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Parasulla Mallick Vs. Chandra Kanta Dass - Court Judgment

LegalCrystal Citation
Decided On
Reported in39Ind.Cas.177
AppellantParasulla Mallick
RespondentChandra Kanta Dass
Cases ReferredTrego v. Hunt
contract act (ix of 1872), section 27, exception 1 - goodwill, meaning of--contract with illiterate person--terms-not explained--contract in restraint of trade. - .....that the consideration for the bond was the plaintiff undertaking not to carry on a' rival boat business, then the agreement was contrary to public policy and, therefore, void.8. looked at from another aspect, the first argument was stated in these terms-there was no agreement for two instalments aggregating rs. 1,200 to be paid within the mouth of jaishta, and no agreement that default regarding any one instalment would render the whole sum due, and, therefore, the suit is premature.9. i will deal first with the question of the instalments by which the sum of rs. 5,400 was to be paid. the defendant's case is that he agreed to pay rs. 4. 80 a day, and that he executed the bond because he was induced to believe that this condition had been inserted in it he says that at the.....

D. Chatterjee, J.

1. I am not quite satisfied that the parties were quite ad idem in respect of the kistbandi agreement. The learned Subordinate Judge says the defendant was in a destitute condition and I find it impossible to believe that he agreed to pay Rs. 1,200 within a fortnight, knowing that if he failed to do so the plaintiff would not only be entitled to realise the whole consideration at once but to resume the working of the gahana boat line. The learned Vakil for the respondent wanted to show that about two years after the contract he had a deposit of Rs. 1,500 in the Bank. Even if this could be shown at this stage of the case from a document put-side the record, I do not think it would throw much light on the situation at the time of the kistbandi. On the other hand, this might be due to savings thereafter made from the boat business. I cannot, therefore, believe that the contents of the document were fully explained to or understood by him. The evidence is that the plaintiff read the document audibly. That is quite consistent with the defendant not following the intricacies introduced into the document. I think the defendant placed too much confidence in the Mooktear Ramlal, who played, him false. If he was so friendly as he is said to have been, it was his duty to safeguard his interest as well as that of the plaintiff, his rich client. The document shows he did nothing of the kind. It is probable that the real truth has been concealed by both parties and evidence has been adduced by each, to prove the case that he made in the pleadings; but taking the facts as they appear on the evidence 1 am not satisfied that the defendant fully understood the import and effect of the agreement that he placed his signature on. As regards the good-will, I agree with my learned colleague that there was none and the main part of the consideration was a myth. As to the abstention of the plaintiff from carrying on the particular business, that could not form a legal consideration.

2. The next matter that must be considered is that the defendant has derived some advantage under this void agreement and under Section 65 of the Contract Act he ought to make compensation for the same. This advantage is the use of the leases taken by the plaintiff, and the defendant should in equity pay to the plaintiff the amounts he paid in respect of the ghats. Now what did the plaintiff pay for the ghat? It is difficult on the evidence to make out the exact amount, but on the whole I think a thousand rupees will fully serve the ends of justice. The decree will be for Rs. 1,000 in favour of the plaintiff, with proportionate costs to the parties according to their success and failure in both Courts. The decree is modified accordingly.

Walmsey, J.

3. This appeal is preferred by Parashulla Mullick, the defendant. He used to carry on business as a carrier of passengers by gahana beats between Bagharhat and Khulna, calling en route at Panighat, Jatrapur, Fakirhat, Mausha and Alaipur. In the autumn of 1316, there was a cyclone which caused him considerable loss, and shortly afterwards the plaintiff, Chandra Kanta Das, set up a rival business. The competition interfered very seriously with Parashulla's profits, and the two rivals quarrelled about the boat business and about other subjects, until in Jaishta 1317 B.S. an arrangement was made between them. By this arrangement Parashulla agreed to buy off the plaintiff for a sum of Rs. 5,400, and the plaintiff agreed to give up to Parashulla such settlements as he had obtained in regard to ghats used for embarking and disembarking passengers. The arrangement also embraced all, or most, of the other disputes between the parties, but it is not necessary to go into further details. It is common ground that the rivalry in the boat business was adjusted in this way. Lawyers advised the execution of several documents, two of which relate to the boat business. One of them is a kabala executed by the plaintiff in favour of the defendant, and other is a kistbandi bond executed by the defendant, by which he promised to pay the plaintiff a sum of Rs. 5,400 by instalments. These two documents were executed on Jaishta 13, 1317 (May 27th, 1910), and registered on the following day. The instalments set out in the kistbandi bond are Rs. 1,000 on Jaishta 25, 1317 and Rs. 200 on Joishta 31, 1317, and then an instalment every month until Kartik 1320. The defendant did not pay any instalmoent, and on June 22, 1910, the plaintiff instituted the present suit for the recovery of the whole sum due under the bond, in accordance with the stipulation that in default of payment of any one kist the whole sum outstanding should become due.

