AKKIPEDDI GOPALASASTRY Vs. VIJAYAWADA ENGINEERING METAL COMPANY LIMITED

JUDGEMENT

(1.) These two letters Patent Appeals arise out of two connected suits O. S. 10 of 1959 and O. S. 16 of 1959 on the file of the Addl. District Judge, Krishna. The defendant who is the same in both the suits is the appellant in the above appeals which arise under the following circumstances: The plaintiff who is the same in both the suits is the liquidator of a company called the Vijayawada Engineering Metal Co., Ltd. The said Company was started in 1947 and its workshop (foundry) was worked till the year 1959 when it was closed due to mismanagement. The Company fell into debts and was accordingly wound up voluntarily. As a result thereof the plaintiff was appointed as a liquidator to wind up the said Company by disposing of the machinery, etc. As the machinery was not in working order, the plaintiff wanted to put the same in working order before he could sell the same. Accordingly, the plaintiff, entrusted the same to the defendant who was related to him and requested him to put the workshop and machinery in working order so that it may be easily sold out to third parties. Thereupon an agreement, Ex-A-1 dated 14-3-1953 was executed between the plaintiff and the defendant, the material conditions of which are as follows: (1) The period for working the machinery was two years. (2) The defendant should invest all capital for working the machinery. (3) The defendant should keep accounts and pay Re. 0-6-0 out of the net profits to the plaintiff keeping the balance of Re. 0-10-0 for himself. (4) The Company will not be liable for any loss sustained by the defendant's management. (5) The defendant should deliver possession of the workshop with all its machinery if the defendant did not work for a period of three months consecutively. On the same day (14-3-1953) the plaintiff executed another letter in favour of the defendant directing him to make the necessary repairs and replacements to the building and machinery and providing that the expenses incurred should be paid to the defendant by the plaintiff. The plaintiff again executed another letter dated 16-3-1953 authorising the defendant to dispose of certain scrap samans entrusted to him so that the defendant may reimburse himself out of the monies realised by the sale of the scrap samans. As per the terms of the agreement, the defendant was put in possession of the machinery and the parts on 14-3-1958 itself. It may be stated that there was a good deal of correspondence between the plaintiff and the defendant wherein the defendant claimed to have stopped the working on 21-10-1953 as per the instructions of the plaintiff and delivered the machinery, etc., to the plaintiff while the plaintiff denied that he ever asked the defendant to stop working of the workshop or that he took delivery of the machinery that the defendant failed to deliver in spite of various notices issued to him The plaintiff finally sold the workshop machinery to a third party on 31-5-1955. It la the plaintiffs case that in spite of a telegraphic notice, Ex. B. 4 dated 31-5-1955 the defendant failed to open the locks of the workshop and that therefore the plaintiff had to break open the workshop and take forcible delivery of possession in the presence of mediators on 31-5-1955. Thereafter, the plaintiff filed on 31-3-1958 the suit O. S. 239/ 58 on the file of the District Munsif's Court, Vijayawada subsequently transferred and registered as O. S. No. 16 of 1959 on the file of the Additional District Judge, Krishna for settlement of accounts and for recovery of his share of the profits. As the plaintiff discovered that a large number of machinery parts originally entrusted to the defendant were found missing when they were taken delivery of by the plaintiff the plaintiff instituted another suit on 19-6-1958 as O. S. 114 of 1958 in the Subordinate Judge's Court, Vijayawada which was subsequently transferred and registered as O. S. 10 of 1959 on the file of the Additional District Judge, Krishna for the recovery of the lost articles or for their value, namely, Rs. 6,000.

(2.) We will first take up the suit for account, viz., O. S. 16 of 1959 out of which L. P. A. 22 of 1966 arises. The claim for account is based upon clause (4) of the agreement, Ex A-1 which clearly provides that the defendant should maintain proper accounts and that out of the net profits the plaintiff should get Re. 0-6-0 share. The defendant, while admitting the liability to account, pleaded firstly that he had already sent copies of account to the plaintiff and that he was no longer bound to render any account and secondly that the suit was barred by time under Article 115 of the Limitation Act of 1908. The trial Court upheld the defence of limitation and dismissed the suit. On appeal by the plaintiff in A. S. 352 of 1861, our learned brother Narasimham, J. held that the suit is governed by Article 120 of the Limitation Act and that it is within time and accordingly passed a preliminary decree for accounting up to 21-10-1953 when the defendant claimed to have delivered possession of the workshop to the plaintiff. On the question whether the defendant delivered possession of the workshop on 21-10-1953 the trial Court as well as Narasimham, J. on appeal found against the plea of the defendant. There is however no appeal by the plaintiff that he is entitled to accounting till the date of taking delivery of possession, viz. 31-5-1955.

(3.) Sri P. P. Surya Rao, the learned Counsel for the appellant, contended that the suit is in substance one for compensation for breach of a contract not specially provided for and that Article 115 of the Limitation Act governs the suit. He argued that the defendant repudiated the contract on 21-10-1953 itself and that there was accordingly a breach of the contract which was more than three years from the date of the suit. We are unable to accept this argument because the suit is not based upon a breach of contract. As already seen, it is based upon an agreement to render an account to the plaintiff. The defendant was not bound under the contract to work the foundry till the expiry of the period of two years. He was put in possession merely to run the foundry so as to bring it into a working condition for the ultimate purpose of selling the property. The agreement further provided that if the defendant stopped working for a period of three months, the agreement gets cancelled It is therefore clear that the defendant has got the option to stop the working of the workshop and there was no obligation on him to work the same for a period of two years. Hence a mere stoppage of work by the defendant did not amount to a breach of any obligation. We are therefore inclined to hold that the basis of the suit is not one of breach of contract but one for rendition of accounts on the basis of an agreement between the parties.