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K.M. Mohamad Abdul Kadir Rowther Vs. S. Muthiah Chettiar - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Reported in(1960)2MLJ13
AppellantK.M. Mohamad Abdul Kadir Rowther
RespondentS. Muthiah Chettiar
Cases ReferredColquhoun v. Brooks L.R.
Excerpt:
.....reliance was placed on the well recognised principle of interpretation of documents that where parties expressed the terms of their contract in a document they should be deemed to have expressed all their terms and conditions under which their rights inter se were to be regulated, and that the court should not add to the terms expressly agreed to between the parties. the rule of law as well as of reason and good sense is expressum facit ceassare taciturn and where there is an express covenant that the defendant shall out of trust funds--pay the sum advanced, we think it impossible that, at the same time he made himself absolutely liable for the payment of it simpliciter; the failure to make the 'expressio 'complete very often arises from accident, very often from the fact that it..........that both the parties performed their respective obligations under the contract; the appellant's firm paid the respondent a sum of rs. 15,000 within four days of the contract, and the respondent delivered the two prints of the film and the accompanying publicities.3. on 25th february, 1947, the appellant's firm found that m/s. dinamani talkies, madurai were entitled to receive a sum of rs. 2000 from the respondent on account of the exhibition of a certain film and they had to be paid that sum. this the appellant's firm did presumably at the request of the respondent and debited the same in the accounts against the respondent.4. the picture 'vikatayogi' was however not a success. at the end of the contract period it was found that the share of the respondent of the realisations for the.....
Judgment:

Ramachandra Iyer, J.

1. This is an appeal against the decree in O.S. No. 7 of 1954 on the file of the Sub-Court of Dindigul. The plaintiff is the appellant.

2. The suit was for the recovery of a sum of Rs. 8229-2-4 representing the balance due on account with subsequent interest thereon. The appellant was a partner in a business run under the name of 'Amar Jyothi Talkie Distributors, Dindigul'. It will be convenient to refer to that firm as the appellant's firm. That partnership was dissolved and under an agreement between the partners the appellant became solely entitled to the moneys due from the respondent. The respondent was doing business in the distribution of films under the name of 'Nethaji Picture Circuit' at Tiruchira-palli. They had acquired a right to the distribution of a Tamil film called ' Vikata-yogi' in the Madurai district. On 6th February, 1947, they assigned that right to the Amar Jyothi Talkie Distributors for a period of years. The terms of the assignment were embodied in Exhibit A-2. Under that agreement the appellant's firm was to pay a sum of Rs. 15,000 as advance to the respondent against the right to distribute the film for a period of 41 years. The respondent was to give 2 prints of the picture and all available publicities, and thereupon the appellant's firm was entitled at their discretion to exploit and distribute the picture at such rates and on such terms and conditions as they deemed fit. In the net realisation from the exhibition of the film the appellant's firm was to take a commission of I2| per cent., while the respondent was entitled to the balance of 87$. The latter was, however, not to be paid over to the respondent till the entire sum of Rs. 15,000 advanced by the appellant's firm was wiped out, and that portion of the realisations was only to be credited as against the advance. When the entire amount of Rs. 15,000 was recouped by the appellant's firm, they were bound to pay the respondent in cash the 87 per cent, of the realisations. There were also certain other stipulations in the agreement to which reference will be made later. It is admitted that both the parties performed their respective obligations under the contract; the appellant's firm paid the respondent a sum of Rs. 15,000 within four days of the contract, and the respondent delivered the two prints of the film and the accompanying publicities.

3. On 25th February, 1947, the appellant's firm found that M/s. Dinamani Talkies, Madurai were entitled to receive a sum of Rs. 2000 from the respondent on account of the exhibition of a certain film and they had to be paid that sum. This the appellant's firm did presumably at the request of the respondent and debited the same in the accounts against the respondent.

4. The picture 'Vikatayogi' was however not a success. At the end of the contract period it was found that the share of the respondent of the realisations for the exhibition of the film fell short of the sum advanced, viz., Rs. 15,000. The accounts showed a debit balance of Rs. 7323-2-5 against the respondent. That amount included the sum of Rs. 2000 paid by the former to Dinamani Talkies at the request of the latter. A claim was, therefore, made for the payment of the amount due on accounts. The respondent at first complained that the loss was due to the inefficient management by the appellant's firm, but did not persist, in that charge. He suggested to the appellant to take an extension of the contract and minimise the loss; he also promised to settle the account. The appellants firm did not agree for an extension of contract, as the picture was evidently a flop. They insisted on the payment of their dues and issued a notice, of demand. The respondent denied his personal liability to the transaction and took up the position that the only right of the appellant under the agreement was to recover the advance amount paid or such portion of it that might be due, from and out of the proceeds of the picture. Thereupon the suit, out of which the present appeal arises, was filed.

