Posted On by &filed under Calcutta High Court, High Court.

Calcutta High Court
Jaffer Meher Ali vs Budge-Budge Jute Mills Co. on 8 May, 1906
Equivalent citations: (1906) ILR 33 Cal 702
Author: Sale
Bench: Sale


Sale, J.

1. The plaintiff in this suit claims to recover a sum of Rs. 3,000 as damages from the defendant Company for non-delivery of the January instalment of gunny-bags, which under a contract dated the 27th July 1905 the defendant Company agreed to sell and deliver to one Cassim Karim. The plaintiff claims to enforce the contract as the assignee of Cassim Karim, the original purchaser. The deed of assignment is dated the 16th August 1905 and purports in consideration of the sum of Rs. 100 paid by the assignee to the assignor to transfer and assign over to the assignee the contracts in the schedule thereto set forth as also the benefits and advantages thereunder as also the right, title, interest, estate, claim and demand whatsoever of the assignor into or upon the said contracts. The schedule to the assignment sets out nine different contracts entered into by the Delta Jute Mills Company, Ld., and by the Budge-Budge Jute Mills Company, Ld., and also by the Bombay Company, Ld., by Messrs. Kahn and Kahn, Messrs. D. Sassoon & Co. and other sellers. The contract in suit is marked 3 in the schedule annexed to the deed of assignment. In pursuance of the deed of assignment the plaintiff gave notice of the assignment to the Budge-Budge Jute Mills Co. and subsequently called upon the defendant Company to carry out the contract. The defendant Company by their answer declined to recognise the plaintiff as having any right under his assignment to enforce the contract as against the defendant Company. The defendant Company also alleged that the original purchaser Cassim Karim was an insolvent and offered to fulfil the contract, if the plaintiff obtained the consent of the Official Assignee to the plaintiff’s claim. The plaintiff alleges in the plaint that he was always ready and willing to pay for and take delivery of the goods covered by the said contract, but the defendant Company had neglected, failed and refused to deliver the goods and in consequence the plaintiff had suffered loss and damage in respect of the January portion to the extent of Its. 3,000, being the difference between the market rate and the contract rate of the said goods on the 31st of January. The defence taken by the defendant Company is in the main twofold. In the first place they say that the contract was not assignable and that they were not found to recognise the plaintiff as the assignee of the original purchaser Cassim Karim. They further take exceptions to the assignment on the ground that it was not a bond fide or genuine assignment, being made at a time when Cassim Karim was insolvent and with the object of defeating and delaying the creditors of the assignor and was therefore void and of no effect as against the defendant Company. The defendant Company further alleged that the plaintiff was not ready and willing to carry out the contract. Now I am inclined to think that the plaintiff has succeeded in showing that the rule as regards the assignability of contracts in this country is that the benefit of a contract for the purchaser of goods as distinguished from the liability thereunder may be assigned, understanding by the term benefit the beneficial right or interest of a party under the contract and the right to sue to recover the benefits created thereby. This rule is however subject to two qualifications: first, that the benefit sought to be assigned is not coupled with any liability or obligation that the assignor is bound to fulfil, and next that the contract is not one which has been induced by personal qualifications or considerations as regards the parties to it. Neither of these exceptions I think apply to the present contract. There is nothing on the face of the contracts to suggest that any credit was given by the defendant Company to the original purchaser or that any circumstance of an especial or personal character existed, which led to the making of the contract between the parties thereto, nor looking at the terms of the contract does it appear to impose any liability or obligation of a personal character on the assignor, which would prevent the operation of the rule of assignability. The contract is for the sale on the usual terms of a certain quality of gunny-bags to Cassim Karim, and subject to the exercise of certain options the purchaser has an absolute right to call for delivery of the goods on payment of the price. I am inclined to think that the right to claim the benefit of the contract, or, in other words, the right on certain conditions to call for delivery of the goods mentioned in the contract, constitutes a “beneficial interest in moveable property, conditional or contingent,” within the meaning of the definition of an actionable claim in Section 3 of the Transfer of Property Act, and as such is assignable. But it appears to me that conceding to the plaintiff that the benefit of the contract in suit was assignable, the second ground of defence taken by the defendant Company affords an insuperable bar to the plaintiff’s claim in this suit. It is necessary to look at the circumstances under which this assignment was made, which is the basis of the claim in suit. Cassim Karim at or about the date of the assignment was in insolvent circumstances. He was then and had been for some time previously contemplating an application to the Court to be declared an insolvent. At that time the hearing of a suit was proceeding, in which a heavy claim was made against him, and he openly expressed to his Attorney, who was engaged to draw this and other similar assignments, that in the event of the suit being decided against him it would be necessary for him to file his petition in insolvency. It is clear also that within a few days of the date of the present assignment Cassim Karim began to unburden himself of the substantial portion, if not the whole, of his assets, the object being to prevent these assets vesting in the Official Assignee and thereby becoming distributable amongst his creditors under the provisions of the Insolvency Act, The plaintiff is related to Cassim Karim, being, I think, his brother-in-law. The two lived in the same house, and there cannot be the slightest doubt that the plaintiff knew that the purpose and object of the assignment was to defeat the provisions of the Insolvency Act. The assignment was made for a purely nominal consideration, and there is one very significant recital in the assignment. This recital is to the effect that the present market rate of the goods is lower than the contract rate. The evidence in the case shows that at the date of the assignment the market for gunnies was rising and that the rate instead of being lower was higher than the contract rate. It is clear that the purpose of making this false statement was to give a colour of good faith to the assignment and to make it appear that the object was not to prevent the beneficial interest in valuable contracts from being made available for the benefit of creditors, but rather to get rid of burdensome contracts, which might and probably would impose a loss on the assignor’s estate. Accordingly the deed provides for an indemnity from the assignee. At the same time the assignor makes transfers of certain jewellery, his carriage and horse and his office furniture. Neither the plaintiff nor the assignor Casssim Karim are called to explain these transactions, which strongly suggest a fraudulent design on the part of those concerned therewith. That being the position of affairs, ten days after the assignment in question Cassim Karim filed his petition in insolvency, and having with the assistance of his attorney and the plaintiff got rid of all his property there was nothing in the shape of assets to make over to the Official Assignee for the benefit of his creditors. Now an assignment of property made under these circumstances is clearly an assign-Kent in fraud of the Bankruptcy Law. That is the language of the Courts in England. In this country a similar assignment falls clearly within Clause (h) of Section 6 of the Transfer of Property Act, that is to say–“It is of such a nature that if permitted, it would defeat the provisions” of the Insolvency Act. That is in substance the language of Section 23 of the Contract Act, which for this purpose is incorporated with Section 6 of the Transfer of Property Act. Clause (h) of Section 6 says: “No transfer can be made in so far as it is for an unlawful object or consideration within the meaning of Section 23 of the Indian Contract Act, 1872.” Section 23 of the Contract Act provides that “the consideration or object of an agreement is lawful, unless it is forbidden by law or is of such a nature that, if permitted, it would defeat the provisions of any law.” Now it follows I think that, if the object of the assignment was to defeat the provisions of the Insolvency Law in such a manner as to prevent property of the insolvent vesting in the Official Assignee and thereby becoming available for distribution under the provisions of the Act, such an object is unlawful. The transfer in this case was therefore for an unlawful object and as such is prohibited by Clause (h) of Section 6 of the Transfer of Property Act and is inoperative. It was contended on behalf of the plaintiff that the words “consideration” and “object” used in Section 23 of the Contract Act do not mean two different things, but two different views of the same thing, and that though the object of the present assignment might be in one sense to defeat the creditors, that was not the object of the agreement of transfer within the meaning of Section 23 of the Contract Act, as the object or consideration of the assignment was the sum of Rs. 100, which is and was a good and lawful consideration. It is pointed out in Gour’s Law of Transfer (Vol. I, p. 130 and see foot-note), an authority upon which much reliance was placed in the course of the argument for the plaintiff, that this view of the meaning of the words “consideration” and “object” is not correct and that object is intended to mean something very different from consideration. In my opinion the word “object” in Section 23 of the Contract Act was not used in the same sense as ” consideration,” but was used as distinguished from consideration and means purpose or design, If then the purpose of the parties was to defeat the provisions of the Bankruptcy Law there can be no doubt, I think, that the assignment or transfer would be inoperative under the provisions of Section 6 of the Transfer of Property Act. The assignment being inoperative the result would be that the beneficial interest of the assignor in the contract in suit vested in the Official Assignee on the vesting order being made, and it was then open to the Official Assignee to have claimed the benefit of the Acts of the plaintiff and to take such other steps as were necessary to entitle him to call upon the defendant Company to fulfil the contract and to deliver the goods or in lieu of delivery to have claimed damages, but no such step was taken nor was any claim to the benefit of the contract made by the Official Assignee. The reason why the Official Assignee did not and has not moved in this matter to protect the interests of the creditors probably is that there are no assets in his hands to meet the necessary expenses.

