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Jewan Ram Vs. Ratan Chand-kishen Chand - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported inAIR1921Cal795,70Ind.Cas.498
AppellantJewan Ram
RespondentRatan Chand-kishen Chand
Cases ReferredIn Torkington v. Magee
Excerpt:
transfer of proterty act (iv of 1882), section 3, 5 - contract act (ix of 1872), section 107--assignment of damages for breach of contract--mere right to she. - .....of contract by the defendants and that it was not assignable, because it was an assignment of a mere right to sue.6. the first point taken upon this appeal was, that, the claim which was assigned by bhairodhan to the plaintiff was for an ascertained amount. with regard to that it is to be noticed, in the first instance, that the assignment referred to, the sum of rs. 6,716-11 annas as damages sustained by the assignor on a re-sale. it is true that the claim in form is for the specified amount of rs. 6,716-11 together with some sum for interest. but it was alleged, as i have already mentioned, that the re-sale took place in consequence of a direction in the award. when we look at the award, that allegation turns out to be incorrect, this case was dealt with by the learned judge upon.....
Judgment:

Lancelot Sanderson, C.J.

1. This is an appeal from the judgment of my learned brother Mr. Justice Woodroffe whereby he dismissed the plaintiff's suit on the ground that the suit was not maintainable, and that the plaint did not show a cause of action.

2. The original plaintiff in the suit was one Bhairodhan. His name was deleted from the suit and the present plaintiff, Jewanram, who is alleged to be the assignee of the right, title and interest of Bhairodhan, was added as a plaintiff. The defendants were Ratan Chand Kishen Chand, a firm carrying on business in piece-goods in Calcutta.

3. Bhairaodhan made a contract with the defendants whereby the defendants undertook to take delivery of 8 bales of dhoti in accordance with their contract. The defendants failed to take delivery in accordance with the contract and it was alleged that thereby the original plaintiff had buffered loss and damage on the re-sale of the 8 bales of dhoti. But before the re-sale the parties, that is to say, the original plaintiff Bhairodhan and the defendants, had referred the matter to the Marwari Chamber of Commerce, and the decision of the arbitrators was given on the 9th of October 1918 and the plaint alleged that the award directed that Bhairodhan should re-sell the said goods and recover the loss suffered thereby from the defendant firm as would appear from the order of the said Marwari Chamber of Commerce when produced. It then proceeded to allege that he re-sold the goods on the 9th of October the same day as the award was made and thereby realised a sum of Rs. 15,502-1 'and after deducting that sum from the contract price there remained a sum of Rs. 6,716-11 ahnasi which it was alleged was due to the original plaintiff Bhairodhan in respect of the breach of contract by the defendants.

4. This suit was instituted on the 16th of December 1918 and, on the following day, the 17th of December 1918, Bhairodhan executed an assignment the terms of which. I shall have to refer to in greater detail presently.

5. The learned Judge came to the conclusion that the defendants had succeeded in their objection that the suit was not maintainable and that the plaint showed no cause of action. The ground of the learned Judge's judgment was that the claim which was relied upon in this suit by the plaintiff was a claim for unascertained damages for breach of contract by the defendants and that it was not assignable, because it was an assignment of a mere right to sue.

6. The first point taken upon this appeal was, that, the claim which was assigned by Bhairodhan to the plaintiff was for an ascertained amount. With regard to that it is to be noticed, in the first instance, that the assignment referred to, the sum of Rs. 6,716-11 annas as damages sustained by the assignor on a re-sale. It is true that the claim in form is for the specified amount of Rs. 6,716-11 together with some sum for interest. But it was alleged, as I have already mentioned, that the re-sale took place in consequence of a direction in the award. When we look at the award, that allegation turns out to be incorrect, this case was dealt with by the learned Judge upon the plaint, the assignment, the award and some verbal evidence which is not material for my present purpose. Theabward does not support the allegation that the re-sale took place by direction of the arbitrators. The award is as follows: 'The books of account of the defendants and the plaintiffs have been examined. The goods were lying in the plaintiff's firm. Therefore, the defendants do pay for and take delivery of the goods.' This award did not direct any specified sum to be paid. It is true that the amount claimed is said to be ascertained by reason of the re-sale, but the ground upon which the re-sale was based, in fact turns out, when the award comes to be examined, to be unsustainable.

