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Ramasamy Chetty Vs. Karuppan Chetty and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Judge
Reported inAIR1916Mad133; 31Ind.Cas.216
AppellantRamasamy Chetty
RespondentKaruppan Chetty and ors.
Cases ReferredDe Bussche v. Alt
Excerpt:
civil procedure code (act v of 1908), section 11 - two suits with, regard to same subject-matter tried together--judgment in one following that in the other--appeal against one, whether tarred because no appeal against the other--principal and agent--silence or acquiescence of principal, whether amounts to ratification--agent obtaining pecuniary advantage for himself, duty of--trusts act (ii of 1882), section 88--decree in favour of principal--execution sale--purchase by agent of immoveable property outside british india--principal entitled, to decree for mesne profits--mandatory injunction directing reconveyance of property, whether allowed. - .....and 110, in respect of which the charge against the 1st defendant is that he lent these items to tamils and muhammadans contrary to the instructions of the principals. loan no. 18 was made on the 23rd of april 1904, no. 102 in july 1905, and no. 110 in october 1905. the earliest letter in which there is a prohibition against lending to tamils and muhammadans is exhibit e, dated the 13th april 1904, written by the 3rd defendant to the 1st defendant. the 1st defendant replied on the 4th of may 1904 [exhibit e2] and stated that he had lent to three muhammadans prior to the receipt of the instructions in exhibit e and said that for the future he would not lend to tamils and muhammadans. one of those persons to whom he had already advanced is creditor no. 18, and so far as that item is.....
Judgment:

1. Plaintiff's father and the 3rd defendant were doing business as moneylenders in partnership at Kuala Lumpur under the name and style of S.L.V. The 1st defendant was engaged as an agent to conduct the business of the firm for three years and he executed the usual salary chit to the 3rd defendant on the 3rd of November 1903. He transacted the business of the firm as such agent till about the end' of the year 1907 and came back to India in the beginning of 1908.

2. The 3rd defendant released his interest in the partnership to the plaintiff's father, Plaintiff's father is dead and the plaintiff is now the sole owner of the firm.

3. The suit is instituted to take the accounts of the agency. A preliminary decree was passed for an account and in pursuance of that decree statements of accounts were filed, and the plaintiff after the examination of the accounts charged the 1st defendant with misconduct in respect of particular loans which have since become irrecoverable and sought to recover their amount from him. The Subordinate Judge of Ramnad has disallowed the claim as to most of the items and the plaintiff appeals in respect of some of them.

4. The respondent has taken an objection to the hearing of the appeal, on the ground that the question of the liability of the 1st defendant has been adjudicated upon by a prior decision which operates as res judicata. The facts necessary for the disposal of this question are these: The 1st defendant when he was appointed an agent was given a 1/6th share in the profits and losses of the firm; but instead of his being given this share in the S.L.V. firm, a subsidiary firm of L.R.M. was started which was to have a and share in the profits and losses of the transactions of the main S.L.V. firm, and in the L.R.M. firm the 1st defendant was to have a one-half share, the plaintiff's father and the 3rd defendant, the partners of the S.L.V. firm, being entitled to the other half. The L.R.M. firm was not to transact any independent business, but was simply to share to the extent of f rd in the profits and losses of the transactions of the S.L.V. firm. It is obvious that though in name there was a separate firm of L.R.M. in which the 1st defendant had a one-half share, the practical effect of the arrangement was to give the 1st defendant a 1/6th share in the firm of S.L.V. The plaintiff simultaneously with the suit instituted another suit, Original Suit No. 10 of 1912, against the 1st defendant for the dissolution of the L.R.M. firm. As the question of the 1st defendant's liability was the same in both the suits, they were tried together on the same evidence and disposed of by the same Judge. The judgment in Original Suit No. 10 of 1912 is based on and follows the judgment in Original Suit No. 48 of 1911, though separate decrees were drawn up. Plaintiff has not appealed against the decree in the Original Suit No. 10 of 1912 and it is this judgment which is pleaded as a bar to the trial of this appeal. The respondent's Vakil relies on a decision of the Calcutta High Court reported as Midnaporo Zemindary Co. Ltd. v. Nitya Kali Dasi 24 Ind. Cas. 543 hut we think the question has been decided by a Full Bench of this Court in Panchanada Velan v. Vaithinatha Sastrial 16 M.L.J. 63. Following that decision we overrule the plea of res judicata raised by the respondent.

