Alfred Henry Lionel Leach
1. The plaintiff in the action is the appellant. He sued on the Original Side of this Court for an account of moneys alleged to be due to him by way of commission. At all times material to the suit, the plaintiff was the chief agent of the defendant company for the sale of petrol and fuel oil in the southern part of the Madras Presidency. He was appointed under an agreement in writing and the period of the agency was fixed at ten years from the 29th May, 1933. The contract provided that the plaintiff was to have a commission on every gallon of petrol or oil sold, whether the sales were through dealers or effected by the company direct.
2. The plaintiff was a shareholder in the company and in 1937 had failed to pay the final call due in respect of his shares. In these circumstances, the defendant forfeited his shares and filed a suit in the Bombay High Court to recover some Rs. 36,000, the amount of the final call. On the 15th November, 1937, the plaintiff filed a written statement in which he claimed to set off against his liability for calls, the interest on a loan of Rs. 1,25,000 which he had granted to the company and what was due to him by way of commission from the 30th June, 1935. On the 19th January, 1943, the parties agreed to a settlement of the Bombay suit. The agreement was in these words:
1. Order that the defendant do pay to the plaintiff the sum of Rs. 29,893-0-3 (Rupees twenty-nine thousand eight hundred and ninety-three, anna nil and pies three) only being the amount of unpaid calls.
2. Order that forfeiture of the defendant's 2,491 shares in the plaintiff company be annulled and set aside.
3. Declare that the plaintiff company shall have first charge or lien on the ordinary 2,491 shares of the defendant in the plaintiff company as a security for payment of the said sum of Rs. 29,893-0-3.
4. Declare that the claims of set-off under various heads by the defendant do stand withdrawn with liberty to be settled and disposed of by mutual consent of parties, out of Court.
5. Each party to bear his and their costs of the suit and counter-claim.
3. On the 14th June, 1943, a formal decree was passed by the Bombay High Court in accordance with the terms of the agreement, except that the clause with regard to the withdrawal of the defendant's set-off read as follows:
Doth further order that the claims of set-off under various heads made by the defendant be and they are hereby allowed to be withdrawn.
4. The words ' with liberty to be settled and disposed of by mutual consent of parties, out of Court ' were omitted because the Bombay High Court considered that no permission was required to enable parties to settle a matter out of Court, an opinion which is not open to question.
5. On the 11th October, 1943, the plaintiff wrote to Mr. K.P. Ghiara, the director who had signed the agreement for compromise, asking that his claims against the company should be settled. On the 15th November, 1943, the plaintiff received a letter from the defendant's secretary to the effect that as the claim for set-off had been withdrawn without permission given to him by the Court to file a fresh action in respect of the matter, he was precluded from making any claim against the company. This is an astonishing letter. We shall deal presently with the question of law involved; but accepting that the consent decree operated in the way the defendant suggested, it was certainly not an honest attitude for the defendant to take up. The company had consented to the plaintiff withdrawing his counterclaim on the understanding that there would be a mutual settlement out of Court. Instead of having the accounts investigated and the true position discovered, the defendant refused to go into the matter and took shelter behind a technical plea.
6. On the 14th April, 1944, the plaintiff instituted the present action. In addition to the plea that the suit was not maintainable because permission had not been obtained from the Bombay High Court to institute a fresh suit in respect of the claim to set-off, the defendant company pleaded that this Court had no jurisdiction to try the action and that the claim was barred by limitation. The learned Judge (Clark, J.) held against the defendant on the pleas of wane of jurisdiction and limitation; but found for the defendant on the plea that the suit was not maintainable by reason of the failure to obtain permission from the Bombay High Court, but only in so far as his claim for commission related to the period prior to the 15th November,, 1937) the date on which the plaintiff had filed his written statement in the Bombay suit. The learned Judge held that the plaintiff was entitled to an account of the commission due to him subsequent to that date. The plaintiff appeals against the decision of the learned Judge in so far as it concerns his claim to an account for the period prior to the 15th November, 1937. The defendant has accepted the learned Judge's findings with regard to jurisdiction and limitation; but he has filed a memorandum of cross-objection on the question of the starting point of the account which has been ordered. The defendant says that the starting point should not be the 15th November, 1937, but the 20th January, 1943, the date-of the compromise decree.
7. Learned Counsel for the plaintiff has contended that the compromise decree must be read in conjunction with the agreement for compromise and that therefore the compromise decree must be deemed to have incorporated the whole of Clause 4 of the agreement, that is, it must be read as embodying the words ' with liberty to be settled and disposed of by mutual consent of parties, out of Court.' This argument is based on the decision of a Full Bench of this Court in Narayana Tantri v. Nagappa (1917) 34 M.L.J. 515. We agree that the judgment in that case does support this contention; but we do not consider that reading these words into the compromise decree will alter the position. Even if they are read into it, they do not give the Court's sanction to the filing of a fresh suit to enforce the claim to set-off. If the defendant is to be regarded as being in the position of a plaintiff in the Bombay suit with regard to his plea of set-off, permission of the Court to withdraw that claim was necessary to enable him to file a fresh suit. Order 23, Rule 1 precludes a plaintiff who withdraws from a suit or abandons a claim without liberty being given to him to file a fresh suit, from instituting a fresh suit unless permission to withdraw has been granted with liberty to institute a fresh suit.
8. A defendant who prefers a counter-claim is in the position of a plaintiff. Order 8, Rule 6 says that where the defendant claims to set off against the plaintiff's, demand any ascertained sum or money legally recoverable by him from the plaintiff, the written statement shall have the same effect as a plaint in a cross-suit so as to enable the Court to pronounce a final judgment in respect of both the claim and the set-off. Therefore, the plaintiff should have obtained the Bombay High Court's permission to institute a fresh suit when he withdrew his claim to set-off if he had intended to institute legal proceedings should the negotiations for settlement outside the Court fail. He allowed the decree to be passed declaring his set-off to be withdrawn without permission to institute fresh proceedings and, as we have indicated already, reading into the decree all the words in Clause 4 of the agreement does not help him.
9. The appeal must be dismissed; but in view of the unreasonable attitude taken up by the defendant company, we make no order as to costs.
10. The decision of the learned Judge with regard to the date from which the account should be taken was clearly right and the memorandum of cross-objections has not been seriously pressed.
11. It is dismissed with costs.