support of this contention, learned counsel relied upon the decision in Hall Ltd. v. Barclay, 1937 3 All ER 620. The headnote of the case may be conveniently extracted as containing a statement of the relevant facts:

'The respondent company did work for the appellant in erecting and testing a pair of experimental davits. The davits and testing apparatus were then dismantled and kept by the respondent company for several years. A dispute arose over the non-payment of part of the appellant's account for work done, and a writ was issued. The appellant counter-claimed for damage for detinue or conversion of his davits and testing apparatus, which it transpired that the respondent company had sold as scrap. The judge awarded the appellant the scrap value of these articles as damages. On appeal: Held: the appellant was entitled to the value of the articles converted, which was ordinarily the price of similar articles in the market. As there was no market in the articles concerned, the measure of damages was the cost of replacement.'

It is true in that case the davits, i.e., the testing apparatus have been used for the purpose required and it had no appreciable value and the argument that the damages or compensation to the plaintiff in respect of the same can be only the scrap value was not accepted. The decision turned upon the peculiar facts of that case as it was found that similar davits could be purchased in the market for the compensation awarded, that is 220. We may in this connection refer to the following observations of Greer L.J. at page 624:

'Now, if there had been a market for the davits, to which the appellant could have gone on the day after he was wrongfully deprived of his davits, and bought them at an agreed price however much lower that might be or however much higher it might be than what he had originally paid for them, he would have been entitled to the cost of replacement by getting them in the market. But, if he cannot get them in the market, what is his position? He must do that which is analogous to getting them in the market, namely, he must go to the only people from whom he can get goods to put him into the same position as he would have been in if his davits had never been taken away from him, that is to say, he must go to the manufacturer and see for what price the manufacturer will supply him with similar goods. That test would give him 220, and he was entitled to ask the Judge to say and entitled as of right, in my judgment, to say 'I want my goods. If you do not give me back my goods, then you must pay me what I would have to pay in order to put myself into the same position as I would have been in if you had complied with my demand for the goods. I want them for the purpose of further experiments in order that I may satisfy myself that the design of these davits, and possibly the design of the improved davits, may be improved upon. He not having had the davits returned to him, I think the test of their value and the sum that he is entitled to recover for having failed to get his davits back again, is the 220 which he would have to pay, according to the undisputed evidence of Mr. Small, in order to get davits similar to those of which he had been deprived.'

It is also significant to notice that the davits had not become absolutely useless to the plaintiff and that they would be useful to him in the shipping industry. Referring to this aspect of the matter in 1937 2 All ER 620 in Mayne on Damages, 12 Edn. the learned author has observed as follows at page 682:

'There was evidence that the plaintiff would want to use such replacements so that he could not be said to be claiming on the basis of replacement value just in order that the defendant should pay him damages.'

From this it is clear that the principle of this decision will have no application to the instant case. In a case where the chattel has no market value, it has no market in the goods and where it is of no use to the owner the proper measure of damages would be the price which the plaintiff would get if he sold the chattel to a solvent buyer. Reference may be made to the statement of the law in 38 Halsbury, 3rd Edn. at page 794, para 1320:

'1320. Assessment of value: Subject to the rules already mentioned the value of goods converted or detained is ordinarily assessed by reference to their market value. Where there is no market in the goods, the value is assessed by the cost of replacing them; and, if no market exists in which to replace them, their value is to be fixed at what the plaintiff could get by sale to a solvent buyer.'

If this rule is applied to the instant case we have no doubt that the plaintiff will not get anything if he were to sell the negatives to a solvent buyer. As observed earlier there is no evidence whatsoever of any person having made any offer to purchase the negatives. In the case of a chattel which is not a profit earning chattel or which has ceased to be a profit earning chattel the plaintiff would be entitled to have damages or compensation for loss in the form of its monetary equivalent. The wrong doer is held responsible for his tortious conduct by applying as far as possible the general principle of restitutio in integrum and difficulties always arise in defining the proprietary loss which has to be compensated and the date on which the loss is to be evaluated in terms of money. Reference may be made to a recent decision of the Supreme Court in Dhian Singh v. Union of India, : [1958]1SCR781 , which contains a detailed discussion of the law relating to the ascertainment and the award of damages for the 'conversion' and 'detinue'. That decision dealt with a case of wrongful detention of two motor trucks and it was held that the injured party was entitled to the value of the trucks as on the date of the judgment and also damages at a particular rate per day during the period when the injured party was prevented from making use of the trucks by hiring out and earning income. There it was held that if a bailee (which would include a pledgee) refuses to deliver the chattel back on demand by the bailor the latter will be entitled at his election to pursue his remedy against the bailee for wrongful detention of his goods and recover either the goods in specie or its value on the date of the judgment. The difficulty arises only where the chattel has no saleable value whatsoever and its earning capacity to the owner is nil. In such a case the damage sustained by the owner is virtually nil and if the wrong doer escapes without performing his contractual obligation of due delivery of the chattel it is because the chattel has no value. In this respect the rule is the same whether the claim arises out of a contract or tort and the best that the Court can do is to place the party who has sustained the injury in the same position as he would have been if he had not sustained the wrong for which compensation or reparation is awarded.

(4) In Gemini Picture Circuit v. Commr. of Income-tax, : (1958)2MLJ6 a Bench of this Court had to consider the allowance towards depreciation in the assessment of Income-tax of a film industry and it was held that the normal life of a film was three years, and that its saleable value was lost rapidly and to the extent of 60 per cent in first year of its life and that barring exceptional cases the general rule was that three years represented the normal life of a picture. In this case the relevant date is the date of the decree of the trial Court, that is, 15th September 1949, and by that time seven years have lapsed. There is the further important fact that the picture was a total failure and admittedly there was no question of its being exploited by exhibition in any theatre. Under these circumstances, it will be clearly unjust to hold that the plaintiff would be entitled to his cost of the production of the picture.

(5) In the evidence there is some reference to the negatives of old pictures being sold at three annas per pound for making bangles. It may be that the plaintiff may be entitled to some damages if the materials of the negatives could be used for such miscellaneous use but the plaintiff's counsel stated before us that his client is not claiming damages on that basis but only on the basis of the cost of production.

(6) For all these reasons we dismiss the appeal with costs agreeing with Sadasivam J.

(7) Appeal dismissed.


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