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Rameswarlal Bagla and ors. Vs. Bezonji Barjorji Nadadwalla and anr. - Court Judgment

LegalCrystal Citation
Decided On
Case NumberA.F.O.D. No. 101 of 1948
Reported inAIR1950Cal236
ActsLimitation Act, 1908 - Section 22; ;Code of Civil Procedure (CPC) , 1908 - Orders 1 and 30, Rule 9; ;Contract Act, 1872 - Sections 39, 64 and 72
AppellantRameswarlal Bagla and ors.
RespondentBezonji Barjorji Nadadwalla and anr.
Appellant AdvocateG.P. Kar, Adv.
Respondent AdvocateF.S. Sunita, Adv.
DispositionAppeal allowed
Cases ReferredMonghibai v. Cooverji
- .....interested were before the court, judgment was given in favour of all the partners.26. the two bagla plaintiffs have each 4 as. 3 pies share in the plaintiff firm and nadadwala has 7 as. 6 pies share therein. these shares are undisputed. there would be a declaration that the two plaintiffs and nadadwala as partners of the firm of bagla minerals co. are entitled to rs. 8,628-5 3 in the above shares. out of this amount rs. 4,582-12-9 being eight annas six pies' share thereof, should be paid by the defendants to the bagla plaintiffs and the balance being rs. 4045-8-6 should be treated as an item to the credit of nadadwala in the partnership account of the defendant firm of behar mining co.27. it was contended by mr. sen that the judgment of jenkins c. j, in the bombay case is no longer.....

Chatterji, J.

1. This is an appeal from a judgment and decree of Clough J. dated 14th July 1948. whereby ho dismissed the plaintiffs' suit with costs.

2. Three persons, viz., Radhakissen Bagla, Ramniwas Bagla and B. B. Nadodwala, carried on business under the name and style of 'Bagla Minerals Company'. The said Mr. Nadodwala, and one Mr. Haq carried on business in partnership under the name and style of 'Behar Mining Company.' They were also owners of a colliery known as East Chasnalla Colliery.

3. According to the plaintiffs on 12th December 1942, the Bagla Minerals Company (hereinafter called the plaintiff firm) agreed to buy and the defendants in their firm of Behar Mining Company (hereinafter called the defendant firm) agreed to sell 2,600 tons of coal on the following terms: (a) 600 tons of coal lying at East Chasnalla Colliery at Rs. 12 per ton f. o. r., Jharia; (b) 2,000 tons Golukhadih Steam Coal which had been bought from another concern of Nadadwala called the Bengal Transmarine Company at Rs. 11 per ton f. o. r., Jharia; (c) Delivery of 2,600 tons was to be given by 31st March 1943 and the goods were to be loaded in wagons provided by the East Chasnalla Colliery out of their own allotment to the extent of 60 wagons per month; (d) The plaintiff firm was to pay to the defendant firm the full value of 600 tons in advance. They were also to deposit Rs. 4,000 with the defendant firm against the value of 2,000 tons of coal as and by way of an advance.

4. The plaintiff firm in pursuance of the contract paid a sum of Rs. 7,200 to the defendant firm for the total value of 600 tons in advance and on the next day they paid a further sum of Rs. 4,000 to the defendant firm being the advance against the said 2,000 tons.

5. According to the plaintiff firm there was subsequent variation of the terms of the con-tract and it was agreed that (a) the defendant firm would sell only 600 tons of steam coal lying at East Chasnalla Colliery for and on account of the plaintiff firm, (b) the defendant firm would supply soft coke in place of steam coal and (c) the defendant firm would pay the sale proceeds of 600 tons to the plaintiff firm after deducting loading charges and other expenses.

6. The plaintiff firm were supplied from time to time only 130 tons of soft coke out of 600 tons of steam coal. The plaintiff firm were paid altogether Rs. 2571-10-9. The defendant firm fail-ed and neglected to sell the remaining quantity. Alternatively, there was a claim for damages for conversion of that coal. The defendant firm failed and neglected to give delivery of the 2,000 tons or any portion thereof.

