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S.L. Ramaswamy Chetty and anr. Vs. M.S.A.P.L. Palaniappa Chettiar - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1930Mad364
AppellantS.L. Ramaswamy Chetty and anr.
RespondentM.S.A.P.L. Palaniappa Chettiar
Cases ReferredNekram Dobay v. Bank of Bengal
Excerpt:
- - it is alleged by the appellants that the mistake arose as the jewels were in an iron safe the key of which was with appellant 2 at. 5. the appellants pleaded that the erroneous statement in the plaint in the former suit was an innocent one, due to a bona fide mistake on the part of appellant as to what the pledged jewels were as they were in a safe the key of which was with appellant 2 then at ipoh, that after arrival of appellant 2 in india, due notice of the sale was given to the respondent and that as the debt was not paid, all the ten pledged jewels were properly and in fact sold and fetched rs. as there is absolutely nothing but the word of the appellant's witness, the respondent's enemy, to support the theory of guarantee we find it difficult to believe that shrewd.....pandalai, j.1. the defendants appeal from a decree declaring that the respondent (plaintiff) is entitled to redeem eleven jewels pledged by him with the appellants, ordering the appellants to produce the same in court on or before 30th january 1928 and in default to pay the respondent the price thereof i.e., rs. 11,000, with interest thereon, less rs. 11,712-9-0 being the amount due to the appellants under the decree in o.s. no. 110 of 1921 or a net amount of rs. 627-9-8 and also ordering the appellants to pay the respondent his costs of suit. all the parties are nattukottai chet ties and appellant 1 is appellant 2's brother's son.2. on 3rd november 1918 at karaikudi in the ramnad district the respondent borrowed from the appellants who are jointly carrying on a money lending business in.....
Judgment:

Pandalai, J.

1. The defendants appeal from a decree declaring that the respondent (plaintiff) is entitled to redeem eleven jewels pledged by him with the appellants, ordering the appellants to produce the same in Court on or before 30th January 1928 and in default to pay the respondent the price thereof i.e., Rs. 11,000, with interest thereon, less Rs. 11,712-9-0 being the amount due to the appellants under the decree in O.S. No. 110 of 1921 or a net amount of Rs. 627-9-8 and also ordering the appellants to pay the respondent his costs of suit. All the parties are Nattukottai Chet ties and appellant 1 is appellant 2's brother's son.

2. On 3rd November 1918 at Karaikudi in the Ramnad District the respondent borrowed from the appellants who are jointly carrying on a money lending business in India and the F.M.S., the sum of Rs. 6,000 at 12 per cent interest and pledged with them the jewels mentioned in the schedule to the decree. The debt being unpaid appellant 1 as agent on behalf of appellant 2 and during the latter's absence in the F.M.S. brought a suit for its recovery on 3rd November 1921 in the Court of the Subordinate Judge of Sivaganga O.S. No. 110 of 1921. In the plaint it was stated by way of remark that 2 jewels worth in all Rs. 2,700 were pledged for the debt. This was only by way of remark; the jewels were not produced in Court and the suit was framed as for the recovery of the debt, reserving to the plaintiff the right to sell the jewels without the intervention of the Court, a course which the creditor could take under Section 176, Contract Act. It is now admitted that this statement was incorrect because at least 10 jewels were pledged. It is alleged by the appellants that the mistake arose as the jewels were in an iron safe the key of which was with appellant 2 at. Ipoh in the F.M.S., and appellant 1 who had to file the suit before it became barred did not know the number and value of the pledged jewels. However this may be, in March 1922 the respondent applied to the Court to direct the production of the jewels urging that the statement in the plaint as to the number and value of the jewels was incorrect. To this request, instead of stating what is now urged as the truth appellant 1 stated in a counter affidavit that the defendant's (present respondent's) allegations were all false and that he had no right to have the pledged jewels produced nor could his objections as to their value or number be heard as no relief was sought in the suit about the said jewels. On 27th November 1922 the Court made the following order;

The pledged jewel does not form the subject matter of the suit. Plaintiff does not seek to enforce the pledge in the suit. No issue raises the question of the pledge. This application does not lie and is accordingly dismissed.

