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Udai Chand Pannalal Vs. Thansing Karamchand - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1935Cal537,157Ind.Cas.937
AppellantUdai Chand Pannalal
RespondentThansing Karamchand
- .....such of the 41,000 bales as belonged to the defendant. i read the order as an attachment of 41,000 bales. goods therefore of the plaintiff were attached.6. mr. page's further argument was upon the two intermediate issues that were raised, namely whether the goods had been withheld and whether the plaintiffs had in fact been deprived of their use. he suggested from the correspondence that the bank in fact would have delivered notwithstanding the attachment. that i am not prepared to find. he suggested also that it was the duty of the plaintiffs to have sold forward so as to minimise the loss. that argument again does not appeal to me. he lastly relied upon the fact of the pledge. mr. page used it to show that the plaintiff in fact could not have obtained possession of the goods; that.....

Ameer Ali, J.

1. The short facts of this case are as follows: Shortly before the events in issue in this suit, the firm of Chandanmull Khanmull, big jute dealers, were indebted to the Bank of India, and as security for this indebtedness they had deposited with that Bank a number of balas of jute to the extent of 41,000. Before the events in suit, the liability and the security had been transferred to the National Bank. This firm of Chandanmull Khanmull were also indebted to creditors other than the Bank, in particular to a firm of the name of Udai Chand Pannalal, the plaintiff in the present suit. As one means of obtaining payment, the plaintiff firm in the beginning of 1933 instituted insolvency proceedings against Chandanmull Khanmull whom I will call the debtor firm. Pending these proceedings a system of payment or satisfaction was discovered and certain creditors including Udai Chand Pannalal made an arrangement to take over certain bales at a certain price, paying to the National Bank a sum of Rs. 19 per bale which represented the fractional or proportionate amount of the indebtedness of the debtor firm to the Bank, the remaining value of the bales being applied in discharge of the debtor firm's indebtedness to the creditor other than the bank. In the case of the plaintiff firm, the number of bales was 10,750. Those are the goods in question in this suit. The transfer was prior to 29th May. On or about that date another arrangement was entered into between the plaintiff firm and the Bank. I should have mentioned, earlier perhaps, that the plaintiff firm, apart from the arrangements between themselves and the debtor firm, had guaranteed the total indebtedness of the debtor firm to the Bank. A letter of guarantee was issued on 27th May 1933 and in support of that guarantee the 10,750 bales were pledged to the Bank, a letter of lien in the usual form being executed on 29th May 1933.

2. On 30th May 1933 the Bank made over to the plaintiff firm a letter (see first letter in the Brief of Correspondence) recognising the transfer from the debtor firm to the plaintiff firm acknowledging payment of their dues from the plaintiff firm, and acknowledging that they held the goods 'deliverable to you in trust for you under an arrangement arrived at with you.' Something turns upon the language of that clause, the position being unless it can be successfully argued that the declaration of trust nullifies the pledge that the bank were not only trustees of the goods but that it was also entitled to certain possession as pledgee. Shortly after this the defendant firm Thansing Karamchand filed an application for attachment before judgment. It is obvious from paras. 4, 5, 6 and 7 that the defendant firm must have had fairly accurate information from some source or other of what had taken place between the debtor firm and the other creditors. The paragraphs in question reads as follows: On 2nd June 1933 upon the allegations contained in those paragraphs, an order was made in terms of the notice of motion attaching 'the 41,000 bales of jute belonging to the defendant firm in the hands of the National Bank of India Limited, subject to the claim of the said Bank.' On the same date Messrs. Khaitan & Company for the plaintiff firm called upon the defendant firm to withdraw the attachment and claimed a sum of Rs. 50,000 as damages. On 5th June the bank wrote to the solicitors of the defendant firm stating 'the number of bales in the Bank's hands belonging to the defendant firm is approximately 25,302.'

3. So far as the correspondence relates to negotiations for settlement between the attaching creditor, and the debtor firm I need not refer to it. On 5th June the attorneys for the defendant firm answered Messrs. Khaitan & Company's letter (see page 10 of Brief) denying knowledge of the sale by the debtor firm of 10,750 bales, and stating that they had 'not attached any goods belonging to the plaintiff firm' and quoting the words of the writ of attachment. On 5th June also the sub-manager notified the parties concerned of the order of attachment treating it as an attachment of 41,000 bales of jute. On the 5th also an application was filed by the plaintiff firm to have the attachment removed, and on the 7th (see p, 23 of Brief) the attorneys for the defendant firm refused to discuss the matter further with Messrs. Khaitan & Company as the matter had been argued in Court and was subject to the proceedings in Court. The attachment in question, and apparently another attachment with which we are not concerned were removed by 10th June though actually the plaintiff firm did not receive notice of the withdrawal of the attachment until the 13th. I should mention that the motion for removal of the attachment came up for hearing on the 13th or there about and the attachment having already been removed no order was made except that the plaintiffs in this suit were awarded the coats of the application. The plaint in this suit was filed on 16th August 1933. The issues raised were as follows: (1) Did the defendant cause 10,750 bales to be attached as alleged in the plaint? (2) If so, did the defendant act with malice and/or negligence? (see para. 6 of the plaint). (3) If so, were the said bales by reason of such attachment withheld from the plaintiff until 13th June 1933? (see para. 4 of the plaint). (4) Was the plaintiff by reason of such attachment deprived of possession of the goods, or power of disposing same? (see para. 4). (5) Damages.