4. The defendant, in his written statement, admitted most of the allegations in the plaint, in particular he admitted execution of the kistbandi bond, and he admitted that the sum to be paid by him was Rs. 5,400; but he said that he did not agree to pay the sum in the instalments set out in the bond, but by daily instalments of Rs. 4-8-0, extending over a term of 3 1/2 years: he attributed the insertion of the instalments as set out in the bond to fraud on the part of the plaintiff and he alleged that plaintiff had not transferred to him all the rights which he agreed to transfer. The learned Subordinate Judge decided that the kistbandi bond as drawn up correctly represented the agreement between the parties, and, subject to one small deduction, he decreed the suit in the plaintiff's favour.

5. The defendant admits that he agreed to pay Rs. 5,400 to the plaintiff, that the payments were to be extended over a period of 3 1/2 years, and that he executed the bond. It is apparent, therefore, that the onus is on him to show that the bond as executed does not embody the arrangement to which he gave his consent.

6. The learned Vakil who appeared for the appellant gave us a highly coloured picture of the difference between the two parties: he painted the plaintiff as a scoundrel scheming to bring the defendant to his knees, and the defendant as too simple to suspect treachery. It is not necessary to deal with all the quarrels which have been going on between the parties, or to consider whether plaintiff has been a scrupulous enemy or not; it is sufficient to say that the defendant's experience in the Civil and Criminal Courts has been quite enough to teach him wisdom, even if he had no natural shrewdness to help him. There is, however, one point in favour of the defendant, and that is that he is illiterate, at least he can do no more than scrawl his name.

7. The arguments set out by the learned Vakils are as follows:

(1) The kabala and kistbandi were drawn up in terms to which the defendant did not consent, they were not read over to him, and, therefore, there was no real execution of the bond by him.

(2) The plaintiff made false representations that he had rights as lessee to various ghats mentioned in the kabala, not having such rights, and that the consideration, therefore, failed.

(3) If it be said that the consideration for the bond was the plaintiff undertaking not to carry on a' rival boat business, then the agreement was contrary to public policy and, therefore, void.

8. Looked at from another aspect, the first argument was stated in these terms-there was no agreement for two instalments aggregating Rs. 1,200 to be paid within the mouth of Jaishta, and no agreement that default regarding any one instalment would render the whole sum due, and, therefore, the suit is premature.

9. I will deal first with the question of the instalments by which the sum of Rs. 5,400 was to be paid. The defendant's case is that he agreed to pay Rs. 4. 80 a day, and that he executed the bond because he was induced to believe that this condition had been inserted in it He says that at the Registration Office he refused to sign the bond because it had not been read over to him, but plaintiff-pressed him to sign assuring him that the bond was in accordance with the draft, and telling him that he could verify the fact later. Again he says that he demurred to authorizing the plaintiff to take the bond away from the office after registration, but gave way once more. He does not say, however, that he took any further steps to find out what had been actually written in the bond which he had executed. This evidence, taken by itself, is singular, but when it is compared with that given by the Pleader Nakuleswar Bose (P. W. No. 17) it becomes absolutely incredible. This Pleader says that he saw a draft and penned through some words. In cross-examination he says that the words related to a kist of Rs. 1,000 to be paid in Asar, that defendant on hearing the condition said that he could not possibly pay such a large lump sum and that thereupon he (the Pleader) crossed out the words about the instalment of Rs. 1,000 and wrote instead that defendant would pay Rs. 4-8-0, a day. If this Pleader's evidence is true, the defendant was put on his guard upon the subject, and it is inconceivable that he should execute the bond without being satisfied as to its contents. If it is false, and there is abundant reason for thinking that it is false, the mere fact that a witness is called to give such evidence throws the greatest suspicion upon defendant's story. At least we may extract from it, whether it be true or false, an admission that on plaintiff's side, to the knowledge of the defendant, there was a desire that there should be a substantial instalment payable at one early date. Positive evidence is given to this effect by the Muktear Ram Lal Sar, and the Pleader Ashutosh Biswas, and the latter is corroborated by his rough notes and both by the draft kistbandi. It has been urged that these witnesses have been in league with the plaintiff to mislead the defendant, and that Ram Lal Sar in particular has played the part of a false friend. I feel, however, unable to accept this view. I do not attach any weight to the dharmabap relationship mentioned by the learned Subordinate Judge; but when a Pleader and a Muktear are agreed upon a simple question of fact, I think there should be strong reasons given for holding that their evidence is untrue. As I have already said they are supported by the Pleader's rough notes, by the draft kistbandi, and by Nakuleswar's statement that he saw an instalment of Rs. 1,000 in the draft bond. Further we have the Sub-Registrar, called by defendant, saying that it was agreed between the parties that the defendant would pay a big sum to the plaintiff within Jaishta of the year of registration.