3. The decree in the suit was passed on 8th December 1922 by which time appellant had returned from Ipoh to India.

4. The dispute in this case is about a private sale of the pledged jewels which the appellants alleged they effected on 25th January 1923 for Rs. 5350 and about the true value of the jewels. The pespondent in paras. 7, 8 and 9 of the plaint alleged that the appellant's suppression of the truth about the jewels in the plaint in the Sivaganga suit was wilful and fraudulent, that in pursuance thereof they set up the alleged sale of 25th January 1923 in order to appropriate his property really worth Rs. 15,100 for a gross undervalue, and that no sale in fact took place, the so-called sale being a 'bogus transaction' or a sham and fictitious one.

5. The appellants pleaded that the erroneous statement in the plaint in the former suit was an innocent one, due to a bona fide mistake on the part of appellant as to what the pledged jewels were as they were in a safe the key of which was with appellant 2 then at Ipoh, that after arrival of appellant 2 in India, due notice of the sale was given to the respondent and that as the debt was not paid, all the ten pledged jewels were properly and in fact sold and fetched Rs. 5,350. They pleaded further that credit was given for this amount in several applications for execution in the Sivaganga Court, that no objection was taken by the appellant at the time but that he on the contrary made several payments towards the balance of the decree amount and that therefore the respondent must be held to have affirmed and acquiesced in the sale and is not entitled now to question it. They also pleaded limitation and that the suit as framed was not maintainable. 8 Issues were framed. Issue 1 raised the question of the number and value of the jewels. Issues 2, 4 and 5 raised the question of the factum and validity of the sale and its binding character on the respondent. Issue 3 raised the question of respondents' acquiescence, issue 6 that of the maintainability of the suit, issue 7 that of limitation, and issue 8 is the general issue as to appropriate relief.

6. The learned Judge who tried the case delivered a careful judgment dealing exhaustively with the matters in dispute and it is not necessary for us, as we generally agree with his conclusions, to go as minutely as he has done into the evidence with which he has dealt.

7. The learned Judge held that the appellants had foisted a sale on the respondent whereas in fact there was no sale at all. As to the jewels themselves though at the time of pleadings the appellants denied the existence of one small item worth Rs. 300 out of the items 11, no importance seems to have been attached at the trial to this question and nothing has been urged in the appeal before us about it and we must hold, with the learned Judge that all 11 jewels mentioned in the decree were pledged. About their value, the learned Judge held that they were worth Rs. 11,000. On the question of limitation he held that on his finding that the jewels were not sold the suit was really one for redemption for which a period of 30 years is provided, and that even regarded as one for damages it was governed by Article 95 as the appellants had been guilty of a gross fraud and the relief was one claimed on the ground of fraud. The respondent's acquiescence and the maintainability of the suit are not separately dealt with by the learned Judge probably because much insistence was not made on them before him but from several passages in his judgment dealing with the respondent's conduct and its effect it is clear that he considered that the respondent had not acquiesced in the appellants' pretence that the jewels had been sold when they were not. He says

it is inconceivable that the plaintiff (respondent) did not question the sale in Court though it is quite clear that no executing Court would go into such a matter, and that is what the plaintiff says the Judge refused to do. All that the plaintiff could say was that there was no sale but this was not a sale in execution and so the Court would not enquire into that sale.

8. As to maintainability of the suit the Judge says:

There having been no sale, the plaintiff is entitled to redeem the jewels by payment of a certain amount.

9. Before us the learned advocate for the appellants has argued (1) that the learned Judge's finding as to the factum of sale is incorrect (2) that his finding as to the value of the jewels is incorrect (3) that in any view the respondent must be held to have affirmed and acquiesced in the sale and cannot now disaffirm or repudiate it (4) that the suit is not maintainable as the respondent did not tender the money due nor was he willing and ready to pay it and (5) that the suit is barred by limitation.