7. It was argued in this appeal that the re-sale was justified by Section 107 of the Indian Contract Act. It was admitted by the learned Counsel for the appellant that the case was not put in the Court below from this point of view. This, further, is evident from the learned Judge's judgment. He said, at the bottom of page 12 of the paper book dealing with the award, as follows: 'It (the award) did not direct that any specific sum should be paid. The damages still remain unascertained and in fact were not ascertained until after the award when; there was a re-sale.' If we were to stop' there, it might be urged that the learned Judge was of opinion that there was an ascertained sum when the re-sale took place. But when we read on it is clear that the learned Judge was of opinion that the claim was not for an unascertained sum. He went on to say: 'on that again' (i.e., on the re-sale) 'the suit is brought for damages which are said to have been ascertained by a re-sale, which re-sale is alleged to have been justified by directions given in the awards Nothing in short in the award converted this claim for damages into a debt and nothing has since then done so. ' To my mind, it is clear that the learned Judge's finding was that, on the material before him, this claim for unascertained damages had not been converted either by the award pr by the re-sale or by anything else into a debt or claim for a specified amount.

8. It is true that the question whether the re-sale was justified by Section 107 was not investigated by the lower Court but no attempt was made by the plaintiff to suggest or to prove that Section 107 of the Contract Act applied. Further than that, there is no ground of appeal against the learned Judge's finding that the claim for damages was not converted into a debt. I think the fourth ground of appeal goes to show that the point which is now relied upon was neither taken before the learned Judge nor relied upon in the grounds of appeal. In my judgment there are no materials before us which would justify, us in holding that Section 107 of the Contract Act is applicable. The plaintiff's allegation was that the re-sale was justified by the award. The award was proved, and when proved, it showed that there was no such direction. The award on the face of it does not itself justify a re-sale yet the re-sale took place on the same day as the award was made. Under these circumstances, in my judgment, for the purpose of this appeal only we must take it that the re-sale was not justified and that, the claim was one for unascertained, damages.

