GOVINDRAM GORDHANDAS SEKSARIA Vs. STATE OF GONDAL

JUDGEMENT

(1.) THESE are consolidated appeals from two decrees of the High Court of Judicature at Bombay dated November 8, 1948. The first of these decrees reversed a judgment against the respondent, the State of Gondal, in favour of the present appellants which had been given on January 15, 1943, by the High Court in its Ordinary Original Civil Jurisdiction : the second decree dismissed an appeal by these appellants from the same judgment in so far as It rejected their claim in the suit against the second and third respondents.

(2.) THE facts out of which the litigation arises are simple and they have produced no material divergence of view in the Courts in India. THE real question is how the law should be applied to those facts. All that it is necessary to notice may be briefly set out as follows. On October 1, 1926, a limited company called THE Currimbhoy Mills Co. , Ltd. , executed a debenture trust deed mortgaging two mills known as the Currimbhoy Mill and the Mahomedbhoy Mill together with certain plant thereon to trustees for debenture holders to secure an issue of debentures. THE second and third respondents (whom it will be convenient to refer to as "the trustees") were two of the trustees acting under the trust deed and were the only trustees who were made parties to the suit: the first respondent, the State of Gondal, acting through His Highness the Maharajah (hereinafter referred to as "the Maharajah"), was at all material times the owner of all the debentures secured by the trust deed. By October, 1933, the trustees, in exercise of their powers under the deed, had entered into possession of the mills which, it seems, lay within the municipal limits of the City of Bombay, and remained in possession until September 9, 1937, when the mills were handed over to Mr. Seksaria whose legal persona! representatives are the first appellants. At that date Mr. Seksaria had just become the purchaser of the mills for a sum of Rs. 12,50,000 under a contract between the Maharajah and himself, one of the terms of which was that possession should be given on payment of the full purchase price and before formal transfer. THE full price, Rs. 12,50,000, was in fact paid into the Maharajah's bank account on September 7, 1937, the contract in question having been effected by and contained in (i) a letter which Mr. Seksaria wrote to the Maharajah dated September 1, 1937. (ii) a telegram and confirming letter dated September 4, 1937, from the Dewan of the State of Gondal to Mr. Seksaria, (iii) a telegram from Mr. Seksaria to the Dewan dated September 5, 1937, a telegram in reply of the following day and a final telegram in reply to that on the same day.

(3.) THE property having been thus conveyed in pursuance of the contract, Mr. Seksaria and the appellant company instituted the present suit as joint plaintiffs claiming that the respondents should be ordered to pay to them the sura of Rs. 77,522-6-0 (being so much of the sum of Rs. 78,466-12-0 paid as related to the period up to September 9, 1937) with interest. THE trial Judge gave judgment for both Mr. Seksaria and the appellant company against the Maharajah in the sum of Rs. 95,630, covering the sum claimed and interest, with costs, but he dismissed their suit as against the trustees. He ordered them to pay the trustees' costs but directed that they should be at liberty to add those costs to the costs that they were entitled to recover from the Maharajah. THE basis of the learned Judge's view was that the Maharajah had made a contract with Mr. Seksaria into which were imported by law the provisions of Section 55 of the Transfer of Property Act. THE result of that was to impose upon him an obligation to clear off the unpaid municipal taxes up to September 9, 1937. Although Mr. Seksaria had not himself paid the money to discharge these taxes, the learned Judge interpreted the sub-sale to the appellant company as being an actual sale of Mr. Seksaria's contractual rights against the Maharajah and, so holding, considered that there had been an assignment by Mr. Seksaria to the appellant company of his right of action for damages in respect of the Maharajah's breach of contract. Since assignor and assignee were both before the Court, he considered that there was no difficulty in giving judgment for them both against the Maharajah. As to the trustees, they had made no contract with either of the plaintiffs and he saw no ground of action against them.