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R. Ezekiel Vs. the Province of Bengal - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata
Decided On
Reported inAIR1939Cal746
AppellantR. Ezekiel
RespondentThe Province of Bengal
Excerpt:
- .....of 1935. i have read the subsequent correspondence which contains an unequivocal demand for the note by davidsons limited and unequivocal refusal to part with the note on the part of the government. i do not think any useful purpose would be served by insisting on an amendment of the plaint setting out these facts. in my opinion it was the duty of the government to return the note, and that, under the well-known principle which is embodied in section 117, evidence act, being bailees they were not at liberty to refuse to return it on the ground of some interest which they allege still subsists in david ezekiel.9. i also consider that the government cannot after their refusal improve their position by obtaining ex parte an order under section 88, criminal p.c., and they cannot buttress.....
Judgment:

Panckridge, J.

1. The facts of this case are as follows: There was a company named Davidsons Limited which carried on business as importers of wines and spirits. For the purposes of this business they owned a private bonded warehouse, and as a condition of owning it they were required by the excise authorities to secure the liability, which would arise from time to time to pay duty in respect of dutiable liquors imported by them. On 20th September 1933 the company wrote to the Collector of Excise enclosing a Government promissory note in the five per cent, loan, 1945.55, of the face value of Rs. 10,000. The company in their letter to the Collector describe the note as

deposit money in connexion with the establishment of a private warehouse by us at 6, Cooper's Lane in lieu of executing a hypothecation bond.

2. This Government promissory note has never been endorsed to the company. The last endorsement is as follows: 'Pay David Ezekiel and Mrs. Ezekiel either or survivor or order,' the endorser being the Imperial Bank of India. On 9th January 1934 the Collector acknowledged receipt of the promissory note, which he described as deposit by you in Connexion with the establishment of a private warehouse at 6, Cooper's Lane in lieu of executing a hypothecation bond required for this purpose.

3. There is a document of 11th November 1934 whereby the Collector certifies that the company have deposited the bond in connexion with the establishment of a private warehouse, and that the bond is lying in the Collector's custody. It appears from a letter of 28th may 1935, that on 18th March 1935 the company had written to the Collector stating that they desired to withdraw the note and to deposit in lieu thereof either cash or other Government securities. This letter is of no particular importance, except as evidencing the date when the company first attempted to recover possession of the note. On 23rd July 1936 the company's solicitors wrote to the Commissioner of Excise saying that as the company's excise licenses have been can celled and they have been prevented by the excise from selling their goods, they have been instructed to ask for the return of the note. This letter failed td elicit a reply and in a reminder of 1st September 1936, the solicitors again ask for the promissory note and point out that as their clients' excise license has been suspended and they are not permitted to sell the goods lying in their bond, their security has been automatically discharged, and they are entitled to the refund of their deposit. A further reminder was sent on 2nd October 1936.

4. On 16th October 1936 the Commissioner wrote to the company's solicitors stating that the security deposit could not now be refunded. At this time a prosecution for offences under the Excise Act and the Indian Penal Code was pending in the Magistrate's Court at Ali pore against David Ezekiel, who was an endorsee of the note and was also interested in Davidsons Limited. On 16th December 1936 the Police Inspector, who was in charge of the prosecution, at the instance of the Excise Department, applied to the trying Magistrate to order attachment of the note. The trying Magistrate endorsed on the Inspector's written application an order that the note should be attached, and that it should remain with the Collector of Excise, who was not to part with it or deal with it in any way without the permission and authority of the Court.

5. The formal order addressed to the Commissioner of Police, requires him to attach the right, title and interest of David Ezekiel in the note, and all interest that had accrued, or is hereafter to accrue on it. The order of attachment was made on the ground that David Ezekiel was absconding, and in making it the Court purported to exercise the powers conferred on it by Section 88, Sub-section 30(o), Criminal P.C., which prescribes, as one of the methods of attaching moveable property, an order in writing prohibiting delivery of such property to a proclaimed person or to anyone on his behalf. Meanwhile the plaintiff Mr. Ezekiel David's wife, as a debenture holder in Davidsons Limited, had instituted a suit to enforce her security, and in June 1936 this Court had appointed the Official Receiver, receiver of the property and assets of Davidsons Limited, with power to get in and collect the same and to bring suits in his own name. On 8th December 1937 the Official Receiver instituted the present suit. While it was pending, that is to say, on 11th April 1938, Mrs. Ezekiel obtained a decree for forecolsure which provided for the discharge of the Official Receiver and declared that Mrs. Ezekiel was entitled to the assets of the company. The decree gave Mrs. Ezekiel liberty to realize the assets and proceed with pending suits, which had been instituted by the Official Receiver. Consequential amendments to the plaint were made on 22nd June 1938, in accordance with which Mrs. Ezekiel has become plaintiff in the place of the Official Receiver. The reliefs sought include a declaration that the note is a part of the assets of Davidsons Limited, return of the note with all interest thereon, or its value, and damages. The written statement of the Province of Bengal was filed on 16th February 1938. Under Section 88(6-a), Criminal P.C., any per-son who claims to have an interest in property attached under the Section can make a claim within six months of the attachment. Sub-section 6(d) provides that if a claimant's claim or objection is disallowed in whole or in part that person may within a period of one year from the date of such order institute a suit to establish the right which he claims in respect of the property in dispute, but subject to the result of such suit, if any, the order of the Magistrate shall be conclusive.