7. The suit was instituted originally by only two plaintiffs, viz., Radhakissen Bagla and Ramniwas Bagla against Nadadwala and Huq who were described as carrying on business In partnership under the name and style of Behar Mining Company. There was a claim for account in respect of the sale of 600 tons of steam coal and for delivery of the coal still un delivered or the value thereof and for damages. There was also a claim for the refund of the sum of Rs. 4,000 which had been advanced as aforesaid by the plaintiff firm to the defendant firm.

8. The defence was principally directed against the subsequent agreement as pleaded by the Baglas. The defendants, however, admitted that there was some kind of variation in 1943 but according to the defendants the terms settled were different and the terms as arranged were set out in para. 10 of the written statement.

9. On the main issue of this case, namely, issue 6, as to the variation of the original contract of 12th December 1942, my learned brother Clough J. did not accept the evidence adduced by the plaintiffs. His finding is that the plaintiffs failed to prove that there was any agreement of the kind alleged by them. He also held that what really happened was that the original contract was varied by consent. The total quantity was reduced to 500 tons and the price was also reduced to Rs. 11-8-0 per ton. But the learned Judge did not accept the evidence of Nadawala that it was agreed between the parties that the plaintiffs would not be entitled to refund of Rs. 11,200 which had been already paid by them. In his careful judgment, the learned Judge pointed out, and in our opinion correctly, that no such term was mentioned in the correspondence and was inconsistent with the bill dated 24th May 1943 which had been submitted by the defendant firm to the plaintiff firm and that it was not referred to at all in the written statement.

10. The learned Judge also held that Behar Mining Company was ready and willing to perform their part of the new agreement but it was the Bagla Minerals Company which failed to perform the contract either in its original form so long as it existed, or, as it was subsequently varied.

11. The plaintiffs failed to establish the case made by them in the plaint that the defendants had sold some of the coal and misappropriated the sale proceeds and the relevant issues were answered by the learned Judge in favour of the defendants. The defendants raised a plea of limitation which was negatived by the learned Judge. On his findings on the relevant issues the learned Judge dismissed the suit with costs, and refused to grant any relief to the plaintiffs.

12. The suit as originally framed was instituted on 19th May 1945 by the two Baglas mentioned above. It was contended that they were not competent to maintain the suit in the absence of Nadadwala who was the third partner of the firm of Bagla Minerals Co. More than three years later, the plaint was amended on the application of the plaintiffs and the firm of Bagla Minerals Co., was added as a plaintiff 3. During the pendency of the suit, Radhakissen Bagla died and in his place Rameshwarlal Bagla was substituted. The plaint was actually amended and re-verified on 12th July 1948.

13. Learned counsel for the plaintiffs appellants, Mr. G.P. Kar, accepted the findings of the learned Judge and contended with consider-able force that in any event his clients were entitled to the refund of Rs. 8628-5-3 being the difference between Rs. 11,200 which had been paid or advanced by the plaintiff firm and Rs. 2571-10-9 which is the total price of the coke supplied by the defendant firm. We are inclined to accept the contentions of Mr. Kar on this point, although the plaintiffs did not claim specifically in the plaint the refund of both the sums of Rs. 4000 and Rs. 7200. Mr. Arun Sen for the respondents urged that in view of the absence of a specific prayer in the plaint no refund should be allowed. We cannot accede to this submission as it would mean pushing technicality to absurd limits. The learned Judge, Clough J. was referred to Sections 39, 64 and 75, Contract Act and also to a judgment of the Judicial Committee in Muralidhar Chatterjee v. International Film Co. Ltd. .