5. The respondent contested the action on the grounds, mentioned in his reply notice. He also denied the correctness of the account.

6. In the lower Court neither of the parties made any distinction between the balance of advance due, which could be claimed only on the basis of the nature Of that transaction and the sum of Rs. 2000 advanced to the Dinamani Talkies at the request of the respondent, which was an independent transaction.

7. The learned Subordinate Judge held that, as there was a special provision under the contract that the amount advanced by the Amar Jyothi Talkie Distributors should be discharged out of the respondent's share of the realisations from the picture, there could be no right in the appellant to maintain the action personally against the former. On that finding he dismissed the entire claim although that finding would sustain only the dismissal of the claim in respect of the advance paid and would be no answer for sum of Rs. 2000 paid by the appellant for the respondent's benefit. Aggrieved by the decision the plaintiff has filed the appeal.

8. The sum of Rs. 8229-2-4 claimed in the suit comprises three items : (1) the refund of that portion of the advance which still remained undischarged at the end of the contract period, viz., Rs. 5481-0-8 (ii) the amount paid to the Dinamani Talkies, Madurai on behalf of the respondent by the appellant Rs. 2000 (iii) interest from 22nd January, 1953 to 22nd November, 1953 at the rate of 12 per cent, on its outstanding balance Rs. 748-1-8.

9. As regards the first item of claim the question to be considered is whether the respondent would be personally liable to pay the balance of the advance amount that remained unrecouped. The decision of that question would depend on the terms on which the advance was paid either as expressed in the agreement, or implied in the circumstances of the case. The relevant clauses of Exhibit A-2 run as follows:

1. The party of the second part shall on the execution of these presents pay Sri S. Muthia Chettiar a sum of Rs. 15,000 (Rupees fifteen thousand only) as advance by them in the accounts of the party of the first part, against distribution for a period of 4J years. After the completion of the said period the party of the second part should return all the copies of the prints and loan and saleable publicities to the party of the first part....

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4. The realisations actually made of the said picture in the said territory after deduction by the party of the second part of the distribution commission as hereinafter provided shall be credited to the account of the party of the first part.

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6. That the party of the second part shall recover the advance of Rs. 15,000 (Rupees fifteen thousand only) from the share amounts payable to the party of the first part.

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8. That party of the second part shall, after the said entire advance amount is recovered, pay the party of the first part, his share once a month accompanied with a statement of account relating thereto as hereinabove provided.

10. In case the party of the first part sells the said picture to a third party, the party of the second part shall be entitled to a commission of 5 per cent, (five) on the sale proceeds.

It will be seen from the agreement that the sum of Rs. 15,000 was to be paid by the appellant's firm as advance on account against distribution right of the firm for a period of 4 1/2 years. There is no doubt that this sum was intended to be recouped by the appellant's firm. Till that amount is discharged the appellant's firm was entitled to take the respondent's share in the net collections. The agreement provides for the payment of the 87 per cent of the net collections to the respondent after the entire sum of Rs. 15,000 was liquidated. But there is no provision in Exhibit A-2 for a case where the net realisations during the contract period fell short of the sum of Rs. 15,000. The question is whether a promise to pay that amount can be implied.

10. It is evident that the sum of Rs. 15,000 was not intended to be a security for the performance of the obligations under the contract by the appellant's firm, as that amount was agreed to be liquidated as and when moneys were received on the exhibition of the picture during the period of the contract itself. Nor can it be said for the respondent that the advance amount paid was a minimum guarantee by the appellant firm. It was contended for the appellant that the advance should be held to be a loan by the appellant's firm to the respondent and that the portion which remained undischarged should be held to be repayable, as there would be an implied promise to repay a loan. The learned advocate for the appellant urged that the word 'Advance' itself would imply a loan. 'Advance' means literally a payment before hand; in certain cases it may be a loan but it cannot be said that a sum paid by way of advance is necessarily a loan. In London Financial Association v. Kelk L.R. (1884) 26 Ch. D. 107, it was observed, that the words-'advancing' and 'lending' might each have a different signification, money might be 'advanced' without being 'lent' and that the relation of borrower and lender did not exist in a great variety of the transactions. In Lincolnshire Sugar Company v. Smart L.R. (1937) A.C. 697, Lord Macmillan observed that the term 'advanced' in the British Sugar Industry (Assistance) Act of 1931 was ambiguous and might either refer to the prepayments of what would become due in future or be a polite euphemism for loans; but when 'advance' were declared to be 'repayable' (though only conditionally) they certainly would lean to the side of loans.

