JOHN Vs. ORIENTAL KURIES LTD

JUDGEMENT

(1.) Both the above appeals arising out of the common judgment rendered by the learned Single Judge in AS Nos. 326 and 346 of 1992. The two appeals were preferred by the common defendants in the suit OS No. 323/84 and 548/87 respectively on the files of the Subordinate Judge's Court, Trichur. The respondent Company is a company incorporated under the Companies Act. They started the kuri (chits). The suit OS No. 323/84 was for recovery of 12 instalments due for the period from 24/11/1981 to 24/11/1984 and the suit OS No. 548/87 was for recovery of the entire future subscriptions due under the transaction other than the period covered by the earlier suit. The Trial Court decreed the suit OS No. 323/84 for an amount of Rs.40,915/- with 12% interest on the sum of Rs.34,800/- from the date of suit till date of decree and thereafter at the rate of 6% per annum from the date of decree and suit OS No. 548/87 was decreed for Rs.83,820.68 with 12% interest on the sum of Rs.63,800/- from the date of suit till date of decree and 6% interest per annum thereafter. Preliminary decree for sale charged on the plaint schedule property was passed in both the suits. Challenging the decree the defendants preferred appeals. Before the learned Singe Judge three questions were raised. The first question was that the decree passed in an equitable mortgage as granted by the Trial Court is not sustainable since there is no subsisting relationship of debtor and creditor between the defaulting subscriber and the foreman of the chit and hence the decree to that extent is bad. Though specifically this contention was not raised before the Trial Court, the learned Single Judge permitted the said question to be raised and considered in the light of the full bench decision of this Court in P. K. Achuthan v. State Bank of Travancore, 1974 KHC 181 : AIR 1975 Ker. 47 : 1974 KLT 806 : ILR 1974 (2) Ker. 631, the larger bench decision of this Court in Janardhana Mallan v. Gangadharan, 1983 KHC 46 : AIR 1983 Ker. 178 : 1983 KLT 197 : 1983 KLJ 722 : ILR 1983 (2) Ker. 33 : 1983 KLN 161 and the decision of the Supreme Court in K. P. Subbarama Sastri v. K. S. Raghavan, 1987 KHC 220 : AIR 1987 SC 1257 : 1987 (1) KLT 753 : 1987 (2) SCC 424 and took the view that in view of the decision of the Supreme Court in Subbarama Sastri's case, 1987 KHC 220 : AIR 1987 SC 1257 : 1987 (1) KLT 753 : 1987 (2) SCC 424 as having approved the decision in Achuthan's case, the decision in Janardhana Mallan's case cannot be taken to lay down the correct law and overruled the contention of the appellant. We will revert to this question after we dispose of the other contentions in this appeal.

(2.) The second contention urged on behalf of the appellant was that the plaintiff has violated the Kerala Chitties Act, 1975 and contended that there was no previous sanction of the Government as required under S.3(1) of the Kerala Chitties Act and that the same is not registered. In the light of the penal provision under S.60 for contravention of the provisions, the suit could not be maintained by the plaintiff. The learned Single Judge after referring to the pleadings and evidence in the case and also the decision of the Trial Court, held that the kury price book shows that the foreman of the kury is the Mangalore Branch of the plaintiff company. Reference was made to Exts. A51 and A52 in support of the above finding. Reliance was also made to the evidence of PW 1. It was found that the appellant had no case in the written statement that the foreman of the kury was not in the Mangalore Branch. Even though a contention was raised that the foreman of the chity was really in the head office at Trichur, the same was not accepted. The learned Single Judge held that the Court below referred to the relevant documents produced in the case and in the light of the relevant documents coupled with the statement contained in the written statement and the memorandum of appeal, it is not possible to accept the contention of the counsel for the appellant that the foreman of the chit is the head office at Trichur and not the Mangalore Branch of the plaintiff company. The learned Single Judge further held that the Kerala Chitties Act has no application to kury in the present case since it was started from Mangalore Branch in Karnataka State. On a consideration of all relevant matters, the learned Single Judge concurred with the view expressed by the Trial Court and held that the suit on the basis of the chitty transaction is maintainable. Though a ground is raised in the present appeal reiterating the contention, no acceptable argument was raised to take a different view as expressed by the learned Single Judge. We have gone through the judgment of the Trial Court and the reasoning given thereunder and the positive findings of fact rendered by the Sub Court on the basis of the materials on record that the chitty transaction was actually done from the Mangalore Branch of the company in Karnataka State with which the learned Single Judge agreed even after reappreciating the evidence on record we do not find any reason to take a different view, this point is decided against the appellant confirming the view of the learned Single Judge.

(3.) It was then contended that the suit was not maintainable as the Memorandum of Association of the plaintiff company and its articles of association do not empower it to start a kuri from Manglore in Karnataka State. This argument was also repelled after referring to the relevant provisions contained in the Memorandum of Association and Articles of Association of the company and also to the relevant provisions under the Companies Act. The view taken by the Court below that the clause contained in the memorandum of association of the company and the object clause contained is to establish, promote and carry on any other business in State of Kerala or anywhere in India and the expression 'anywhere in India' includes any place within or outside the State of Kerala and the fact that the State of Karnataka or Mangalore is not specifically mentioned in the object clause is immaterial. The learned Single Judge agreed with the said view. The plaint averments more particular in paragraph 8 clearly states that the plaintiff company is registered under the Indian Companies Act and a company registered under the Companies Act is a Corporation as held by the Supreme Court in Hakam Singh v. Gammon, 1971 KHC 442 : AIR 1971 SC 740 : 1971 (1) SCC 286. In State of Punjab v. M/s.Bajaj Electricals Ltd., 1968 KHC 597 : AIR 1968 SC 739 : 1968 (2) SCR 536 : 1968 (70) ITR 730 : 1970 (25) STC 82 it has been held that the trade in its primary meaning is exchanging of goods for goods or goods for money and in its secondary meaning it is repeated activity in the nature of business carried on with a profit motive, the activity being manual or mercantile as distinguished from literal arts or modern profession or agriculture. The object of the company is to start and conduct kuries as can be seen from clause 3(j) of the Memorandum of Association. It is therefore clear from the objects of the company that it can start any business with a view to earn profits. So it cannot be held that the plaintiff company is not a trading corporation and hence S.13(1)(e) of the Companies Act has no application. Therefore the view taken by the learned Single Judge that the plaintiff company is a trading company coming within the exemption contained in S.13(1)(e) of the Companies Act is perfectly correct. Hence the contention as advanced in this appeal lacks merit in this regard also.