10. We propose to deal with these contentions seriatim.

11. As to the sale itself after fully considering the evidence we agree with the Judge's finding that there was no sale at all on 25th January 1923 as alleged by the appellants. We need refer only to some of the striking features of this part of the case which support that finding. The sale is alleged to have been held at Karaikudi in the appellant's house on 25th January 1923, in pursuance to the notice Ex. B dated 16th January 1923, by which the respondent was required to pay the decree debt in one week from that day in default of which the 10 jewels mentioned therein would be sold. The respondent's answer to this was Ex. B-l, dated 26th January 1923, in which he pointed out the discrepancy between the plaint in which only two jewels were mentioned and the notice in which 10 jewels were mentioned and stated that neither the 10 jewels admitted nor those still omitted should be sold as he (respondent) intended to take criminal proceedings. The parties being residents of the same village these letters must have reached the other party the same or the next day.

12. It is curious that the sale is dated 25th January which gives the appellants the opportunity of saying that they had already sold the jewels before receipt of the respondent's reply. If any sale actually took place on 25th January, it is curious that the appellants on receipt of Ex. B-l did not take the trouble to inform the respondent that the sale had already been held or what the amount realised was. In fact they gave no information at all to the respondent but followed up the notice by an execution petition Ex. I in which for the first time they alleged that the jewels had been sold on 25th January for Rs. 5350. At the sale besides the appellants and their witness and the supposed purchasers, (two mysterious Madura merchants) four persons, Kuppusami Chetty, Kumarappa Chetty, Arunachalam Chetty, and a goldsmith Ponnaya Asari, all natives of Karaikudi, are said to have been present. Of the above nine persons except the appellants' only witness their paid servant, between whom and the respondent there is personal enmity on account of a decree obtained against him by the respondent, not a single person has been called. The last named four persons are said to have come there to value the jewels and yet not one of them has signed the undated list now produced which is alleged to be in the handwriting of appellant 2 and to have been made at the time of the sale. Most extraordinary of all, the alleged purchasers who are said to be two Madura merchants, have remained to this day unidentified, the appellants' witness not being able to say who or what their names are even at the trial. As if this were not enough, it is admitted that these mysterious persons, who came to buy valuable jewels did not bring any money nor was any money paid but it is said they were allowed to take away the jewels on the guarantee of Kuppusami Chetty. As there is absolutely nothing but the word of the appellant's witness, the respondent's enemy, to support the theory of guarantee we find it difficult to believe that shrewd businessmen like the appellants allowed unknown persons to take away Rs. 5,350 worth of jewels without a scrap of writing either from themselves or from someone else.

13. From all the evidence we are convinced that these Madura merchants are pure inventions and that no one took away the jewels on 25th January 1923 as admittedly no money was paid. Needless to say that the appellants have not produced their accounts of that day and it is admitted that there is no such entry anywhere in the appellants' books. This is not all. The appellants produced a ledger book and relied on certain entries there dated 16th July 1923 nearly six months later. The corresponding day book is not produced. The story to be gathered from these entries and the evidence of the appellants' witness is that Kumarappa Chetty had on 25th January 1923 taken the gold worth Rs. 1,200 from one of the neck ornaments which was melted, that for six months no part of the Rs. 5,350 for which the Madura merchants were responsible was paid by themselves or their guarantor or Kumarappa Chetty, that on 16th July 1923 the Madura merchants paid the appellants Rs. 3,640, that at once this Rs. 3,640 was lent to Kumarappa Chetty that, therefore, he was on that day debited with the Rs. 1,200 in one account and with Rs. 3,640 in a new account opened for that purpose and that for the balance of Rs. 510 another new account was opened in the name of the unknown Madura merchants. That these entries are fabrications is seen from the fact that in the body of the entries the date in jhai to which the transaction is referred is left blank.