11. We are of opinion that in the present case it cannot be said that the advance of of Rs. 15,000 was by way of loan. Under clause (1) of the agreement, the advance of Rs. 15,000 was made on account against distribution for a period of 4 1/2 years.Under the contract the actual exploitation of the picture was to be in the hands of the appellants firm and they would be receiving the monies. As the respondent states in his letter Exhibit A-18 the distribution right was assigned in the hope that the appellant's firm would be able to arrange to screen the picture more efficiently than the respondent and recover at least the advance amount. The respondent was to receive 87 1/2 per cent, of the collections, and under the circumstances it can be only held that the payment was intended as an advance of the respondent's share in the future realisation of the picture. A provision is therefore made for its recovery, but that cannot mean that the sum of Rs. 15,000 was given as a loan.

12. It was next contended that, even if the advance were not to be considered as a loan, the amount was intended to be recovered by the appellant's firm, and that, therefore an obligation to repay the sum should be inferred : there being thus an obligation to repay a personal liability would subsist.

13. The learned Advocate-General-appearing for the respondent contested that position and contended that, where the parties reduced the terms of their agreement in the form of a solemn document providing ex facie for the respective rights and obligations of the parties thereto, there would be no scope for extending the express terms of the agreement by implication. Reliance was placed on the well recognised principle of interpretation of documents that where parties expressed the terms of their contract in a document they should be deemed to have expressed all their terms and conditions under which their rights inter se were to be regulated, and that the Court should not add to the terms expressly agreed to between the parties. It was contended that Clause 6 of the agreement provided a particular mode of discharge of the obligation of the respondent in regard to the advance paid, and that would exclude any other mode of discharge a fortiori personal liability. The contention was based on the legal maxim ' expressio unis est exclusio alterius ' meaning that the express mention of one thing implies the exclusion of another. In Brooms Legal Maxims, 1911 Edition, page 504 this rule is stated thus.:. Where parties have entered into written engagements with express stipulations, it is manifestly not desirable to extend them by implications; the presumption is, that having expressed some, they have expressed all the conditions by which they intend to be bound under that instrument.

14. In Singjee v. Tiruvengadam I.L.R. (1889) Mad. 192, a question arose whether a hypothecation bond contained a personal covenant. The bond stipulated that the debtor should pay the creditor every day a portion of the proceeds of sales of firewood in his shop. In default the creditor was authorised to collect amount due from the mortgaged properties. It was held that no personal covenant could be implied from the document.

15. In Chennapatnam Gopal Rao v. T. Narasimha Rao I.L.R. (1903) Mad. 86, there was a mortgage and a lease of an even date (two together were held to constitute the bargain); the lessee who was the husband of the mortgagee was directed to pay the interest due to the mortgagee. It was held that the transaction between the parties was a tripartite one under which there was no personal obligation on the part of the mortgagor in respect of the interest, and this was to be paid only by the lessee. Dealing with the argument that a general liability to repay money ought to be implied from the description 'money lent and advanced' the learned Judges followed the reasoning of Pollock, C.B. in Mathew v. Blackmore 1 H & N. 762, to the following effect:

In the present case the question is whether a contract by parol can be implied for repayment when there is an express covenant under seal relative to it. The rule of law as well as of reason and good sense is expressum facit ceassare taciturn and where there is an express covenant that the defendant shall out of trust funds--pay the sum advanced, we think it impossible that, at the same time he made himself absolutely liable for the payment of it simpliciter; and at all events to do so would be to create a contract by implication different from and much more onerous than that entered into by the express words used.

16. The rule however which is contained in the maxim, 'expressio unis est exclusio alterius' is not a rule of law but one relating to the construction of documents. It is also applied in certain cases to the construction of statutes. It could only be a guide for the interpretation of a statute or document to ascertain the intention of the legislature or of the parties. It cannot always be held to be a certain guide for the ascertainment of the intention, as the exclusion of certain terms in a document might be due to the result of inadvertance, accident, etc. For example it is not uncommon to find in partnership agreements, the absence of a stipulation in regard to the sharing of the losses between the partners. They either by reasons of sentiment or by reason that they do no anticipate loss in the venture, do not sometimes provide for the sharing of the losses. That does not mean that if the partnership sustains loss the partners are not liable to share the same. In such a case an agreement has always been implied for the sharing of the loss in the proportion in which the profits are agreed to be shared between the partners. The question whether a term in a contract had to be implied or not, would depend on the nature of the transaction and the intention of the parties.

