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Gus Alexander Mackenzie Vs. Himalaya Assurance Co., Ltd. and anr. - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported inAIR1926Cal745,94Ind.Cas.381
AppellantGus Alexander Mackenzie
RespondentHimalaya Assurance Co., Ltd. and anr.
Excerpt:
principal and agent - agency, termination of. - .....and the agreement, dated the 30th december 1919, between the defendant company and the firm of mackenzie and rajabally, had been entered into. by the agreement the firm of mackenzie and rajabally were appointed managing agents of the company for a period of at least 35 years. the agreement contains provisions about remuneration which are not material for the purpose of this appeal: clause 5 provides that 'the managing agents shall, subject to the supervision and control of the directors, manage, conduct and carry on the business of the company both at the head office and at all branches and agencies wheresoever situated ' and then it provides that they ' shall have and possess all powers, authorities and discretions necessary for or incidental thereto, and, without in any way.....
Judgment:

Lancelot Sanderson, C.J.

1. This is an appeal by the plaintiff Mr. Gus Alexander Mackenzie against the decision of my learned brother Mr. Justice Pearson which was delivered on the 17th of April 1924.

2. The plaintiff sued to recover a large sum of money as damages from the Himalaya Assurance Co., Ltd., for the alleged breach of an agreement by which the plaintiff and the 2nd defendant, Rajabally, were appointed Managing Agents of the Company.

3. The 2nd defendant was joined as a party to the suit, because it was alleged that the plaintiff had requested Rajabally to join as a plaintiff in the suit but Rajabally had declined so to do. Therefore, the plaintiff had joined him as a defendant.

4. The plaintiff and Rajabally were in partnership. There were two agreements which dealt with the matter of partnership. The first was dated the 24th of September 1919 and the second one was dated the 29th of May 1920. In the interval, the Company had been registered on the 27th of October 1919 and the agreement, dated the 30th December 1919, between the defendant Company and the firm of Mackenzie and Rajabally, had been entered into. By the agreement the firm of Mackenzie and Rajabally were appointed Managing Agents of the Company for a period of at least 35 years. The agreement contains provisions about remuneration which are not material for the purpose of this appeal: Clause 5 provides that 'the Managing Agents shall, subject to the supervision and control of the Directors, manage, conduct and carry on the business of the Company both at the head office and at all branches and agencies wheresoever situated ' and then it provides that they ' shall have and possess all powers, authorities and discretions necessary for or incidental thereto, and, without in any way limiting or restricting the general powers hereby conferred upon them, the Managing Agents shall in particular possess and enjoy the following powers.'

5. Mr. Mackenzie and Mr. Rajabally were also appointed Directors of the Company.

6. The suit, as I have already said, was brought on the ground of an alleged wrongful breach of the managing agency agreement.

7. In the plaint there was an allegation in para. 7 that ' at sometime during the first half of the year 1922 the Directors (other than the plaintiff) decided to oust the plaintiff from the said managing agency and to appoint the defendant Rajabally sole managing agent and also decided to dismiss all the European staff from the service of the Company and in furtherance of such designs in concert and collusion with each other they carried out the following plan of action: On the 12th of August 1922 the defendant Rajabally wrote and addressed a letter to the plaintiff suggesting that the latter should retire from the said partnership but the plaintiff declined to do so.'

8. It is material to notice that in the letter of the 12th of August, amongst other things, Rajabally cancelled the power-of-attorney which he had given to the plaintiff whereby the plaintiff was conducting the affairs of the Assurance Company and those of the firm of Mackenzie and Rajabally.

9. The plaint further alleged that 'on the 14th August 1922 the defendant Rajabally caused his attorney K. B. Ghose to address a letter to the plaintiff purporting to give the latter notice that the partnership would be dissolved as from that date and informing the plaintiff that in default of his consenting to that course within 24 hours the said Rajabally would file a suit for dissolution of the firm.' It then alleged that the Directors had passed a resolution on the same day whereby Rajabally was appointed the Managing Agent of the Company.

10. The learned Judge came to the conclusion that the plaintiff had not proved that Rajabally was acting in concert and collusion with the Directors as alleged in the plaint : and, he also came to the conclusion, shortly stated, that such a situation had arisen on the morning of the 14th of August 1922 between Rajabally on the one hand and Mackenzie on the other that the Directors were justified in putting an end to the agency agreement.