2. The matter is complicated by reason of the fact that the insolvency proceeding? resulted in the petition of the insolvent being dismissed. As I understand, the reason for the dismissal was the conduct of the insolvent with regard to the assignment in suit and other like assignments, which the learned Commissioner (Henderson J.) thought were all made in fraud of the provisions of the Insolvency Act. The petition was not however dismissed without giving time to the Official Assignee to take steps to enforce his rights under the Contract in suit. The Official Assignee failed to take steps within the time limited and the petition was accordingly-dismissed. I am informed that an appeal has been filed against the order dismissing the petition in insolvency, and the question which I have to consider is whether it would he desirable to stay making a final order in this suit, until the result of the insolvency appeal is known; but it seems to me undesirable that I should take this course, having regard to the fact that the appellant is the insolvent, and it is his case that the beneficial interest in the contract in suit did not pass to the Official Assignee by virtue of the vesting order. Moreover, if the vesting order is restored, there seems no prospect of damages being now recoverable at the instance of the Official Assignee for the benefit of creditors. It might be perhaps that, if the plaintiff could show that he had taken the necessary steps to claim damages for the breach of contract, he might have been permitted to recover as trustee for the Official Assignee. But that is not the object of the present suit. Further, it is doubtful if the plaintiff could have succeeded in this case–having regard to the issue raised in the question of the plaintiff’s readiness and willingness. The plaintiff claimed to exercise certain options under the contract. The defence is that the options were exercised too late. This has not been denied on the part of the plaintiff, but it is said he was in any case entitled to take goods of the standard make and quality and to obtain damages on that basis.

3. But the difficulty is that the plaintiff never said he was prepared to take goods of the standard make. He never said so in the correspondence, nor has he said so in the plaint–nor has he been called to say so in the witness-box. Having claimed to exercise certain options I am not satisfied that he was prepared in the alternative to take goods of the standard make, if such had been offered to him.

4. The right view, in my opinion, is that, inasmuch as the Official Assignee has failed to take advantage of the opportunities afforded to him to claim the benefit of the contract, such rights as he had thereto must be regarded an having now lapsed.

5. Under all the circumstances it seems to me that the defendant Company is entitled to judgment dismissing the suit with costs.

Leave a Reply

Your email address will not be published. Required fields are marked *

* Copy This Password *

* Type Or Paste Password Here *

107 queries in 0.203 seconds.