17. The maxim 'expressio unis est exclusio alterius' is not therefore an absolute one, and in Brooms Legal Maxims (ioth Edition at page 444) it is stated:

Great caution is necessary in dealing with the maxim expressio unis est exclusio alterius, for as Lord Campbell observed in Sounders v. Evan L.R. 8 H.L. 729, it is not of universal application, but depends upon the intention of the party as discoverable upon the face of (he instrument or of the transaction; thus where general words are used in a written instrument, it is necessary, in the first instance, to determine whether those words are intended to include other matters besides such as are specifically mentioned, or to be referable exclusively to them, in which latter case only can the above maxim be properly applied.

The applicability of the maxim was considered by Wills, J., in Colquhoun v. Brooks L.R. (1887) 19 Q.B.D. 400 who observed:

I may observe that the methods of construction summarised in the maxim ' expressio unis exclusio alterius' is one that certainly requires to be watched. Perhaps few so called rules of interpretation have been more frequently misapplied and stretched beyond their due limits. The failure to make the ' expressio ' complete very often arises from accident, very often from the fact that it never struck the draftsman that the thing supposed to be excluded needed specific mention of any kind; and the application of this and every other technical rule of construction varies so much under differing circumstances and is open to so many qualifications and exceptions, that it is rarely that such rules help one to arrive at what is meant.

This statement of the principle was accepted by the Court of Appeal in Colquhoun v. Brooks L.R. (1888) 21 Q.B.D. 52. Lopes, L.J., observed that the maxim was often a valuable servant, but a dangerous master to follow in the construction of statutes or documents. He held that 'exclusio' was often the result of inadvertence or accident, and that the maxim ought not to be applied, when its application having regard to the subject matter to which it was to be applied leads to inconsistency or injustice.

18. We have already referred to the intention of the parties as disclosed in Exhibit A-2 that the sum of Rs. 15,000 was to be recovered. Clause 6 of the agreement, in our opinion, was intended to create a right to lien or set off over the 87 1/2 per cent, of the collection; which otherwise would have to be paid over to the respondent. It purported to provide only an additional right and cannot be held to exclude an obligation to pay back the advance, or such portion thereof as remained unpaid after the period of the contract was over. That the advance was intended to be recouped or repaid is supported by Clause 10. That clause provided for a case when the respondent proceeded to sell the picture, evidently during the period of the contract. It stated that in such a case the appellant's firm would be entitled to 5 per cent of the sale proceeds. If one were to accept the contention of the respondent, it would follow that in a case where he proceeded to sell the picture to a third party the appellant firm would have to be content with the 5 per cent, of the sale proceeds of the picture and forfeit the sum of Rs. 15,000. This is manifestly unjust and would not have been the intention of the parties. In such a case it is but proper to infer that the appellant firm would be entitled to be paid back, the unrecouped portion of the advance and also the 5 per cent of the sale price of the picture. We are, therefore, of the opinion that in the circumstances of the case the maxim cannot apply, and that the parties intended to adjust the advance sum of Rs. 15,000 at the end of the contract period, that an obligation to pay the unadjusted portion of the advance amount which remained due at the termination of the contract should be implied on the terms of the document, and that the appellant would be entitled to recover the amount due.

19. In the accounts submitted by the appellant to the respondent the sum of Rs. 2000 paid to Dinamani Pictures by the appellant's firm on behalf of the respondent was debited. The propriety of that debit was accepted by the respondent in Exhibit A-II dated 28th February, 1947. No objection has been taken for the claim on the accounts except a vague statement in the written statement that the correctness of the accounts was not admitted. When D.W. 1 was examined, the learned Judge has made a note that the defendant's advocate stated that the parties were not at issue about the correctness of the accounts 'at that stage '. What the defendant's advocate meant by that concession and what really the learned Judge meant when he recorded the same, it is difficult to understand. The correctness of the account was relevant if at all only at that stage. It is unnecessary, however, to rest one's conclusion in this case on the mere admission of the defendant's advocate. From the fact that the propriety of the debit in regard to the sum of Rs. 2,000 was admitted by the respondent as early as 1947, the claim under the head should be held to be proved.

20. The question then is in regard to interest. The appellant claimed interest from 21st February, 1953 to 22nd November, 1953 at 12 per cent per annum relinquishing the interest thereafter. The agreement does not provide for the payment of any interest. Under the circumstances the appellant would be entitled to get only interest at 6 per cent, from the date of demand. His claim under this head will be reduced by half and he will be awarded only a sum of Rs. 374-0-10 towards the interest.

21. In the result there will be a decree for Rs. 7855-1-6 with interest and costs in both the Courts.


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