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C. Jagannadham Pillai Vs. Official Assignee and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1931Mad124; 129Ind.Cas.814
AppellantC. Jagannadham Pillai
RespondentOfficial Assignee and ors.
Cases ReferredGajadhar Mahton v. Ambika Prasad Tiwari
Excerpt:
.....you have a deposit accompanied by an actual written charge. a detailed statement containing the terms of the agreement, the amount of the debt to be secured, rate of interest, terms of repayment, particulars of the security, on the other hand, clearly would amount to such a document. i think that 'the learned judge is clearly right in holding that the two documents, for the purpose of deciding this point, must be read together as the letter intends them to be, and so read they do constitute a document within the terms of section 17. i would hold therefore that the mortgage is invalid for lack of registration. it was i think clearly within the competence of the court, upon failure of the mortgage, to give such a decree on a plaint so framed. ambika prasad tiwari ,where their lordships..........of the transaction. the question is whether the procedure adopted amounted to recording those terms in a document requiring registration under section 17, registration act. only one case has been brought to our attention relating to a document which refers to terms not expressly recited in it, and that is an unreported case decided by madhavan nair and jackson, jj.: a.s. nos. 61, 117 and 176 of 1924. but in that case it was found that the document referred to a bargain which had already been completed, and to particulars which had not previously been reduced to writing. in the present instance, it is, i think, clear that if the letter, besides referring to the memorandum of agreement, had also embodied its terms, it would have been registrable as a record of the transaction; and the.....
Judgment:

Curgenven, J.

1. These three appeals, arising out of two suits tried by Beasley, J., as he then was, may be disposed of together since they relate to the same set of transactions. Jaganntham Pillai and one Somasundaram Chetti (now dead) carried on a hardware and machinery business in partnership from 1913 to 1923. One of the two suits (O.S. No 358 of 1921) was brought by Jagannadham Pillai for dissolution of this partnership and for accounts. At the trial it was agreed that the partnership was no longer subsisting so that it became a suit for accounts only. The case for the defendants, who were the. sons of Somasundaram Chetti was that the accounts had already been settled between the partners and indeed on two occasions. In 1920 there was a settlement with effect to the end of December 1918, with the result that Jagannadham Pillai received Rs. 13,800 as his share of the profits. Again in 1923 there was. a second settlement up to the termination of the partnership; and, probably because post war conditions were not favourable to a business of this kind, a considerable loss had to be divided and Jagannadham Pillai made himself liable, by means, to which I will subsequently refer, for the share to which his partnership related. He now repudiates both these so called settlements of account on the ground that he was in fact no party to them and that they are in fraud of his interests. If it is to be held that they did amount to settlements, his further plea is that owing to certain errors they are not binding upon him.

2. These pleas are raised in the face of a number of written admissions accepting his liability. The partnership agreement was originally an oral one But on 11th June 1920, when Jagannadham Pillai's share was reduced from l/4th to 1/5th the agreement Ex. A was executed. This contains a statement subscribed to by Jagannadham Pillai that accounts had been taken up to 31st December 1918 and that he had received the amount due to him. Again when, to provide for his ultimate liability he executed the promissory note Ex. E on 25th May 1923, he made a similar admission with regard to the profit due up to the end of 1918. Then as regards the second settlement, Ex. E itself is the most important piece of evidence of its acceptance by Jagannadham Pillai, and this document was followed by what purported to be a mortgage) by deposit of title-deeds; and the agreement to enter info this mortgage comprises another admission, and further such admissions are to be found in the stock books of the partnership. In all, as the plaintiff had to admit, he acknowledged a debt of (is. 62,000 to the defendants in five different documents. Yet ha has had the effrontery to state in evidence that be had no opportunities of looking into the accounts and that he signed these documents blindly trusting the honesty of Somasundaram Chetti. He can hardly pretend that he is a man without any business abilities or experience because for 20 years he was in charge of the hardware department of Messrs. Oakes & Co., drawing a salary of Rs. 100 a month and 10 per cent commission on sales. His evidence contains a number of prevarications regarding his acquaintance with the accounts, but the admission that he makes as regards his signing some of the rough accounts proves, what is indeed only in accordance with probabilities, that as manager he was responsible for maintaining them. How far he is prepared to go will be seen from his assertion that he understood the promissory note Ex. E to be something in the way of a security bond for losses which might subsequently he incurred in the business. There is no doubt in my mind that on each occasion the plaintiff was perfectly well aware of what he was signing and that he must have given his agreement after a verification of the accounts. An attempt has been made to cast doubt upon the truth of the second settlement by reason of some discrepancy in regard to dates. In the written statement 31st July 1920, is given as the date when accounts up to 31st December 1918, were made up, while the date of Ex. A, as we have seen, is 11th June 1920. However such a difference may be accounted for, no reason has been given for the view that it indicates the evidence regarding the settlements to be false.