14. That case is an authority for the pro-position that a contract which may be 'put an end to' under Section 39, Contract Act, is voidable and Section 64 of the Act applies to cases of rescission under Section 39. The right to recover damages in cases where the contract has been rendered 'voidable' by the wrongful act of a party thereto and has been rescinded by the other party is a right expressly conferred by the statute. In Muralidhar's case , the appellant had wrongfully refused to perform his part of a contract entered into with the respondents, and the latter had rightfully put an end to the contract under Section 39 and they were held to be liable under Section 64 to restore to the appellant the benefit received from him under the contract. The learned Judge was right when he observed that Muralidhar's case , had no application to the facts of the present case. Clough J. pointed out that 'the plaintiff's pleading does not justify the making of a decree on the basis of a contract which has been rescinded resulting in right to a refund.' All that the Judicial Committee decided in that case was that where a party to a contract had elected to put an end to the contract under Section 39, he is bound to return or restore any benefit or advantage that he had received under the contract although he can claim damages for the breach of the contract. A liability to make restitution attaches to the party who rescinds or puts an end to a contract under Section 39.

15. In this case there is no room for the in-vocation of Section 39 or Section 64, Contract Act. This is not a case where one party had become entitled by reason of the other party's default to put an end to the contract, nor is it a case where a contract has become voidable at the option of one party, under Section 64. But that is no reason why the plaintiff firm should not get back the I moneys which they had advanced when accord to the learned Judge's finding a variation was agreed upon between the parties as aforesaid. There was no agreement that the defendant firm would be entitled to retain or to forfeit any part of Rs. 11,200 which had been advanced or paid by the plaintiff firm. In this state of things it would be contrary to equity and justice to refuse any relief to the plaintiff firm. Clearly they would be entitled to get back Rs. 11,200 less the price of coal or coke which had been supplied to them. Call it money had and received or money held by the defendant firm to the use of the plaintiff firm or money due on failure of consideration, the defendant firm must repay the difference, viz. Rs. 8628-5-3 to the plaintiff firm unless the suit is barred by the law of limitation. But the equities between the members of the plaintiff firm have got to be worked out in any event as described hereinafter.

16. Mr. Arun Sen contended that the learned Judge's judgment was not correct on the question of limitation. In our opinion, Clough J. took the correct view on this question and the suit was not barred by limitation under Section 22, Limitation Act. That section reads as follows :

'22 (1) Where, after the institution of a suit, a new plaintiff or defendant is substituted or added, the suit shall, as regards him, be deemed to have been instituted when he was so made a party.

(2) Nothing in Sub-section (1) shall apply to a case where a party is added or substituted owing to an assignment or devolution of any interest during the pendency of a suit or where a plaintiff is made a defendant or a defendant is made a plaintiff.'

17. All persons who have a joint cause of action must be impleaded before the period of limitation prescribed by the Act. When a suit is instituted within time by some of the persons who have a joint cause of action and other persons are added as plaintiffs after the period of limitation, then the whole suit is barred as the original plaintiffs could only enforce their claims in conjunction with the added plaintiffs. Ramsebuk v. Ram Lal Koondoo, 6 Cal. 815: (8 C.L.R. 457). Mir Tapurah v. Gopi Narayan, 7 C. L. J. 251.

18. It sometimes happens that a suit is instituted by some persons and later on it appears that other persons who were necessary parties must be joined. In such a case additional parties may be impleaded but with regard to the parties subsequently added the suit is to be treated as if it was instituted on the day when they were actually made parties. It is a just rule, because a person who may have a clear right against another by lapse of time should not be made to lose such rights for no fault of his. Section 22 was enacted with a view to safeguard such a right.

19. Here the suit had been properly constituted at the date of its institution, because all the necessary parties had been impleaded. Really the addition of the plaintiff firm was not necessary as all the members of that firm were on the record either as plaintiffs or as defendants.

20. In our opinion this case is covered by Rustomji Aspandyarji Sethna v. Sheth Purshottamdas Chaturdas, 25 Bom. 606 : (3 Bom. L. R. 227), where Jenkins C. J. passed a decree in somewhat similar circumstances. A Division Bench of this High Court has held that the rule that the same man cannot be the plaintiff and the defendant in the same suit loses much of its force in India where the Courts are Courts of Equity and when all the parties are before the Court and their rights can be determined and adjusted: Mahomed Faiz Chowdhury v. Upendra Lal Singh Roy, 2 I. C. 597 (Cal.).