4. At the time the issues were raised I suggested that issues 3 and 4 were not issues essential to the action being merely questions of fact having a bearing on issue 1 (the factum of the attachment) and issue 5 (quantum of damage). During the course of the trial a further issue was raised on the results of cross-examination by counsel for the defendant, namely whether the suit was maintainable in its present form. Evidence was given of the matters in issue by the plaintiff's gomasta, one Chunilal, and by one of the proprietors Johorimull on the incidental question raised as to joint family or partnership. The evidence of Chunilal was directed to show that he could not get the goods from the bank on 2nd June because of the attachment. He spoke of a certain interview, and also attempted to bring out throughout his evidence that but for the attachment, the bank would not have retained the goods notwithstanding the letter of lien. No evidence was called on behalf of the defendant firm. I propose to deal with the technical point as to the maintainability of the suit last.

5. Counsel's contentions on behalf of the defendant firm were as follows: First of all, that no property of the plaintiff was attached. For his argument on this point Mr. Page relied upon the following: First, the form of order itself, i.e., the words 'belonging to the defendant.' Secondly, he relied upon the fact there was in fact no physical attachment, the order being made effective by a notice to the bank. Thirdly, he suggested that the bank in fact was aware, that the order related only to such goods as had not been transferred to the plaintiff firm, i.e., the goods other than the 10,750 bales. He contended, that on the terms of the order the case was precisely analogous to the case of an attachment of a certain sum to the credit of a customer in a bank, a sum which before the order for attachment had been reduced by being drawn on. The matter seems to depend not very much upon how the bank understood the position although it appears to me clear (notwithstanding the letter of explanation by the bank of 5th June), that the bank regarded the attachment as an attachment of the whole 41,000 bales. It appears to depend upon whether the property attached is 41,000 bales described as belonging to the defendant, or is such of the 41,000 bales as belonged to the defendant. I read the order as an attachment of 41,000 bales. Goods therefore of the plaintiff were attached.

6. Mr. Page's further argument was upon the two intermediate issues that were raised, namely whether the goods had been withheld and whether the plaintiffs had in fact been deprived of their use. He suggested from the correspondence that the bank in fact would have delivered notwithstanding the attachment. That I am not prepared to find. He suggested also that it was the duty of the plaintiffs to have sold forward so as to minimise the loss. That argument again does not appeal to me. He lastly relied upon the fact of the pledge. Mr. Page used it to show that the plaintiff in fact could not have obtained possession of the goods; that therefore the attachment was not the effective cause of the detention, Hence there was no attachment in fact. Alternatively no damage was in fact caused.

7. Mr. Page on this question of pledge suggested that the Bank would, notwithstanding the attachment, have delivered if there had been no pledge. Neither side called the Bank. The Bank I find, would not have been prepared either to waive their pledge or to disregard the order of attachment. As regards the effect of the pledge, I am not prepared to accept Chunilal's evidence so far as it was directed to show that the Bank would have delivered had there been no attachment, an impression which he sought to give from his evidence of the conversation of 2nd June and of the relationship between the plaintiff firm and the Bank. As regards that interview, I am of opinion that so far as the statement by the officer of the Bank is for this purpose it is inadmissible.

8. In my opinion the fact of pledge as a matter of law assumes an importance considerably greater than that originally attributed to it by consent on either side. Yesterday, Mr. Banerjee contended, simply-attachment of the plaintiff's goods: detention from 2nd to 13th June: therefore, damages which must be assessed on the difference between the highest rates between those dates and the market price at the date of release. It appeared to me that this could not possibly be the position when the person claiming damages was not entitled to possession, and that if the case was based upon a right to damages for any interference with a reversion or reversionary right the basis of damages must be entirely different. I therefore asked Mr. Banerjee to consider that point further. Mr. Khaitan who followed Mr. S.N. Banerjee this morning, apparently anticipated the further difficulty which appeared to me last night on looking into Arnold on damages, namely, whether an owner not entitled to possession is at all entitled to claim for trespass.

