Equitable Trust Co. And Ors. vs Hafiz Mohammad Halim And Co. And … on 28 June, 1927

Allahabad High Court
Equitable Trust Co. And Ors. vs Hafiz Mohammad Halim And Co. And … on 28 June, 1927
Equivalent citations: AIR 1928 All 120
Author: Sen


Sen, J.

1. This appeal and the connected civil revision arise out of the same proceeding.

2. The Deccan Trading Co., incorporated in America, New York, entered into a partnership with the defendant firm for the purchase and sale of hides and skins, and the agreement was that the parties were to share the profits and bear the loss in equal moieties. Originally the terms of this partnership were not reduced to writing. Skins and hides used to be purchased by the defendants in India and shipped to America, and the plaintiffs used to sell the same, and, after sale, the profits and losses used to be received or borne by the parties in equal shares. Some time in 1920 the defendants approached the plaintiffs for certain monetary accommodations on the security of the goods shipped. The plaintiffs, in their turn applied for loans to these banks, The National Bank of South Africa, New York, the Philadelphia National Bank, Philadelphia, and the Equitable Trust Co. of New York. These banks agreed to lend money but they desired that a written contract of partnership be prepared between the plaintiffs and the defendants clearly defining the terms of their respective rights and liabilities. In consequence of this, a deed of partnership was executed on 14th September 1920, the material terms of which have been reproduced in para. 7 of the petition, dated 8th November 1926.

3. A second agreement was entered into between the same parties on 18th February l921, where by the terms of the earlier document were confirmed. Unfortunately for the parties from February 1920 onwards the market for hides in America seriously declined, which resulted in very heavy losses. Thereupon the Deccan Trading Co. instituted the present suit in the Court of the Subordinate Judge of Cawnpore, on 16th January 1923, for recovery of Rs. 6,68,215-14-0. The suit was contested on the ground that no money was due to the plaintiffs, that the plaintiff Company had gone into voluntary liquidation in 1920, and a syndicate of creditors was formed in February 1921, to “oversee the liquidation,” and that the suit was misconceived as the plaintiff’s ought to have sued for dissolution of partnership and Account.

4. It has been brought out in evidence that just a few days before the institution of the present suit the plaintiffs, on 8th December 1922, executed an agreement in favour of three banks whose names are material for the purposes of this appeal. These banks are The National Bank of South Africa, The Equitable Trust Co. of New York and the Philadelphia National Bank of Philadelphia. This document purports to assign the chose-in-action owned by the plaintiff Company against the defendants to the three banks aforesaid. The instrument is couched in such clear, simple and forcible language as one ought to expect in a commercial document. There is no ambiguity, no equivocation of terms. The operative part of the document is in simple language, characterized by clarity and precision of expression. The operative part of the document may be usefully quoted:

Now therefore in consideration of the sum of one dollar and other good and valuables considerations, the receipt whereof is hereby acknowledged the undersigned hereby sells, transfers and sets over unto the National Bank of South Africa Ltd., Bombay, for its own account, in conjunction with the Equitable Trust Company of New York, New York, and the Philadelphia National Bank, Philadelphia, all of its right, title and interest, in and to several demands in favour of the undersigned and against the said Hafiz Mohammad Halim, arising under the agreements aforesaid in the following transactions:

5. It is difficult to believe that any English-speaking people in England and America or in this country, oven by diligent application, would find any equivocation or ambiguity in this document or discover a single word which might lend itself to two constructions. The entire document has been read out to us and elaborately commented upon. We find it impossible to construe this document to anything less than an absolute assignment of the right, title and interest of the Deccan Trading Company against the Halim Brothers to the three banks referred to above.

6. This being the nature and scope of this document, it may seriously affect the rights of the plaintiffs to maintain the present suit. As pointed out above, the deed of assignment was executed on 8th December 1922. The suit was lodged on 16th January 1923. The plaintiffs realized that the suit involved a very large stake, and they sent out to this country one of their Directors, Mr. Rappenhagen, to look after the filing of the plaint and the subsequent proceedings. It is not impossible to conceive that Mr. Rappenhagen may not have known about the document, dated 8th December 1922, on the day when the suit was instituted, although we have the statement of Mr. Dewhurst that Mr. Rappenhagen did not leave America till after the execution of this document. The National Bank of South Africa has a branch at Bombay. It is proved from the statement of Mr. Dewhurst, who was examined in America on commission as a representative of the said bank, that, on 8th December 1922, a copy of this deed of assignment was transmitted from America to Bombay, and this ought to have been in the hands of the Bombay firm some time about the institution of the present suit. A copy of this document was posted the very day it was executed, because its importance was fully appreciated and realized, but we do not know whether the document was ever brought to the notice either of Mr. Rappenhagen or of the plaintiffs’ solicitors or counsels in Bombay. If it was brought to their notice its material value was not sufficiently appreciated for some cause or another, by indifference, oversight, mistake or negligence. The plaintiff was party to the document but no step was taken by him (the plaintiff) to bring the document to the notice of the Court. Likewise the assignees made no application to the Court for being brought upon the record, and for the consequential amendment of the plaint.