9. There remains the second point, which the learned Counsel for the appellant argued, namely, that even if the claim was for unascertained damages arising out of the defendant's breach of contract, the assignment was not an assignment of 'a mere right to sue' within the meaning of Section 6(e) of the Transfer of Property Act. The defendants, on the other hand, argued that the assignment was an assignment of 'a mere right to sue, 'which was not assignable by reason of Section 6(e). It was urged on behalf of the plaintiff, who is the appellant, that, although the defendants had failed to perform their contract with the assignor, the contract was still in existence and the obligation on the defendants to perform it remained and that the plaintiff by the assignment obtained the benefit of the contract which was in itself property, and that there was attached to the property the right to sue for the breach of contract. In my judgment this case must be decided upon the terms of Sections 3 and 6(e) of the Transfer of Property Act. Many English cases were cited to us. Some of them are useful for the purpose of ascertaining what meaning has been placed by the English Courts upon expressions such as 'a mere right to sue' or, as it is called in some cases, 'a bare cause of action' or, as in others, a 'mere right to litigate.' I do not intend to refer to more than one, viz. Glegg v. Bromley (1912) 3 K.B. 474 at p. 489 : 81 L.J.K.B. 1081 : 106 L.T. 825 and I have desire to refer to the judgment of Mr. Justice Parker who was then sitting in the Court of Appeal--his judgment has been referred to in subsequent cases with approval. In my judgment the principle relating to the present question was therein clearly laid down. The learned Judge said this, at page 489: 'Ordinary choses in action were not assignable at law, but were, generally speaking, assignable in equity whether themselves legal or equitable choses. In the former case equity compelled the assignor to allow his name to be used for their recovery in legal proceedings, in the latter case the assignee could sue in equity in his own name. There was one exception to this rule. Equity on the ground of public policy did not give validity to the assignment of what is in the cases referred to as a bare right of action, and this was so whether the bare right were legal or equitable. I have looked at a good many authorities on that point, and I am satisfied that the real reason why equity did not allow the assignment of a bare right of action, whether legal or equitable, was on the ground that it savoured of or was likely to lead to maintenance.' There is No. doubt in the cases about the rule and there is no doubt in the cases with regard to the exception, but difficulties often arose in deciding whether a particular right was within the exception or was within the rule, ft is to be observed that an equitable assignee of a chose in action, whether it is legal or equitable, could institute proceedings and maintain proceedings for its recovery., The question was whether the subject-matter of the assignment was, in the view. of, the Court, property with an incidental remedy for its recovery, or was a bare right to bring an action either at law or in equity. Applying that principle to this case, the question is whether the subject-matter of the assignment by the assignor to the plaintiff is, in the view of the Court, property with an incidental remedy for its recovery or whether it is a bare right to bring an action or within the words of the Act 'a mere night to sue.' For this purpose it is necessary to look at the terms of the assignment. I have already pointed out that the assignment was dated the 17th December 1918 and the suit was instituted a day before, viz., the 16th The assignment recited that on the 16th December the assignor had instituted a suit against the defendants to recover the sum of Rs. 6,783-11 annas damages sustained by the assignor on a resale of 8 bales dhotis No. 460 of which the firm of Rattan Chand-Kissen Chand had failed to take delivery in terms of the Sowda or contract made with the assignor and dated Sravan Sudi 13, 1975. corresponding with the 28th August 1918. It then recited the fact that the assignor owed to the assignee the sum of Rs. 6,551 and that the assignor was unable to pay it and that he had requested the assignee to accept in payment of the sum of Rs. 6,500 an assignment and transfer to him of all his claim and costs in the suit. The assignor then transferred and assigned unto the assignee all the claims of the assignor in, as well as the right to proceed with, the said suit and all the advantages and benefits of all proceedings thereof to hold the same unto the assignee absolutely and for ever. I cannot find in the terms of this document anything more than an assignment of a mere right to sue or anything more than a mere right to prosecute the claim of the assignor for damages for the alleged breach of contract by the defendants. The assignment did not in terms purport even to assign the contract or the benefit thereof. In my judgment, there is no ground for holding that the subject-matter of the assignment was property with an incidental right to sue; on the contrary, on a true construction of the terms of the assignment, in my judgment, there was nothing transferred except a mere right to sue for unascertained damages for the alleged breach of contract. The learned Counsel for the appellant invited us to come to the conclusion that the decision in the case of Abu Mahomed v. S.C. Chunder 1 Ind. Cas. 827 : 36 C. 345 : 13 C.W.N. 384 was wrong. If we acceded to such an argument, a reference to a Full Bench would be necessary. In my judgment, however, there is no necessity for us to express any Opinion as to the correctness of that decision. The facts of that case were different from those existing in this case. I base my judgment upon the principle which I have already enunciated, regard being had to the particular terms of the assignment, the true construction thereof and the facts of this case.

10. A third point was taken by the learned Counsel and that was in respect of parties. In the Court below an application was made for adjournment to enable the plaintiff to enquire whether the Official Assignee would be willing to be added as a party so as to represent the estate and interest of the original plaintiff Bhairodhan who had become insolvent. The learned Judge refused it for reasons which he gave in his judgment. In this Court the application was varied and the application was that we should direct that the original plaintiff Bhairodhan should be (added as a plaintiff. In my judgment, this cannot be done. Apart from the considerations which my learned brother Mr. Justice Woodroffe gave in his judgment, which, as far as I can see, would be just as applicable to a joinder of the original plaintiff as to a joinder of the Official Assignee representing him, the application is not made on behalf of the original plaintiff nor is there any consents of the plaintiff produced before us to show that he is agreeable to join as a plaintiff. In these circumstances, it is not possible for us to accede to the application of the appellant that Bhairodhan should be added as a plaintiff.