3. Accepting then the fact of these two settlements, it remains to consider whether the plaintiff is entitled to have them reopened. It is unnecessary to discuss the principles upon which such reopening should be allowed, because he has failed not only to establish any kind of fraud but any kind of error. Before us he, has raised five objections to the correctness of the accounts and I will briefly deal with these seriatim:

(1) He states that he was to draw a salary of Rs. 200 per mensem in addition to his share in the profits and that this he has not been allowed credit for. The only bases for this assertion are firstly the fact that he was drawing a sum of Rs. 100 or Rs. 150 per mensem and secondly that there are certain entries showing credit for salary of Rs. 2,400 per annum. As regards the monthly drawings they are nowhere described as salary, and it may equally well be that they represent advances from possible profits for maintenance purposes. Indeed the admitted circumstance that the plaintiff was charged interest on these drawings seems to point unmistakably to this supposition. The same account undoubtedly shows a number of such advances which were certainly not salary. In the firm's establishment ledger there is a debit for 12 months' salary of Rs. 2,400. But it has been plausibly suggested that this was made for income-tax purposes, and when we turn to Jagannadham Pillai's own ledger we find not only a credit but also a debit entry, the two cancelling out. This may have been done to tally with the establishment ledger, but it certainly does not establish the claim for salary which, it may be noted, is not provided for in the agreement, Ex. A.

(2) This objection relates to debits under date 21st November 1918 amounting to Rs. 14,573-10-9. In his particulars of errors and fraud filed in the suit the plaintiff admitted as correct entries to the extent of Rs. 9,600-9-3, and denied his liability as regards the balance. When however he was orally examined upon this matter he confessed that he could not say which items were right and which were wrong. This objection is therefore worthless.

(3) It has been said that the plaintiff derived a profit of Rs. 13,800 in respect of the first settlement and this objection relates to a payment of this sum on 23rd June 1920. The plaintiff admits that such a payment was made but denies that it was in respect of the profit. His learned advocate has endeavoured to persuade us, but without success, that if it were such profit it should not have found place where it does in the accounts. It is quite clear that it should be so shown. As regards the plaintiff's version, he has to admit the remarkable concidence that this sum is identical with what the accounts show the profits should be, and he gives the very lamest explanation why, if not as profits, he drew this large sum, some of it going in discharge of documents which are not produced and some being given away as presents. There is no foundation shown for this objection.

(4) The plaintiff complains that he was charged interest upon advances drawn against profits, whereas no counter-interest was allowed upon profits left in the firm. It should be explained that Somasundaram Chetti & Sons had a money-lending business and acted as bankers to the partnership and the real objection seems to be that they did not allow interest upon moneys in deposit with them. As to this it can only be said that, whatever the merits of the objection, no materials are upon the record to show what sums, if any, wore so in deposit. This point cannot therefore be substantiated.

(5) This relates to a debit of Rs. 5,137-8-0 made on 31st December 1920, in respect of Jagannadham Pillai's share of income-tax up to 1918. It is objected that this item should have found a place in the 1918 settlement. But there is nothing to show that the figure was available when those accounts were settled. Since the plaintiff does not contend that its inclusion in the second settlement caused him prejudice, it is difficult to see what this objection amounts to.

4. These are all the criticism brought to our attention. None of them is deserving of any consideration. The suit for an account was properly dismissed and O.S. A. No. 71 of 1926 must be dismissed with costs.

5. The remaining two appeals, O.S. Nos. 98 and 108 of 1926 arise out of O.S. No. 592 of 1921, which was a suit brought by Somasundaram Chetti's legal representatives against Jagannadham Pillai upon a mortgage by deposit of title-deeds. Reference has already been made to the promissory note Ex. E which Jagannadham Pillai executed on 25th May 1923 for a sum of Rs. 62,017-13-8 due by him to the firm. This was followed on the following day (26th May) by an agreement to deposit title-deeds, Ex. 4, and on 27th the title-deeds were sent with a letter, which be-gins as follows:

I have the honour of herewith sending you with the intention of delivering and depositing the same with you as per the momorandun-dated 25th May 1923, executed by me in your favour the title-deeds and papers relating to the property....