7. Issues were framed on 9th April 1923 and a large quantity of oral evidence was put in. Some of the witnesses were examined in America on commission whose evidence began on 29th March 1926. It was in the course of this evidence that it was brought out that the document, dated 8th December 1922, was followed by another document between the plaintiff and his numerous creditors, including the three sets of appellants in the present appeal. This document is only a confirmation of the earlier deed of assignment, dated 8th December 1922, as would be abundantly clear by reference to para. 12 of the said document. It secures to the assignees and their successors and assigns full power and authority to ask, demand, collect, receive, compound and give acquittance for all sums of money now due or hereafter to become due by reason of the said Halim’s claim. This document does not by itself create or transfer any interest in the chose-in-action. Mr. Aldrige, an American jurist, who was examined by the plaintiffs to prove that the earlier deed was not, according to the law of the United States, a deed of assignment but created a mere charge or security, and that the later deed was the only effective deed of transfer, has not succeeded in establishing these postulates. We regret to note that a straight question put to this witness does not always elicit from him a straight answer. His recollection is not always to be depended upon. Not infrequently he takes shelter under generalities. Under the American law or by trade usage of that great country the document dated 8th December 1922, is not proved to be any thing short of a complete and absolute deed of assignment.

8. It may not be out of place here to notice that the dates of the accrual of cause of action for the plaintiffs suit have been put severally in the year 1920, or 2nd January 1921, 14th September 1920, and 18th February 1921. Any claim lodged after 18th February 1924, will therefore be time barred.

9. On 8th November 1926, an application was made to the learned Subordinate Judge of Cawnpore by the Equitable Trust Co. of New York, Gerard National Bank and the Barclays Bank (Dominion Colonial and Overseas). It purports to be under Order 1, Rule 10 and Order 6, Rule 17, Civil P.C. The prayers contained in the petition are: (1) that the applicants be impleaded as plaintiffs in the suit either in addition to or in substitution of the original plaintiffs namely, the Deccan Trading Co., (2) that consequential amendments be made in a number of paragraphs and (3) that in the relief claimed a further relief for dissolution of partnership and accounts be added. It is said in this application that the Deccan Trading Co. incorporated in New York sued in January 1923, without joining as plaintiffs the Equitable Trust Co., New York the National Bank of South Africa Limited, and the Philadelphia National Bank of Philadelphia, in whose favour a deed of assignment had been executed by the Deccan Trading Co. of New York in 1922, because the said deed of assignment was neither acted upon nor was it in strict conformity with the laws of America, and it was doubtful whether the banks could be made parties on that deed and to remedy this defect a complete “distribution agreement” was executed on 25th June 1925, whereby the deed of assignment was put on sounder basis and illegal anomalies removed. Under this latter deed the Gerard National Bank became successors to the Philadelphia National Bank, and Barclays Bank (Dominion, Colonial and Overseas) became successors to the National Bank of South Africa and these two bodies jointly with the Equitable Trust Co., prayed to be impleaded as plaintiffs.

10. The defendants contested the application on the ground that the deed, dated 8th December 1922, was a complete assignment by the plaintiffs of their right to sue in favour of the Equitable Trust Co. and the two other banks, that the deed, dated 25th June 1925, was only in confirmation of what was done by the deed of prior date and did not amount to a devolution or transfer of the plaintiffs interest in favour of the appellants during the pendency of the suit, and that the applicants should not be made parties after the period of limitation on the original cause of action had expired.