9. If I may say so, Mr. Khaitan dealt with the matter logically and frankly. He conceded and I think on the authorities referred to in Arnold on Damages, he was bound to concede that qua action for trespass simply an owner would not be entitled to sue unless entitled to possession. On this point he had to fall back therefore upon the conversation of 2nd June 1933 and upon the further argument, namely whether having regard to the form of the letter of trust the pledge could be regarded as having been superseded. In other words, had the plaintiff firm the right, notwithstanding the pledge, to call for an immediate possession? As to the first point, the conversation of the 2nd June, I have already expressed my view. On the second also I am of opinion that the transaction of pledge and the transaction of acknowledgment or declaration of trust by the bank must be regarded as one, neither transaction giving place to the other.

10. The next point I asked Mr. Khaitan to deal with, was whether, irrespective of an ordinary suit for trespass, the owner, not entitled to possession, could sue for damages at all or had the right of suit. On that point, I think, there is some difficulty. According to the authorities, he can do so if there has been some 'permanent injury' to the goods in respect of which the trespass has been committed, the words in Clark and Lindsell, 8th edition, being a little wider, namely 'loss or permanent damage of his chattel.' It is contended therefore by the defendant firm that there is no right to recover unless it is a case of actual injury to the goods. On the other hand the question which troubles me is this: assuming that an attachment does affect the capacity of an owner to sell it any more, should that not give a right of action? It might in certain cases be a matter of great importance. I am not prepared to hold that there is no such cause of action. I think there is, even though the injury is not to the goods but to a right in respect of the goods.

11. But it appears to me, and this brings one back to the original point discussed yesterday with Mr. Banerjee, that as regards measure of damage to apply the principles applicable, which would be applied in the case of trespass to or detention of the goods of a person entitled to possession would be utterly wrong. Mr. Khaitan contended on this point that even so he would not be obliged to prove that the plaintiff had in fact obtained any contract; there I agree. He contended further that the measure of damage would, at any rate, be analogous. There I do not agree. I think the plaintiff has to show circumstances pointing to an actual loss of business of some kind; on the facts before me I do not find that he has established such loss. That would yet entitle the plaintiff to nominal damages. The question remains whether in this case the damages should be increased upon the basis of malice using the expression in its extended meaning. On this point the petition for attachment before judgment has been relied upon. The matter depends again upon the inference to be drawn from paras. 5, 6 and 7. The plaintiffs contend that the defendants must have known the full facts of the transfer of the 10,750 bales; that they knew it to be genuine, but in order to obtain attachment before judgment, they alleged that it was surreptitious and with a view to defeat their claim. The defendant's counsel suggest that the allegations really relate to matters in insolvency and that no suggestion was made against the plaintiff firm of the genuineness or honesty of the plaintiff firm's transactions. I do not think it is possible to go quite as far as this. On the other hand there were all sorts of arrangements going on between the plaintiff firm and other creditors, with the debtor firm from which the defendant firm in this case had been left out. They were naturally agitated and desired to get in. Some allowance must be made for that. I assess the damage at Rs. 500. The point as to the maintainability of this suit, although one for which I feel no great enthusiasm is yet substantial. Its determination depends upon the construction to be put upon a certain document and the very scanty oral evidence. It is this: The first question asked him in cross-examination of Chunilal was the names of the partners of the plaintiff firm. The witness gave Hazarimull, Johorimull and three others. He also stated that a few minors were interested in the business. In Q. 22 he stated those other than Hazarimull were members of the joint family (see also Q. 23). There was re-examination to show that Hazarimull and Johurimull had certain shares covering the whole of the 100 per cent interest in the firm.

12. Johurimull put in an award purporting to provide for adjustment or dissolution of the alleged partnership. This has been relied upon by the defendant firm who asked me to infer from it that the alleged partnership was an arrangement between Hazarimull and Johurimull as respective kartas of two joint families, the result of the arrangement being a union of two joint families through their kartas which cannot in law be a partnership. The defendant relies also upon the evidence of Chunilal which if it is to be taken as correct would indicate that there was one joint family not two. Mr. Page has been good enough to address me on this point and I fully accept his contentions that neither can one joint family be a partnership of itself, nor can two joint families brought into relation with one another by an agreement be a partnership. The whole question is whether I should so read what evidence there is and the documents as showing that there was an agreement of partnership between Hazarimull and Johurimull, both members of joint families and having rights and duties vis a vis those families, but not an agreement between the joint families through the persons named. On the whole that is the view I take, namely that there was a partnership between Hazarimull and Johurimull, the fact being that each was a member of a joint family and karta.

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