and then follows a reference to the schedules annexed to the letter. The question the learned Judge had to decide in order to discover whether or not the mortgage was valid, was whether this letter required registration as embodying a bargain between the parties. The view which he has taken is that, since this letter makes reference to the memorandum of agreement of the previous day, the two documents must be read together, and so read they clearly embody the terms of the transaction. The Privy Council has laid down the law upon this subject in Pranajvandas Jagjivvn Das Mehta v. Chan Ma Phee A.I.R. 1916 P.C. 115 and Subramanian v. Lutchman A.I.R. 1923 P.C. 50. It had been previously stated by Lord Cairns in the leading case of Shaw v. Foster [1872] 5 H.L. 321 as follows:

Although it is a well-established rule of equity that a deposit of a document of title Without more, without writing or without word of mouth, will create in equity a charge upon the property referred to, I apprehend that that general rule will not apply when you have a deposit accompanied by an actual written charge. In that case you must refer to the terms of the written document, and any implication that might be raised, supposing there was no document, is put out of the case and reduced to silence by the document by which alone you must be governed.

6. In the present case there is no doubt that the act of depositing was accompanied by the letter under reference, a circumstance which distinguishes this case from some others as, for instance, Krishnaiya v. Ponnuswami Ayyar A.I.R. 1924 Mad. 547, Then does the letter amount to an actual written charge? It is clear that the answer to this question depends upon the degree of formality which marks the document, A mere note saying ' Herewith the title-deeds ' would not constitute an instrument of charge. A detailed statement containing the terms of the agreement, the amount of the debt to be secured, rate of interest, terms of repayment, particulars of the security, on the other hand, clearly would amount to such a document. While the letter under reference does enumerate the properties intended to be mortgaged it says nothing about the other particulars in express terms; but it makes it clear that further information is to be obtained from the memorandum dated 26th May, and turning to this memorandum and reading it in its turn with the promissory note, we obtain all the particulars of the transaction. The question is whether the procedure adopted amounted to recording those terms in a document requiring registration under Section 17, Registration Act. Only one case has been brought to our attention relating to a document which refers to terms not expressly recited in it, and that is an unreported case decided by Madhavan Nair and Jackson, JJ.: A.S. Nos. 61, 117 and 176 of 1924. But in that case it was found that the document referred to a bargain which had already been completed, and to particulars which had not previously been reduced to writing. In the present instance, it is, I think, clear that if the letter, besides referring to the memorandum of agreement, had also embodied its terms, it would have been registrable as a record of the transaction; and the mere fact that some other paper, whether an agreement or any other record is immaterial, had to be read in order to ascertain those terms does not seem to me to make any difference in principle. I think that 'the learned Judge is clearly right in holding that the two documents, for the purpose of deciding this point, must be read together as the letter intends them to be, and so read they do constitute a document within the terms of Section 17. I would hold therefore that the mortgage is invalid for lack of registration.

7. This disposes of the plaintiffs' appeal in this suit. The learned Judge however considered that it was open to him to give a decree upon the promissory note, and against this decree the defendant has appealed The decree was preceded by an order allowing amendment of the plaint, so as to comprise a prayer for a personal decree upon the promissory note. This order has been attacked before us, principally on the ground that when it was made, the claim under the promissory note was time barred. But I do not think we need consider whether or not the amendment should have been allowed because on the plaint as it originally stood it seems clear that a decree of this character could be granted. Apart from a general prayer:

for such further and other reliefs as to this Honourable Court may seem meet or the nature of the case may require,

para. 14 of the plaint asks that the defendant be directed to pay to the plaintiffs the sum named and goes on in the ordinary terms of a mortgage suit, to ask for the sale of the properties and if the proceeds are not sufficient, for a personal decree. It was I think clearly within the competence of the Court, upon failure of the mortgage, to give such a decree on a plaint so framed. It has been held by a Pull Bench of this Court in P.V.M. Kunhu Moidu v. T. Madhavan Menon [1909] 32 Mad. 410 that a personal covenant to pay may be proved by a mortgage invalid for defect of attestation, and I think it is incontestable that a trial Court on finding a mortgage to be invalid for this or any other reason, may give a decree on the personal covenant which it contains, provided of course that it be not barred. The only case to the contrary cited before us is Gajadhar Mahton v. Ambika Prasad Tiwari , where their Lordships of the Privy Council decided, clearly in the special circumstances of that case, that they should not themselves give a decree of this nature. Nor do I think that where, as here, the debt is embodied in a promissory note which forms the basis of the invalid mortgage the Court is any more disqualified from giving a decree upon that note. In the result I would dismiss both these appeals with costs.

Bhashyam Ayyangar, J.

8. I agree.


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