11. While arguments were in progress in the Court below a further application was made to the Subordinate Judge under Order 22, Rule 10, Civil P.C. on 22nd December 1926. The Subordinate Judge disallowed the application. He accepted the defendant’s contentions in their entirety. He held that the document, dated 8th December 1922, was a deed of absolute assignment, that no new rights and liabilities were created by the deed, dated 25th June 1925, that it was not proved by the law of the United States that the document of 8th December 1922 created only a charge, or at the most a security, that the deed dated 25th June 1925, recognized the legal effect of the earlier deed as a deed of absolute transfer and that the suit had not been instituted through a bona fide mistake on the part of the plaintiff within the purview of Order 22, Rule 10, Civil P.C. He also held that no amendment of pleadings was necessary for the purpose of determining the real questions of controversy between the parties. He accordingly dismissed the application.

12. Not being certain whether the order of the Subordinate Judge was open to appeal, or to revision, the applicants have come up here with a first appeal from order and also an application for revision. It has been contended before us by the respondent that the order of the Subordinate Judge is not open to either appeal or revision. It has been conceded by Sir Tej Bahadur Sapru, who has put his case for his client with the utmost fairness, that so far as the application purports to be under Order 1, Rule 10 or Order 6, Rule 17, the order of the Subordinate Judge was not open to appeal, as the case did not fall under any of the clauses provided for in Order 43, Civil P.C.; but he argued that though the original application was made under Order 1, Rule 10, it was supplemented by the application, dated the 22nd December 1926, which was made under Order 22, Rule 10, and as this petition had been disallowed by the Subordinate Judge the case fell under Order 43, (Clause b), and was consequently appealable. We are not prepared to accept this contention. The original application was made under Order 1, Rule 10 and incidentally Order 6, Rule 17, was also relied upon. The petition dated the 22nd December 1926, was very vaguely worded and no leave of the Court was specifically asked for, and the making of that application was clearly an after thought. There was no assignment, creation or devolution of interest in favour of the appellants during the pendency of the present suit. Had there been any such assignment it could have been argued, in view of the pronouncement of their Lordships of the Privy Council in re Sir Manindra Chandra Nandi v. Ram Lal A.I.R. 1922 P.C. 304, that the transferees, if they could not be added as parties, could at least be substituted in the place of the original plaintiff. We hold that the facts of this case do not attract the operation of Order 22, Rule 10, Civil C.P., and the order is not appealable. We therefore, sustain the preliminary objection and dismiss this appeal with costs.

Mears, C.J.

13. I am in full agreement with everything that Mr. Justice Sen has said, but I wish to say a few words with reference to a document tendered to us by Sir Tej Bahadur Sapru during the hearing. He put before us the affidavit of Mr. Samuel Yelloly, a gentleman who is a solicitor in the firm of Messrs. Crawford Bailey and Co. of Bombay. The main purport of that affidavit was to exhibit a letter from Mr. Rappenhagen. Mr. Rappenhagen in that letter of the 9th May, addressed to the firm of Murray Aldrige and Roberts, Councilors of Law, New York, asserted positively that at the time the suit was started they did not know of the assignment. We permitted Sir Tej Bahadur Sapru to discuss the case from that point of view, having every desire if we could, to assist the assignees, bud the introduction of that letter creates a difficulty, because if that was the position on the 16th January 1923, when the action was started, it, to a large extent, cuts the ground from beneath the application of the 8th November 1926, which sets up the affirmative case that the paretics considered the effect of the assignment, and having so considered came to the, conclusion that it was a document which was dubious in law, and for that reason the Deccan Trading Co. were designedly and intentionally named as the only plaintiff. I am of opinion that the letter of Mr. Rappenhagen represents the real fact, and that on the 16th January 1923, although there was a letter addressed to the Bank of South Africa at Bombay, informing them of the assignment, there is no evidence to show that letter was over passed on to the firm of Crawford Bailey and Co. Solicitors, Bombay, nor to the lawyers in Cawnpore, nor to Mr. Rappenhagen. The point, there fore, which I wish to emphasize is that, if an application had been made to the Court at Cawnpore in the early part of 1923, or even very much later, setting out the circumstances under which the assignment of the 8th December 1922, had been made in America, and showing that the knowledge of that assignment had only recently come to the legal advisers of the assignees in India, in my opinion an application based on facts of that character, which, in my belief, wore the facts in the case, would have succeeded. The banks, however, in their application of the 8th November 1926, took, as I have pointed out, their stand on a totally different ground, asserting knowledge of the assignment at the date of the commencement of the action but putting upon that assignment an interpretation which cannot be accepted as a real opinion held by them at the time. These applications both as regards the appeal or revision, must stand or fall on the ground taken in the original application before the Court on which argument proceeded. For the reasons given by Mr. Justice Sen I am entirely in agreement with him and this appeal must be dismissed.

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