S SETHURATNAM Vs. M MUTHIAH

JUDGEMENT

(1.) Defendants 1 and 2 in O. S. No. 712 of 1972 on the file of the court of the Subordinate Judge of Tiruchirapalli are the appellants. The plaintiff (1st respondent) filed the suit for the recovery of Rs. 19,030.60 with future interests and costs against defendants 1 to 3. The facts are these: On 9-2-1970 the plaintiff and defendants 1 to 3 entered into a partnership for the purpose of carrying on business in pumpsets, motors, engines of all descriptions and allied accessories under the name and style of Saravana Traders. The second defendant was the managing partner. The Mayuram Co-operative Land Development Bank Ltd., (hereinafter called the bank) placed orders with Saravana Traders for the supply of pumpsets of the value of Rs. 24,063.36. according to the arrangement with the bank the firm was to supply pumpsets to the nominees of the bank and on delivery of the pumpsets the bank would make the payment of the price top the firm. As per this arrangement the pumpsets were sent by the firm to their agent Sendivel at Sembanarkoil for the purpose of being supplied to the various parties named by the bank and on the basis of this the account of the bank with the firm was debited of the extent of Rs. 24, 063.36.

(2.) On 1-8-1971 the firm Saravana Traders was dissolved. Under the deed of dissolution Ex. A-2 the plaintiff (first respondent) was given full right and liberty in his own name to collect all the assets of the erstwhile firm and to demand and sue for the recovery of all book debts of the firm and to receive and give full and effectual discharge therefor. The other partners relinquished and released all their rights and interest in all the assets of the firm and partnership properties including stock, goodwill, furniture, book debts etc., in favour of the plaintiff. There was a further provision that the plaintiff should pay the defendant No. 1 Rs. 17,837.68, the defendant No. 2, Rs. 17,910. 67 and the defendant No. 3 Rs. 20,258.93. It is stated in the plaint that the figures were arrived at in the deed of dissolution after taking into account the sum of Rs. 24,063.36 which was outstanding and due from the bank to the firm towards the price of the pumpsets. After the deed of dissolution the plaintiff called upon the bank to pay the value of the pumpsets but the bank repudiated its liability to the firm stating that no pumpsets were delivered to the partied nominated by the bank. It is further averred in the plaint that at the time Ex. A-2 was entered into the parties were under the mistaken belief that the amount should be recovered from bank and that consequently Ex. A-2 was vitiated by common mistake. The fact that is was later on found that the bank did not owe such sum to the firm would vitiate the settlement of accounts and would amount to a substantial error affecting the settlement of account arrived at in entering into the agreement Ex. A-2, the deed of dissolution. Thus there was an unjust enrichment so far as defendants 1 to 3 are concerned at the expense of the plaintiff and the defendants 1 to 3 are bound to restore the same to the plaintiff. According to the plaintiff Sendilvel the agent had played a fraud on the firm by not delivering the pumpsets to the bank. Therefore, on 5-8-1972 the plaintiff issued a notice to defendants 1 to 3 calling upon them to pay the plaintiff Rs. 19,030.60 being the 3/4th share out of Rs. 24,063.36 after deducting the plaintiff's 1/4th share in the said amount.

(3.) Defendants 1 and 2 filed a joint written statement. They have categorically stated that the plaintiff took over the business of Saravana Traders by virtue of Ex. A-2, the deed of dissolution only after satisfying himself. That he would get the sum of rupees, 24,063.36 from the bank. They have further denied that the agent Sendilvel had played fraud upon the firm. It was also made clear that the plaintiff satisfied himself about the possession of the pumpsets with the agent Sendivel at the time of taking over of the firm and that only thereafter he entered into Ex. A-2 dissolution agreement. In the circumstances Sendilvel must have committed fraud only after the deed of dissolution Ex. A-2 and that consequently defendants 1 and 2 would not be liable for the same. The fact that the parties were labouring under a common mistake as to their mutual rights and obligations at the time they entered into Ex. A-2 was denied. They further stated that the plaintiff was bound by the statement of account and was not competent to file a suit for reopening the account and for recovery of the money. The plea of unjust enrichment was also denied. They have further contended that the plaintiff should have taken proceedings against Sendilvel and thereby mitigated the damages to a certain extent.