21. In the Bombay case the plaintiff, one Purshottamdas Chaturdas, describing himself as the owner of the firm of Gordhandas Bhagwandas, instituted a suit against his son Nagindas and his co-partners who carried on business in partnership in the name of Pathak Shanghavi & Co. Nagindas along with his father Purshottamdas were members of a joint Hindu family and were equally interested in the firm of Gordhandas Bhagwandas. The trial Court passed a decree for the amount claimed by Purshottamdas against) the defendants in respect of advances made by the firm of Gordhandas Bhagwandas to the firm of Pathak Shanghavi & Co. Two of the defendants appealed, Pending the appeal the plaintiff died and his son the defendant Nagindas was substituted in his place. Thus, Nagindas was interested both as a creditor and debtor. Jenkins C. J. held that as all the parties interested were before the Court either as plaintiffs or as defendants, the Court should adjust and determine their rights in accordance with justice, equity and good conscience.

22. Purshottamdas and Nagindas had equal shares in the firm of Gordhandas Bhagwandas and the learned Chief Justice held that the trial Court should have made a declaration that they were entitled to the amount advanced in equal shares and that it ought to have passed a decree that one moiety thereof should be paid to Purshottamdas and the other moiety treated as an item to the credit of Nagindas in the accounts of the partnership of Pathak Shanghavi & Co.

23. The situation became complicated because on Purshottamdas' death pending the appeal Nagindas as his heir had become the sole plaintiff. The Court of appeal did not pass a decree in his favour even in respect of the half share of Purshottamdas, but only declared that for this amount also Nagindas was entitled to credit in the partnership accounts aforesaid.

24. Jenkins C. J. followed Bosanquet v. Wray, (1816) 6 Tauntan 597 : (16 R. R. 677) and pointed out that where an individual is a common partner in two houses of trade, no action can be brought by one house against the other house upon any transaction between them while such individual is a common partner. The learned Chief Justice observed as follows:

'This doctrine is founded on the elementary rule of procedure, too often disregarded in this country, that the same individual, even in different capacities, can not be both a plaintiff and a defendant to one and the same action. While, however, at Common Law this rule led to the result we have indicated, the Courts of Equity surmounted this difficulty. Though they observed, strictly the rule that a man cannot be both plaintiff and defendant, they did not allow it to stand in the way of doing justice between the parties; for, provided all interested were before the Court either as plaintiffs or as defendants, they adjusted and determined their rights. This is aptly exemplified in Luke v. South Kensington Hotel Company, (1879) 11 Ch. D. 121 : (48 L. J. Ch. 361).

'Similarly, we think the fact that Nagindas was interested both as creditor and debtor cannot stand in the way of our adjusting the rights of the parties in accordance with the enjoined rule of justice, equity and good conscience. To learn the goal to which that guiding principle should direct our steps it will be well to consider separately what the rights first of Purshottamdas, and then of Nagindas, would have been had the money advanced been in each case his alone. Now if Purshottamdas had been the sole creditor, he clearly could have recovered the amounts in a suit properly framed for that purpose : had the advance been out of Nagindas' separate moneys, a suit to recover that money would not have lain; for one partner cannot sue for money lent by him to a firm of which he is a member, as the advance would be but an item in the partnership account.

'This we think gives a clue to the proper equitable principle to be applied here. First, we must determine the shares in which Purshottamdas and Nagindas were interested in the firm of Gordhandas Bhagwandas. In some cases this might be a matter of considerable difficulty, but not In the present instance; for it is not questioned that the two were equally interested in this firm, and we think we are entitled to take that as the basis of adjustment.