11. The position seems to me to be as follows : The agreement between the Company on the one hand and the plaintiff and Rajabally on the other was admitted. There was no doubt that that agreement was put on end to by the Directors of the Company.

12. The onus, therefore, was on the Company to justify the action which the Directors took in terminating the agreement. The agreement was alleged to have been terminated because of the deadlock which had been created by the action of the members of the partnership. It would then be for the plaintiff to prove, if he could, that the situation which undoubtedly existed on the morning of the 14th of August 1922 had been brought about or engineered by the Directors or that they had been parties to the scheme which it is alleged Rajabally had conceived, and which, in fact, he carried out.

13. I am of opinion that the learned Judge's decision, that the plaintiff had not proved that Rajabally was acting in concert with the Directors of the Company in bringing about the situation which existed on the 14th of August 1922, was correct.

14. The learned Counsel for the plaintiff-appellant in his argument (which, if I may say so, was a very able argument) placed great reliance on the letter of the 12th of August 1922 which was written by Rajabally to the plaintiff. He urged that only one inference could be drawn from the terms of that letter, and that was that Mr. Rajabally had made up his mind to bring the partnership to an end in one way or an other, and that for the purpose of doing so he had before-hand consulted the Directors and had obtained their consent to that course.

15. The learned Counsel made some severe criticisms upon the evidence of Rajabally; and, argued with much insistence that the explanation which Mr. Rajabally had given for the writing of that letter was one which should not be accepted.

16. It is not necessary for me to give any decision upon that point, because, even if we reject the reason which Rajabally gave for the writing of the letter of the 12th of August 1922, and even if it be assumed that Mr. Langford James' argument was correct that Rajabally's evidence ought not to be relied upon, that is not sufficient for the plaintiff. The plaintiff had to go much further than that: it was necessary to show that the only inference that could be drawn from the facts of this case was that the Directors were a party to the course which Rajabally took on the 12th and the 14th of August.

17. I agree with the learned Judge that that has not been proved.

18. Even if Mr. Daud's evidence be accepted to its full extent it merely amounts to this, that in July 1922 Rajabally in Mr. Daud's presence told Mackenzie that some of the Directors were very antagonistic towards Mackenzie and that he had been asked by one or two of the Directors (without naming them) if it was possible for Rajabally to lay charge against Mackenzie whereby the Directors might be in a position to get rid of him, and that (then turning towards Macknzie) Rajabally said:

If at any time I appear to side with the. Directors, that is not so : it was only to find out what their plans may be towards you.

19. As I understand, it was common ground that at that time Rajabally was on good terms with Mackenzie.

20. It is not possible for the Court to hold, by reason of the above-mentioned conversation between Rajabally and the plaintiff in July 1922, that the Board of Directors were acting in concert with Rajabally in the action which he took on the 12th and the 14th of August.

21. Therefore, as I have said already, I agree with the learned Judge's finding that the plaintiff had not proved that the Company was responsible for the action which was taken by Rajabally on the 12th and the 14th of August.

22. There remains the question whether the Company was justified in putting an end to the agency agreement.

23. Having read the evidence I have come to the conclusion that the learned Judge Bummed up the situation accurately in his judgment. He said as follows: 'There had been Rajabally's letter of the 12th August, the cancellation of the power-of-attorney, notice of dissolution of partnership, the plaintiff's action in consequence, the visit to the office on the 13th, tearing off the 2nd defendant's padlock to obtain admission, and removal of certain things to protect his own interest; another visit on the 14th with Mr. Warden, the cancellation by the plaintiff of his power-of-attorney to the second defendant. I think there can be no doubt that conflicting and contradictory orders were given to the office staff by the plaintiff and 2nd defendant. As one of the witnesses said. 'There was more than an earthquake' Mr. Gregory's account gives some indication of how they felt to each other on the 14th. Both said the position was such that they could not work with each other, because neither could trust the other and Mackenzie had ordered the clerks not to obey the orders of Rajabally, and Rajabally had dissolved the firm and would not work with him any more. Plaintiff's conduct in cancelling the power-of-attorney and breaking the padlock shows his attitude.'