14. The net result of these ingenious manipulations is that even on 16th July when these entries are supposed to have been made for some reason, not one pie in the shape of cash reached the hands of the appellants out of Rs. 5,350 for which they are supposed to have parted with the respondent's jewels; because Rs. 4,840 was outstanding against Kumarappa Chetty and Rs. 510 against the Madura merchants. The alleged payment of Rs. 3,640 by the Madura merchants and the loan of it at once to Kumarappa Chetty is a transparent paper device. It follows that the Madura merchants could not have got the great bulk of the jewels at any time and this confirms the belief that they are mere myths. The respondent suggests the reason why these ledger entries were brought into existence as of 16th July 1923. On 4th March 1923 ho had applied to the Sivaganga Court for sanction to prosecute the appellants for falsely stating in the plaint that only two jewels were pledged whereas it was admitted in the appellants' notice that there were at least items 10. As the learned Judge observes this was an instance of litigants in this country rushing to the criminal Court with little or no justification at all. But while this charge was pending against the appellants, they would think it necessary to arm themselves with proof of their bona fides. That petition was disposed of by the Sivaganga Court by dismissing, it, on 28th July 1924 and the suggestion is that the ledger entries of 16th July 1923 now relied on were really fabricated in answer to the threat of prosecution. Whether this be so or not, we have no doubt that they were paper entries made with the object of supporting a false story first set up in the execution petition Ex. 1 dated 7th February 1923. For these and other reasons more fully stated by the learned Judge we come without hesitation to the conclusion that there was no sale of the respondents' jewels at, all on 25th January 1923 and that the statement to the contrary made by the appellants in the execution petitions in O.S. No.' 110 of 1921 and in this case is untrue. It never was the case of the appellants that they sold the jewels at any other time or to any one else.

15. Coming next to the value of the jewels, in view of the finding that the appellants have not sold the jewels, or given any other satisfactory explanation about their disposal, they must either have them in their possession or must have improperly disposed of them. In either case, on the appellants' default to produce the jewels which should be in their possession, the Court has to come to a conclusion about their value on the best materials available and the appellants cannot complain if the presumption is drawn against them on the principle of Armorie v. Delamirie [1722] 1 Str 504. The learned Judge had some material before him, viz., the fact that item 1, (a packet a diamonds) which the appellants themselves valued at Rs. 1,500 in the plaint in O.S. No. 110 of 1921 is put down at Rs. 800 in the memorandum Ex. D1, now put forward as the basis on which the total price was fixed at Rs. 5,350. This showed that the real price was somewhere near twice the figure at which the appellants pretended to have sold them. On this and on the evidence of the respondent and the fact that the loan advanced was Rs. 6,000 which with interest came to Rs. 8,160 the learned Judge thought it fair to fix the price of the entire lot of pledged jewels at Rs. 11,000. We find nothing wrong in this method and can only add that if we had to make a valuation for ourselves we would in the circumstances have to adopt the same method and arrive at the same figure.

16. The only other contention that involves any question of fact is that the respondent affirmed and acquiesced in the appellant's allegation of sale and cannot now be permitted to question the sale. It is urged that the principle that no one can approbate and reprobate the same transaction applies. But in our opinion the facts proved do not raise any inference of acquiescence at all by the respondent of the fraud-for in fact such it was-which the appellants attempted. Before any one can acquiesce in another's act he must know what that act is. No one can acquiesce in a fraud till he knows that there has been a fraud or in a violation of his right till he knows that his rights have been violated and in what way. The basis of the argument in the respondent's so-called acquiescence is the fact that the appellants alleged in certain execution petitions that the jewels had been sold for Rs. 6,350 and applied for execution for the balance and that the respondent when arrested on those petitions paid Rs. 200, Rs. 1,000, and Rs. 300 respectively in cash an later attempted unsuccessfully to, set off a sum of Rs. 1019 towards that balance.

17. These petitions are, Ex. 1 (7th February 1923), E.P. 137 of 1923, Ex. 1 (a) (8th April 1923), E.P. 265 of 1923, (Ex. 1 (b) 16th January 1924) E.P. 12 of 1924; Ex. 1 (c) (18th February 1924), E.P. 35 of 1924 and Ex. 1 (d) (6th August 1924); E.P. 112 of 1924.

18. The payments by the respondent were made on arrest in pursuance of the first three of the above applications. The unsuccessful application to set off towards the decree Rs. 1,019 alleged to be due to the respondent on some other account is Ex. 1 (e) dated 23rd August 1924 and it was dismissed. The utmost that follows from these facts is that the respondent did not resist those execution proceedings on the ground of the fraud which has now come to light probably because he did not know the appellants were setting up a sale which in fact had not taken place. Assuming that the respondent could have put forward that case in execution and that the executing Court could have given him relief on it about which we will state our opinion presently it is still incumbent on the appellants if they rely on any acquiescence in their conduct by the respondent to show that he knew the facts. Not only is there no such proof but in the nature of the appellant's contention that there was an actual sale, there could be no proof that the respondent knew that there was no sale. Authority for this is abundant land it is only necessary to refer to the passage in Halsbury, Laws of England Vol. 13, at p. 169 summarizing the law that:

as regards knowledge, parsons cannot be said to acquiesce in the claims of others unless they are fully cognizant of their right to dispute them. But it is not necessary that the plaintiff should have known the exact relief to which he was entitled, it is enough that he knew the facts constituting his title to relief.