11. For these reasons, in my judgment, the appeal should be dismissed with cost?.

Richardson, J.

12. I agree and will add a few observations in deference to the argument of Sir Binode Mitter. It seems clear that in England the objection to the assignability of a 'bare right of action' is founded on the law of maintenance. Before the Judicature Act of 1873 the Courts of Common Law seem to have applied that law more strictly than the Courts of Equity. 'There are undoubtedly,' said Cozens-Hardy, If. J., in Fitzroy v. Cave (1905) 2 K.B. 364 at p. 371 : 74 L.J.K.B. 829 : 93 L.T. 499 : 54 W.R. 171 : 21 T.L.R. 612 'many choses in action which are not and never were assignable either at law or in equity. A right to set inside a deed on the ground of fraud is a typical instance.' Then, further on, he continued: 'There are, however, other choses in action which, though not assignable at Common Law, were always regarded as assignable in equity. A debt presently due and payable is an instance. At Common Law such a debt was looked upon as a strictly personal obligation, and an assignment of it was regarded as a mere assignment of a right to bring an action at law against the debtor. Hence the assignment was, with some exceptions, which need not be referred to, looked upon as open to the objection of maintenance. After a time the Common Law Courts recognised the right of any one who had a pecuniary interest in the debt to sue in the name of the creditor. This, however, was the limit of their departure from the old strict rule, so far as I have been able to discover. But the Courts of Equity took a different view. They admitted the title of an assignee of a debt, regarding it as a piece of property, an asset capable of being dealt with like any other asset, arid treating the necessity of an action at law to get it in as a mere incident, they declined to hold such a transaction open to the charge of maintenance.'

13. The Judicature Act assimilated the practice at Common Law to the Practice in Equity. In Tolhurst's case in the House of lord's Tolhurst v. Associated Portland Cement Manufacturers (1903) A.C. 414 at p. 424 : 72 L.J.K.B. 834 : 89 L.T. 196 : 52 W.R. 143 : 19 T.L.R. 677 Lord Lindley said: The Judicature Act, 1873, Section 25, Clause (6), has not made contracts assignable which were not assignable in equity before, but it has enabled assigns of assignable contract to sue upon them in their own names without joining the assignor.

14. It still remains, however, that a Court of Equity is as much bound as a Court of Common Law by the law relating to champerty and maintenance, and if an assignment of a chose in action is obnoxious to that law, it is bad in equity no less than at law. An assignment of a mere right of litigation is bad.' Per Stirling, L.J. in Dawson v. Great Northern and City Railway Co. (1905) 1 K.B. 260 at p. 270 : 74 L.J.K.B. 190 : 92 L.T. 137 : 69 J.P. 29 : 21 T.L.R. 114.

15. It is with reference to the law of maintenance that the Courts in. England have held that some limitation must be put on the generality of the term 'chose in action' as used in the Judicature Act Section 25 Clause (b) Torktngton v. Magee (1902) 2 K.B. 427 at p. 430 : 71 L.J.K. (sic) per Channel], J. The position in England, therefore, differs somewhat from the position in India. In England there is no definite statutory rule that a bare right of action cannot be assigned. There is statutory provision making choses in action assignable which is subject to a limitation upon it by the Court that assignment must not offend the law of maintenance. The provision and its limitation are, perhaps, capable of being moulded in accordance with the nature and substance of particular transactions.