10. Against this evidence the defendant has very little to offer, and I think the learned Subordinate Judge is right in holding that the witnesses Durga Charan Nag and Kailash Chandra Ghose are not entitled to much weight.

11. Apart from the direct evidence there is the matter of probability to be considered. In the first place it seems extremely unlikely that a creditor would agree to have a large sum like Rs. 5,400, paid in twelve hundred daily instalments, more particularly as defendant's case is that the bond was not to be accompanied with any security or by any stipulation that for one default--or even several defaults--the whole amount outstanding should become due.

12. Secondly, the plaintiff had undoubtedly incurred some expense in running the boat business, and it is probable that he would want immediate reimbursement, It may be untrue that he paid a full thousand rupees in cash for the Bagarhat ghats, but he must have paid a considerable sum, for the landlords would be certain to make profit out of the rivalry between plaintiff and defendant. The latter says that he paid them Rs. 250 for the year 1316. So there is nothing improbable in plaintiff's statement that he had paid, if not Rs. 1,000 in cash, at the rate of Rs. 600 for three years. Similarly in regard to the Khulna ghats, the Municipal clerk proves that Hari Nath Das paid as much as Rs. 525 for the period October 1909 to September 1910. These items alone, without taking into consideration the expense of hiring boats and crews, represent an outlay of nearly a thousand rupees. It was natural for the plaintiff to want prompt repayment, and he was in a position to dictate terms. It must be remembered that on defendant's own showing the plaintiff's first proposal was that the whole sum should be paid in cash. Probability and direct evidence point to the conclusion that in the end the parties agreed on a middle course, that is, substantial payments in the first six months, especially in the first month, followed by easy instalments, and this is the arrangement set out in the bond.

13. I find, therefore, that the learned Subordinate Judge is right in his view that there is nothing fraudulent about the execution of the kistbandi bond. This finding disposes of the learned Vakil's first argument in both its forms. Now, I come to the argument that the consideration for the kabala failed because the plaintiff made false representations as to his rights as lessee. In connection with this argument much is made of the clause in the kabala which begins with the words: If there be any mistake or falsity' but the original word, translated falsity, does not convey the idea of wilful deceit, and the unhappy translation must not be allowed to prejudice the plaintiff. The kabala purports to convey the plaintiff's rights as lessee in (1) the ghats at Khulna, (2) the ghat at Morrelganj, (3) the ghats at Alaipur and Mausha and (4) the ghats at Bagirhat. It also purported to sell the good-will of the boat business.

14. We are not concerned with the ghats at Morrelganj. At the two terminal ghats the plaintiff proposed to have a right to collect tolls from other boats as well as the right to use the ghats for his own passengers. So far as the gahana business is concerned, it seems clear that since the agreement was reached the defendant has been able to carry on his business without any molestation or inconvenience. See, for example, the evidence of defendant's witness Biseshwar Chakravarti (D. W. No. 5). With regard to the Bagarhat ghats and the right to collect tolls, defendant's own witnesses show that he is collecting some tolls. I refer to the Sub-Registrar and the Pleader Nakuleshwar Babu. If these are not all the tolls to which the defendant is entitled under the kabala, the defendant is at fault for leaving the evidence so obscure, and I consider that the plaintiff did put the defendant in possession of all the rights that he conveyed in the ghats at Bagarhat.