6. No proceedings were taken either by the Official Receiver or by the present plaintiff under Sub-section 6(a). It is not disputed that sub-section 6 d) does not prevent a person from filing a suit to establish his title to attached property without first filing a claim or objection under Sub-section 6(a), but I understand it to be suggested that an attachment is a bar to a claim for relief other than by way of declaration of title and the reliefs consequent thereon. It was suggested by the learned Standing Counsel that the note was deposited not by Davidsons Limited, but by David Ezekiel. That suggestion was based upon the language of an entry in the ledger of Davidsons Limited which, it is true, lends some support to the submission. However, the point as to the identity of the depositor is not taken in the written statement, and in view of the correspondence it is, to my mind, perfectly clear that it was the company that deposited the note, and that the Collector throughout has treated it as a deposit made by the company.

7. With regard to the company's title the position appears to me to be as follows: The books of Davidsons Limited satisfactorily prove that the company gave consideration for the promissory note by crediting David Ezekiel on 31st January 1934, with Rs. 11,300 which was then the market value of the note. Some difficulty is caused by the fact that there has been no endorsement in favour of the company by David Ezekiel and the plaintiff, or by either of them, nor has there been any assignment by a separate document, such as would satisfy the provisions of Section 130, I.P. Act, assuming that transfers, effected as laid down in that Section, are valid in respect of Government securities. In any event however I consider that there has not been a transfer, which is effectual to vest the property in the note in the company, because in my opinion that can only be done by endorsement on the note itself, and in this connexion I would refer to Section 5, Securities Act, 1920, which provides that notwithstanding anything in Section 15, Negotiable Instruments Act, 1881, no endorsement shall be valid on a Government promissory note unless made by the signature of the holder inscribed on the back of the security itself. Therefore the note is not and has never been, strictly speaking, a part of the assets of Davidsons Limited. This however is very far from saying that Davidsons Limited have no rights whatever to the note.

8. In my opinion when the note was deposited with the Collector on 20th December 1933, and accepted by him in his letter of 9th January 1934, the Government of Bengal became the bailees of the note within the meaning of Section 114, Contract Act. It follows that under Section 160 of that Act the Government were under a duty to return it without demand as soon as the time for which it had been bailed had expired, or the purpose for which it had been bailed was accomplished. I do not think it is a matter of much importance whether the license is more properly described as having been cancelled or as having been suspended, because I am told that it is an annual license and expires at the end of a year. It is not suggested that Davidsons Limited were under any liability to Government in respect of the bonded warehouse, and so even without demand, the Government were under an obligation to deliver the note according to the direction of Davidsons Limited, at least as early as the expiry of 1935. I have read the subsequent correspondence which contains an unequivocal demand for the note by Davidsons Limited and unequivocal refusal to part with the note on the part of the Government. I do not think any useful purpose would be served by insisting on an amendment of the plaint setting out these facts. In my opinion it was the duty of the Government to return the note, and that, under the well-known principle which is embodied in Section 117, Evidence Act, being bailees they were not at liberty to refuse to return it on the ground of some interest which they allege still subsists in David Ezekiel.

9. I also consider that the Government cannot after their refusal improve their position by obtaining ex parte an order under Section 88, Criminal P.C., and they cannot buttress their position by the direction contained in the order that they are not to part with the note without the authority of the Criminal Court.

10. I am not concerned with the position' which would have arisen if the note were no longer in the possession of the Government of Bengal through the Collector of Excise, nor what the measure of damages in those circumstances would be, having regard to the fact that the title of Davidsons Limited has not been perfected by the endorsement of the holders or either of them. In my opinion Davidsons Limited as bailors have been throughout entitled to obtain the return of the note from the bailees, and I also hold that the order of attachment which the Government have obtained in the Courts is no bar to my directing its return. I accordingly make a decree in terms of prayer 2 of the plaint with costs.


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