16. In India the law of maintenance has never obtained in the same absolute form as in England and in the present connection has none but a possible tustbrical relevance. Here there is an imperative statutory rule, a rule which the Courts cannot transcend, that a mere right to sue cannot be transferred. The duty of the Courts is confined to the interpretation of the words, 'a mere right to sue.' Nevertheless, the results may be in many respects similar. The Indian legislature, when it enacted Section 6(e) of the Transfer of Property Act, no doubt had in mind the expressions used in the English cases--'a bare right of action' or 'a mere right to litigate.' On the question of construction which arises in India, the language of Parker, J. in Glegg v. Bromley (1912) 3 K.B. 474 at p. 489 : 81 L.J.K.B. 1081 : L.T. 825, to which the learned Chief Justice has already referred is at least a valuable guide. The question in every case is whether the subject-matter of the transfer is, in the view of the Court, 'property With an incidental remedy for its recovery,' or is 'a mere right to sue.'

17. I will not stop to discuss the definition in the Transfer of Property Act, Section 3, of 'actionable claims' (The Indian term corresponding to the English term 'choses in action') because it seems clear that that definition must be construed as excluding 'mere rights to sue.'

18. Sir Binode Mitter asked why, if a contract might be transferred before breach, it should be incapable of transfer after, breach. After breach, he said the contract still subsisted. No doubt, a line might be drawn between claims for breach of contract and claims in tort, where the right to personal safety or the right to immunity from fraud, has been violated. But however valued such considerations might be, if the principle of the thing were open to discussion, that is not the position. The policy of the law in India is expressed in the Statute and effect must be given to the language according to its true meaning.

19. Moreover, when an ordinary commercial contract for the sale of goods has been broken and subsists only for the purpose of enforcing a claim to damages, it is to my mind difficult to say that the right to damages is, standing by itself, anything more: than a mere right to sue, a right which is not incidental to property but is incidental to abstract right in respect of contracts comparable to the abstract rights to personal safety and immunity from fraud in the region of tort. At any rate, there is authority both English and Indian for the view that a claim to unliquidated damages for breach of contract is not assignable.

19. Turning to the case before us, I agree that the learned Judge decided, and correctly decided, on the materials placed before him, which included not only the pleadings but also the award of the Marwan Chamber of Commerce, that the suit must be dealt with as in essence a suit for unliquidated damages, though at first sight it appears to be a suit for liquidated damages. If that be so, it follows, in my opinion, that the claim to these damages being a mere right to sue was not transferable and that on that ground the suit, as a suit by the transferee, must fail.

20. But even if it be assumed that the goods were properly re-sold, and that the claim asserted in the plaint and transferred to the present plaintiff is a claim to an ascertained sum, it would still be for consideration whether this claim is, in the particular circumstances, a mere right to suit or property with an incidental remedy for its recovery within the meaning of Parker, J., in Glegg's case (1912) 3 K.B. 474 at p. 489 : 81 L.J.K.B. 1081 : L.T. 825.

21. Sir Binode Mitter relied on certain dicta of McCardie, J., in County Hotel and Wine Co. v. London and North Western Railway (1918) 2 K.B. 251 at p. 260 : 87 L.J.K.B. 849 : 119 L.T. 38 : 34 T.L.R. 393. The learned Judge says, 'In Torkington v. Magee (1920) 2 K.B. 427 at p. 427 430 : 71 L.J.K. (sic) Channell, J. in delivering the judgment of the Divisional Court, referred to the above dicta, and apparently expressed the view 'that when a breach of contract had occurred in respect of which the original party to the contract could sue for damages, he could not assign those damages so as to enable the assignee to sue. Again, I venture to think that this dictum, in view of other decisions, goes too far. I can see no reason why damages for breach of contract should not in some cases be capable of assignment without infringement of the public interests.' And then the learned Judge gives an example. 'Take, for example,' he says, 'a case where the contract admittedly fixes the damages for breach at a liquidated sum and provides that it maybe sued for as a debt. What reason of public policy should prevent the assignment of such sum if public policy permits the assignment of a disputed debt?'

22. It must, however, be borne in mind that the observations of the learned Judge were made from the English point of view and that, even so, he did not go so far as to suggest that a claim to liquidated damages would in every case be assignable.

23. With these observations I agree in the conclusion at which the learned Chief Justice has arrived that this appeal must be dismissed.


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