19. The appellants' contention must, therefore, fail on the ground that he did not know that the sale alleged by the appellants was a myth. But there are other and equally fatal grounds. The ground for admitting the defence of acquiescence or laches according to the doctrine of the English Courts of Equity is that a plaintiff in equity is bound to prosecute his claim without undue delay. Where, however, there is, as in India, a statutory time limit to all conceivable kinds of action, the plaintiff is entitled to the full statutory period before his claim becomes unenforceable. Besides, even if in such cases the defence of laches were admissible the defendants (appellants in this case) would have to show that they had suffered a change of position by reason of respondent's laches in which it would not be reasonable to allow him to assert his right. We fail to see what change of position the appellants have suffered except that they have succeeded in making away with part of the respondent's property by giving him credit for only about half its value; in other words, they have enriched themselves at respondent's expense. It is not only not unreasonable but eminently just that this wrong should be redressed. We are not aware of the defence of laches and acquiescence being employed to defeat a money claim like the present: of. Ben Ram v. Kundal Lal [1899] 21 All 496 a case of equitable estoppel.

20. The appellants' advocate urged as a branch of his argument on acquiescence, what is really a distinct point, that the respondent's present suit is incompetent by reason of Section 47, Civil P.C., because the question raised is one relating to the execution, discharge or satisfaction of the decree in O.S. No. 110 of 1921. This point does not appear to have been distinctly raised in the lower Court and has not been distinctly taken in the grounds of appeal to this Court. The passage in the lower Court's judgment has already been extracted above where the learned Judge in dealing with the respondent's alleged acquiescence observed that the executing Court could not and would not go into the question whether there had been a proper sale of the jewels as the sale was not a judicial one. No authority has been cited to us to show that this view is incorrect. The case cited Motilal Hirdbhai v. Bai Mani was one in which the pledgor having obtained a decree for redemption of certain shares sought in execution to show that certain new shares allotted by the company to the pledgees as holders of the old shares should also be delivered up as accretions to the pledged shares on payment of the debt. It was held that the question whether the new shares were accretions liable to be redeemed with the pledged shares was one which fell properly under Section 47, Civil P.C.

21. The suit O.S. 110 of 1921 was brought by appellant 2 as creditor merely for recovery of the debt retaining the goods pledged as a collateral security and he purported after the decree to exercise his right of sale without intervention of the Court as he was entitled to do. The present respondent's application, to have the jewels produced in Court was resisted by the appellants and the Court upheld that refusal by the order dated 27th May 1922 already quoted at the beginning of this judgment. We fail to see how in the above circumstances the respondent could have again agitated in execution the question of the factum or validity of the sale out of Court of the jewels as to which rightly or wrongly the Court had held that they did not form the subject matter of the suit and that the question of their pledge was not in issue. The respondent could not compel the appellants to exercise the power of sale as a means of discharging or satisfying the decree. His only rights were (1) in case the appellants exercised the power, to insist that it should be honestly and properly done and the sale proceeds applied to the debt (2) in case the appellants did not exercise the power, to redeem the pledges on payment of the debt or so much of it as remained otherwise unpaid and (3) in case the sale was improperly exercised, to get damages caused thereby. The 2nd of the above alternatives is what has happened. Having regard to the nature of the former suit, the execution proceedings therein could not at respondent's instance have been converted into an enquiry whether there had been any sale at all or if there had been one whether it was properly held. If such an enquiry had been held and it was found as has been found in this case, that the appellants are liable to pay the respondent the difference between the full value of the jewels and the debt, there was no means of enforcing the payment of such difference in execution of the decree and the respondent would even then have had to bring a fresh suit for that sum. That is in substance what he has done and this suit cannot therefore be defeated by resort to Section 47.

