BOMBAY COMPANY LIMITED Vs. OFFICIAL ASSIGNEE OF MADRAS

JUDGEMENT

(1.) This is an Appeal from an order of Mr. Justice Coutts Trotter in the insolvency of one Sithapati Ayyar, who was formerly a dubash of Messrs. Dymes & Co. and afterwards of the Bombay Company who took over the business, directing the Bombay Company to repay to the Official Assignee as representing the estate of the insolvent Rs. 27,243-13-0, which the Bombay Company had appropriated out of monies belonging to him in redaction of the loss the above firms had sustained in transactions with one V.V. Somasundaram Chetti which Sithapati had guaranteed under his dubash agreement. The ground upon which the refund was directed was that the effect of the arrangement entered into by the Bombay Company with Somasundaram Chetti was to release the dubash from his liability as surety. Assuming for the moment that the effect of this agreement was to release the surety from all further liability, I am not satisfied, and no authority has been cited to show that this surety also became entitled to recover the monies which he had already paid under his contract of suretyship. But before dealing further with this point it will be as well to set out the facts as they appear in the evidence.

(2.) On June 15th, 1915, as appears from Exhibit IT, the Bombay Company terminated Sithapati s employment as dubash and about the same time, as appears from the same Exhibit and their accounts, Exhibit C (3), they realized the promissory notes deposited with them and appropriated the proceeds and the other monies standing in their books to the dubash s credit, some Rs. 33,940 in all, to the losses they had sustained on the various transactions for which he was responsible. There was no specific appropriation to the various heads of loss, but, assuming the other losses to have been met in full, this balance of Rs. 27,000 remained and must have been appropriated to the loss sustained in the transactions with Somasundaram.

(3.) Somasundaram and Sithapati both became insolvents, and Mr. Rao on behalf of the Bombay Company, in January 1916 tendered proofs in Somasundaram s insolvency for the full amount of his indebtedness to Dymes & Co., and the Bombay Company, which eventually came to some Rs. 54,000 in all without making any reduction on account of the appropriation from the dubash s account. This, as will be seen, he was entitled in law to do.