5. Coming to the merits of the appeal, the items for which the plaintiff seeks to make the agent responsible may be divided into three classes. Class one consisting of items said to have been lent negligently to persons who were not in a position to repay them. These items are Nos. 23, 40, 56, 143 and 73 of the A schedule. The 1st defendant has given evidence with respect to these items, and the lower Court on a consideration of the evidence has come to the conclusion that the 1st defendant was not guilty of negligence with regard to these items. Our attention has been drawn to the evidence with respect to each of these transactions, and we agree with the lower Court that there was no negligence on the part of the 1st defendant in making those loans. The next class consists of three items, Nos. 18, 102 and 110, in respect of which the charge against the 1st defendant is that he lent these items to Tamils and Muhammadans contrary to the instructions of the principals. Loan No. 18 was made on the 23rd of April 1904, No. 102 in July 1905, and No. 110 in October 1905. The earliest letter in which there is a prohibition against lending to Tamils and Muhammadans is Exhibit E, dated the 13th April 1904, written by the 3rd defendant to the 1st defendant. The 1st defendant replied on the 4th of May 1904 [Exhibit E2] and stated that he had lent to three Muhammadans prior to the receipt of the instructions in Exhibit E and said that for the future he would not lend to Tamils and Muhammadans. One of those persons to whom he had already advanced is creditor No. 18, and so far as that item is concerned, the agent has not disobeyed the instructions of the principals. With regard to the other items the respondent contends that although the principals gave instructions as to not lending to Tamils and Muhammadans, those instructions were not intended to be taken as positive prohibitions, but were merely in the nature of directions which he was to follow as far as possible. He also contends that the principals regularly received copies of the Day Books in which these transactions were entered and were asked by him to examine them and write to him if they had any objections, that the principals though they took objections to the loans made to one or two particular debtors, they took no objection to the loans made to Tamils and Muhammadans as such; in fact they have ratified these particular transactions. The lower Court agreed with these contentions and we agree with it.

6. After the writing of Exhibit E2, it appears that the 1st defendant was lending moneys to Tamils and Muhammadans and the principals became aware of it when the monthly hurippus were sent to them; they took no objection to the loans to Tamils and Muhammadans as such, though they objected to a loan made to one Chellayya on the ground that the sum lent was too large. [Exhibit T8, dated 2nd August 1904, and Exhibit XV dated 6th August 1904.] Correspondence went on between the 1st defendant and the 3rd defendant with regard to this particular man, Chellayya. Finally in Exhibits XXI and XXXVIII, dated 18th September 1904 and 27th September 1904 respectively, written by the plaintiff's father and 3rd defendant to the 1st defendant, satisfaction was expressed as to the mode in which the 1st defendant was transacting the business of the firm. The next important letter is Exhibit El, dated 8th March 1915, in which the 3rd defendant asked the 1st defendant not to have dealings with Tamils and Muhammadans in future. Even after this letter the 1st defendant had transactions with Tamils and Muhammadans which were brought to the notice of the principals when the copies of the Day Book were sent. On the 30th of July 1905 the 1st defendant wrote to the 3rd defendant pro testing against the prohibition of loans to Tamils and Muhammadans and stating that he had lent to some Tamils who were well known to him and had not incurred any loss in consequence [Exhibit XXI (a)]. Exhibit F2 was the reply in which no exception was taken to the 1st defendant's course of dealing. In Exhibit F, dated 28th of September 1905, the 1st defendant, writing to the 3rd sending copies of the hurippu, asked him to examine them and write to him with regard to any objections he might have with reference to the transactions therein contained.