24. In discussing this part of the case, I desire to make it clear that I am not deciding which of the two parties was responsible for bringing about the deadlock. It may be that everything which the learned Counsel for the plaintiff urged as regards Mr. Rajabally was correct: on the other hand, we have not heard what the learned Counsel for the Company, Mr. Chaudhuri, had to say on that point. As-suming, however, for the sake of argument that Rajabally was in the first instance in the wrong, it seems to me that the plaintiff by the action which he tools, played into the hands of Mr. Rajabally; and, the result was that such a situation was created that it was necessary for the Directors of the Company to take action immediately. It is clear to my mind that the business of the Company could not be carried on, having regard to the action which had been taken by Mr. Rajabally and by Mr. Mackenzie. The office had been closed on the 14th August and the Company had to take steps at once with a view to carrying on the business. In my judgment, they were justified in putting an end to the partnership business: and, they carried that out by the resolution which they passed. That resolution was as follows:

Resolved that having regard to the position now and in the face of the dissolution of the Firm of Messrs. Mackenzie and Rajabally and the difference existing between them, Mr. N. Rajabally be asked to carry on the business as the Managing Agent....

25. It is true that Mr. Mackenzie had stated that the firm was not dissolved. On the other hand, Mr. Rajabally had given notice of the dissolution and he was asserting that it was dissolved although he declared that the Solicitors had advised him that it would be necessary to take legal proceedings to make it effective. There is no doubt about the position which existed in the office on that day and there is no doubt about the difference which was existing between these two parties: each of them declared that it was impossible for him to work with the other. It seems to me that it became absolutely necessary for the Directors to appoint somebody to carry on the business of the Company, The facts that they appointed Mr. Rajabally to carry on as Managing Agent until the share-holders could be communicated with and a meeting held either to confirm him or to appoint another Managing Agent cannot be said to be unreasonable. This was a Company which had been promoted to a large extent by the efforts of Mr. Rajabally, and having regard to the state of affairs which had arisen it was necessary to appoint somebody as Managing Agent and I cannot say that it was 'unreasonable for them to appoint Mr. Rajabally.

26. For these reasons, I agree with the decision at which the learned Judge arrived that the defendant Company were justified in putting an end to the managing agency agreement, and, consequently the plaintiff is not entitled to recover damages from the Company.

27. In the pleadings specific charges of misconduct and insubordination were made by the defendant Company against the plaintiff and the defendants added allegations of misconduct and dishonesty, by a letter which was dated the 10th of January 1924, from the defendant's attorney to the plaintiff's attorneys.

28. The learned Judge came to the conclusion that the defendant Company's case as regards the allegations of insubordination, misconduct and dishonesty failed and that none of the allegations which the defendant Company put forward was sufficient to justify the action which the Company took on the 14th of August.

29. It is not necessary for me to deal with any of these points except as regards the costs. It seems to me that the learned Judge with great respect to him ought to have made some provision in the decree with regard to the costs of the issues relating to the particular charges levelled against the plaintiff which had failed. It must be obvious that the length of the trial was considerably increased by those charges being made and by the investigation which was necessary in respect of them.

30. In fairness to the plaintiff it seems to me that it should be made clear that he was absolved with regard to the charges of misconduct, insubordination and dishonesty, except that it may be said that he may have been indiscreet in assuming in some respects more authority than he was justified without consulting the Directors and in respect of those charges he should get costs from the defendant Company.

31. As regards the costs of the issue on which the plaintiff succeeded, it has been left to this Court by the learned Counsel appearing for both parties to decide the amount.

32. We have already expressed out opinion that the plaintiff ought to have some costs in respect of those issues. That would mean the reduction to some extent of the defendants' bill of costs and the awarding of some costs to the plaintiff. After taking all matters into consideration and what the learned Counsel have said, we have arrived at the conclusion that the defendants' taxed bill of costs in the trial Court shall be reduced to five thousand rupees.

33. The appeal in all other respects is dismissed and the plaintiff-appellant must pay the costs of the defendant Company in the Appeal Court.

Rankin, J.

34. I agree.


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