'That it is within the power of the Court to administer equity on these lines is, we think, to be inferred from Piercy v. Fynney, (1871) 12 Eq. 69 : (40 L. J. Ch. 404). Therefore, we think there should in the lower Court have been a declaration that Purshottamdas and Nagindas were entitled to the amount advanced in equal shares and a decree, that one moiety thereof should be paid to Purshottamdas, and the other moiety treated as an item to the credit of Nagindas in the partnership accounts.'

25. In our view it is within the power of this Court to administer equity between the parties on the lines suggested by Jenkins C. J. in the above case. There is a recent judgment of the Judicial Committee in Monghibai v. Cooverji , where some of the partners sued as plaintiffs and others were joined as defendants. As all the parties interested were before the Court, judgment was given in favour of all the partners.

26. The two Bagla plaintiffs have each 4 as. 3 pies share in the plaintiff firm and Nadadwala has 7 as. 6 pies share therein. These shares are undisputed. There would be a declaration that the two plaintiffs and Nadadwala as partners of the firm of Bagla Minerals Co. are entitled to Rs. 8,628-5 3 in the above shares. Out of this amount Rs. 4,582-12-9 being eight annas six pies' share thereof, should be paid by the defendants to the Bagla plaintiffs and the balance being Rs. 4045-8-6 should be treated as an item to the credit of Nadadwala in the partnership account of the defendant firm of Behar Mining Co.

27. It was contended by Mr. Sen that the judgment of Jenkins C. J, in the Bombay case is no longer good law in view of Order 30, Rule 9, in the Civil P. C. of 1908. That rule reads as follows :

'This order shall apply to suits between a firm and one or more of the partners therein and to suits between firms having one or more partners in common; but no execution shall be issued in such suits except by leave of the Court, and, on an application for leave to issue such execution, all such accounts and inquiries may be directed to be taken and made and directions given as may be just.'

28. In our view, this Rule does not in any way affect the soundness of the judgment of the learned Chief Justice in the Bombay case. Rule 9 of Order 30 reproduces Rule 10 of Order 48-A of the Rules of the Supreme Court in England. It simply provides that suits between a firm and one of its members or suits between two firms with common partners can be instituted in the firm name provided the firms carry on business in British India. But no execution will be levied in such a suit except by leave of the Court. In our opinion, the safeguard introduced against execution of decree in a suit coming within the scope of Rule 9 is meant to secure an equitable adjustment of the rights and liabilities of the partners inter se as indicated by Jenkins C. J. in the above case. In the 'Yearly Practice' it is pointed out that this rule did not alter the substantive law as it existed before the enactment of the rule. We agree with this view and in our opinion nothing in Rule 9 prevents the Court from making an order so as to give appropriate relief when all the necessary parties are before it.

29. One of the original plaintiffs Radhakissen Bagla is dead and it is conceded that his son Rameshwarlal who has been substituted in his place is not entitled to his share of the decretal amount except on the production of a Succession Certificate. The appeal is allowed and the decree of Clough J. is set aside. There will be a decree for Rs. 2291-6-41/2 in favour of Ramnivas Bagla. There will be a further decree for the said sum in favour of Rameshwar Lal Bagla, but he must produce a Succession Certificate before the decree is finally completed. The defendant Nadadwala will be entitled to credit for the sum of Rs. 4045-8-6 in the partnership accounts of Behar Mining Co.

30. It is conceded by Mr. Kar that Bagla Minerals Co. which was added as plaintiff 3 in the year 1948 need not have been made a party as all the persons interested in that firm were already impleaded in this suit and were before the Court. If that firm was a necessary party on the date of the institution of the suit, then the suit would have been barred under Section 22, Limitation Act. But Mr. Kar concedes that the addition of the firm was superfluous and he has proceeded on the footing that the firm need not have been made a party. Therefore, there will be no decree in favour of that firm.

31. The appellants will be entitled to one half of the costs of the lower Court and one half of the costs of this appeal. Certified for two counsel.

Harries, C.J.

I agree.

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