15. The intermediate ghats are Panighat, Jatrapur, Barnipara, Fakirhat, Mausha, and Alaipur. In the kabala the words are: 'l have been possessing the river ghats at Alaipur and Mausha,' and in the schedule there are mentioned one settlement at the rate of Rs. 2 per annum apparently in respect of Jatrapur and another at the rate of Rs. 3-4-0 per annum apparently in respect of Fakirhat. Evidence has been given to the effect that these settlements were really made. It is not necessary to discuss that evidence, because defendant's witness Biseshwar Chakravarti (D. W. No. 5) said speaking of a trip which he made in Asar 1317: 'The ghats of the defendant lay there in the same condition as they had been before. ' This remark refers to all the ghats first mentioned. The defendant, however, called a clerk in the Public Works Department to prove that the ghats at Alaipur, Mausha, Fakirhat and Jatrapur are under the Public Works Department. In view of the remark just quoted it is clear that the defendant is using the ghats whether they are under the Public Works Department or not; but it seems probable that there are other ghats, for questions were not put to the plaintiff about the lessees under the Public Works Department, and defendant does not say how he came to use the ghats before 1316 without taking a lease from the Department.

16. There remains the Khulna ghat for consideration. The complaint is that the sub-lease to Mathur Bajadar prevents the defendant from realizing the tolls. Inasmuch as this man Mathur has held a sub-lease under successive lessees including the defendant, it seems impossible that defendant did not know of the sub-lease, but be that as it may the learned Subordinate Judge has taken the matter into consideration and deducted from the plaintiff's claim a sum equal to the rent payable by Mathura from Jaishta 13 to the end of Aswin.

17. On these findings as to the leases held by the plaintiff, and the extent to which the defendant was put in possession, I hold that there was real consideration for the contract, and that the defendant's assent was not procured by any fraud or misrepresentation.

18. Next I come to the effect of Section 27 of the Contract Act on the agreement between the parties. Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind is to that extent void,' Clearly a gahana boat is a lawful business, clearly the plaintiff in the kabala binds himself not to exercise the business for a period of three years. The agreements must, therefore, be 'to that extent void,' unless it comes under one of the three exceptions mentioned in the section. The first exception is the only one that can be applicable and the learned Subordinate Judge has held that because the kabala purports to sell the good-will of the business that exception does apply. It is true that the good-will is mentioned in the kabala, but was there any good-will in such a business? A distinguished Judge has said that goodwill is very easy to describe, very difficult to define. An attempt at definition is to be found in the case of Trego v. Hunt (1896) A. C. 7 ; 65 L.J. Ch. 1 ; 73 L.T. 514 ; 44 W.R. 225, 'Every positive advantage,... as contrasted with the negative advantage of the late partner not carrying on the business himself that has been acquired by the old firm in carrying on its business, whether connected with the premises in which the business was previously carried on, or with the name of the late firm, or with any other matter carrying with it the benefit of the business,... It is the connection thus formed, together with the circumstances, whether of habit or otherwise, which tend to make it permanent, that constitutes the good-will of a business. ' Now if we take this description and consider whether there was anything connected with plaintiff's business which answers to any part of it, I think we must say that there was nothing. The plaintiff had been running a rival business for a few months only, there is nothing to suggest that he had acquired a name for punctuality, safety or convenience: the only advantage that he had over the defendant was that he had secured the terminal ghats, and could, therefore, embark and disembark passengers at more central points. This advantage does not, in my opinion, constitute good-will.

19. Another way of considering the matter is to ask what was the advantage for which the defendant was willing to pay Rs. 5,400. The kabala did not convey to him any stock in trade, for both parties hired their boats, and the ghats had no fixtures. The leases did not cost as much as Rs. 1,000 a year, even with the panshighat rights included. So it is clear that the defendant was paying for something more than an assignment of the leases. Now what he wanted was his old monopoly, and I think that the chief item in the consideration for the sum of Rs. 5,400 was the plaintiff's undertaking to abstain from carrying on a boat business for a period of three years. This restraining covenant was the vital point in the agreement, and the reference to good-will is merely the Pleader's attempt to circumvent the provisions of Section 27 of the Contract Act.

20. I hold that the plaintiff has failed to prove that his agreement is allowed by the first exception to Section 27, and that it must be regarded as void to that extent. '

21. The meaning of the last three words I take to be that if the agreement can be broken up into parts, it will be valid in respect of those parts which are not vitiated as being in restraint of trade. In this case, however, it is impossible to resolve the agreement into its component parts and to say that so much of the sum of Rs. 5,400 was for assignment of the leases, and the balance for the promise to abstain from rivalry. The result is that the whole agreement must be regarded as void.

22. The defendant, however, cannot escape all liability on the ground that the agreement is found to be void. The case is clearly one in which he has received advantage under the agreement, that is, in the matter of the leases. I agree with my learned brother that the compensation that should be paid for this advantage may be fixed at Rs. 1,000, and in consequence that the appeal should be allowed in part.

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