7. The reply was Exhibit F1, dated 12th October 1905, and no objection was taken to the transactions now complained of. The 1st defendant in October 1905 gave a loan to debtor No. 110 and copies of the Kurippu were sent to the principals and no objection was taken to these transactions. It appears from Exhibit XXXVI, dated 7th September 1906, a letter written by the plaintiff's father to the 1st defendant, that the 3rd defendant who was till then principally supervising the business of the 1st defendant, had asked the plaintiff's father to supervise the work of the 1st defendant thereafter, and the plaintiff's father asked for the balance-sheet and for a list of debtors. Subsequent to that we find Exhibits H, F5 and XXXVIII (b), letters from the 3rd defendant and the plaintiff's father, asking the 1st defendant to close the business of the firm. On the 7th of November 1906 the plaintiff's father wrote Exhibit XXVI to the 1st defendant expressing satisfaction with the manner in which the 1st defendant was conducting the business, and in Exhibits XXVII(a) and XXXVIII (c), dated 9th December 1906 and 27th February 1907, written by the 3rd defendant and the plaintiff's father respectively to the 1st defendant, they expressed their entire approval of the manner in which the 1st defendant was doing the business; and on 8th May 1907, the 3rd defendant asked the 1st defendant to become a partner with him and open new accounts. The evidence above set out, shows that the principals took no objection to the transactions now in question and must, we think, be taken to have ratified them. The learned Pleader for the appellant contended that these facts are not legally sufficient to prove ratification and relied upon the decision in De Bussche v. Alt 8 Ch. D. 286. There is really no doubt or difficulty as regards the principle of law applicable to this case. In the case of an agent exceeding his authority ratification may be implied from the mere silence or acquiescence of the principal, and this principle has been adopted in Ramaswamy Chetty v. Alagappa Chetty 28 Ind. Cas. 135.

8. The appellant does not press his claim to the item in D Schedule. There is only one other item which remains to be dealt with, and that relates to a purchase of lead mines by the 1st defendant. The 1st defendant had lent money to a Chinaman from whom he obtained a mortgage of certain lead mines. He obtained a decree and in execution of that decree brought the mortgaged properties to sale. As the price of lead was falling, the 1st defendant was apprehensive that this property would not fetch a fair price and wrote to his principals that if there was no satisfactory bidding at the auction, it would be necessary for them to purchase and hold the properties until they could find a buyer (see Exhibit XXXVII (j) dated 18th September 1907, and Exhibit XX, dated 6th November 1907). But instead of purchasing the property on behalf of the mortgagees, the 1st defendant purchased it for the subsidiary L.R.M. firm, in which he had a half share. If the 1st defendant had purchased the property on behalf of the mortgagees, as he said he would, the principals would be entitled to a 5/6ths share in the property purchased and the 1st defendant 1/6th. By purchasing for the L.E.M. firm, the 1st defendant got half the properties. The principals claim 5/6ths of the properties, on the ground that the 1st defendant who was bound to protect their interests purchased the property under circumstances in which his own interests were adverse to those of his principals and thereby obtained a pecuniary advantage for himself (see Section 88, Indian Trusts Act). We think this contention is sound.

9. It is, however, contended for the respondent that the principals have acquitted in this purchase and have ratified the same. The principle laid down in De Bussche v. Alt 8 Ch. D. 286, applies precisely to this transaction, and there is no evidence which goes to show that the principals ever intended to release the 1st defendant from his obligation to hold the property for the benefit of the principals.

10. The respondent also argued that as the lands are situate outside British India, the Ramnad Sub-Court had no jurisdiction to determine the title to or decree possession of the lands. This objection was not taken in the first Court, but we allowed the question to be argued here. The plaintiff does not want an adjudication as to the title of the lands nor does he seek to recover possession. The title is admittedly in the 1st defendant. What, however, the plaintiff seeks in the suit is the enforcement of a personal equity against the 1st defendant, a British Indian subject residing within the jurisdiction of the Ramnad Sub-Court. In so far as he asks for an account of the profits of the property received by the 1st defendant from the properties so enjoyed by him and for payment of 5/6ths of such profits, we think he is entitled to a decree: but this 5/6ths will include the one-half share awarded to him in Original Suit No. 10 of 1912. The plaintiff also wants us to direct the 1st defendant to execute a conveyance to the plaintiff of a 5/6ths share of the properties in question. As these properties are situate outside the jurisdiction we could not avail ourselves of the procedure provided in Order XXI, Rule 34, Civil Procedure Code, if the 1st defendant disobeyed the order. The only other way in which we could grant this relief would be by granting a mandatory injunction directing the 1st defendant to execute the conveyance which could be enforced by attachment under Order XXI, Rule 52, Civil Procedure Code. We have not been referred to any precedent for issuing a mandatory injunction to compel the execution of a conveyance, and are not prepared to grant one, more especially in the case of lands situate out of British India.

11. The decree of the lower Court in favour of the plaintiff and the 3rd defendant will be modified accordingly and the necessary accounts will be taken by the lower Court and a final decree passed there. The parties will pay and receive proportionate costs of this appeal.


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