22. The next objection urged on behalf of the appellants, is that the suit is not maintainable as the respondent did not tender the money due nor was he willing and ready to pay it. For this his learned advocate cited the Privy Council decision in Neckram Dobay v. Bank of Bengal [1892] 19 Cal. 322, and the English decisions cited in argument in that case Halliday v. Holgate [1869] 3 Ex. 299, Donal v. Sucking [1867] 1 Q.B. 585 and Johnson v. Stear [1864] 15 C.B. (N.S.) 330. It is sufficient to deal with the decision of the Privy Council which was given after consideration of the other cases. The decision was that where a pledgee having power to sell for default takes over as if upon a sale to himself the property pledged without the authority of the pledgor but crediting its value in account with him, this act though an unauthorized conversion does not put an end to the contract of pledge so as to entitle the pledgor to have the property back without payment. Applying that to the present case what follows is that the pledgee having in effect taken over as if upon a sale the pledged jewels to himself without giving credit for their full value to the pledgor has been guilty of an unauthorized conversion and the pledgor is therefore entitled to have his property back or its full value but only on payment of the debt, This is exactly what the learned Judge has ordered. He having found the jewels to be worth Rs. 11,000 and having given the appellants the opportunity to produce them if they could has ordered them in case of default to pay the respondent the difference between that value and the balance of the decree amount and no objection has been taken to the figures. The decision cited therefore, far from showing that decree appealed from is erroneous, supports it. But it was suggested that the non-maintainability of the suit was due to the respondent's not having tendered or his not having been ready and willing to pay the amount due before the suit, which it seems is an essential condition of bringing a suit for redemption. This is a misapprehension. If a pledgor brings a suit for redemption without first tendering the money to the pledgee and it turns out that the suit was unnecessary because the pledgee was always ready and willing to deliver up the property pledged without suit if the debt had been paid, the plaintiff will no doubt be made to pay the costs of the defendant but his suit cannot be dismissed. But if it turns out that in the circumstances which preceded the suit, it would have been perfectly useless to tender the money to the pledgee as for instance where the pledgee declares in advance his inability to return the pledged property, in such a case if the pledgee was at fault in putting it beyond his power to return the goods the pledgor cannot be defeated on account of his not going through a useless ceremony of tender. Section 51, Contract Act makes the matter clear when it declares that neither party to reciprocal promises need perform his promise unless the other party is ready and willing to perform his promise. Illus. (a) to this section is the ordinary case of buying and selling goods when neither the buyer need pay the price nor the seller deliver the goods unless the other party is ready and willing to perform his part. In this case the appellants having so long ago as 7th February 1923, the date of their first execution petition declared that they had sold the jewels and thus put it beyond their power to be ready and willing to return them the respondent, was not required to tender the debt to them. This contention also must be rejected.

23. The last point urged is that the suit is barred by limitation. The appellant's argument is that the suit is one for damages for tort governed by Article 36, Lim Act and should have been brought within two years of the wrong conversion complained of. The learned Judge has held that in the nature of the finding that the goods were not sold the suit is one for redemption governed by Article 145, Lim. Act which allows 30 years from the date of the deposit or pawn. We think that Article 36 has no application to the suit as it is for wrongs independent of contract and that this case arises out of a contract of pledge though technically the appellants' act amounted according to the authorities to conversion. But as held by the Privy Council in Nekram Dobay v. Bank of Bengal [1892] 19 Cal. 322, above referred to that conduct was not inconsistent with the condition of the contract as to have the effect of putting an end to the contrast so as to enable the pledgor to avoid the contract under Section 153, Contract Act. If the contract is thus till subsisting whether the suit be regarded as one for redemption governed by Article 145, or as one for damages for breach of contract governed by Article 115, the suit which was brought on 19th January 1926, before the expiry of 3 years from 25th January 1923 the date of the alleged sale, is well within time and is not barred, In this view it is not necessary to consider whether the suit was one for relief on the ground of fraud governed by Article 95. The appeal fails and is dismissed with costs. The memo of objections is also dismissed with costs.


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