COTHA KRISHNASWAMI CHETTY Vs. THATHA SEETHARAM CHETTY

JUDGEMENT

(1.) The plaintiff's father Ethirajooloo Chetty and the defendants were partners, carrying on their business under the name of Moses, and Co. Ethirajooloo died on the 5 July 1904 and on the 12 December 1904, the plaintiff executed a deed of release by which he renounced all his interest in the firm and its properties for the consideration therein recited. The suit out of which this appeal arises was instituted to set aside that deed of release for fraud and undue influence and for an account of the assets and liabilities of the firm on the 4 July, 1904, and for payment to the plaintiff of his share so ascertained. The learned Judge who tried the case dismissed the plaintiff's suit and this is an appeal from that decree.

(2.) In order to decide whether the release is binding on the plaintiff it is necessary to consider the circumstances under which it was executed. Shortly before his death Ethirajooloo Chetty wished to dissolve the partnership and requested Mr. Krisnnasami Chetty, a High Court Vakil, to take the necessary steps. It was intended that he and Subbia Chetty, another High Court Vakil, should, act as arbitrators, but before the arrangements were complete Ethirajooloo died. After his death, the plaintiff was unwilling to remain in the firm. From this point there is a conflict of evidence as to the course of events. The Judge entirely accepted the evidence of Mr. Krishnasami Chetty, and we see no reason to differ from his estimate of the oral evidence. We, therefore, disregard the rest of the oral evidence, when inconsistent with that of Mr. Krishnasami Chetty. The evidence proves the following facts. After the death of the plaintiffs father, the plaintiff requested Mr. Krishnasami Chetty to help him in settling affairs connected, with his leaving the firm: the defendants also requested him to do so. Though an intimate friend of Ethirajooloo, as he was not a friend of the plaintiff, Mr. Krishnasami Chetty, therefore, requested the plaintiff to name some person to act with him, and at the plaintiff's request Krishnasami Chetty agreed to act with Narasimhaloo now deceased. These two arbitrators and the parties and the plaintiff's brother-in-law met at the house of Seetharam Chetty, the 1 defendant. It was then agreed that the defendants should take an account of the stock of the firm and value it in the presence of the plaintiff and his brother-in-law; and it was also agreed that if the plaintiff, who had apparently an idea of carrying on business on his own account, desired to have the whole stock or any part of it at the valuation put on it by the defendants, he should be entitled to have it. The defendants invited the plaintiff to be present at the stock-taking with his brother-in-law and the latter's brother, to see that it was taken properly. The brother-in-law's brother was one Cannan Chetty, who had been employed in the firm by the plaintiff's father, who was his maternal uncle. It had been arranged at the meeting that Cannan Chetty was to assist the plaintiff. He accordingly attended every day and took notes. The plaintiff and his brother-in-law did not attend every day, but occasionally whenever they cared to do so. Cannan Chetty had been employed in the firm from 1893 to 1900. He had taken part in the stock-takings of 1893, 1895 and 1598. He was undoubtedly a competent man for the work he had to do and we may add that we entirely agree with the learned Judge in finding that the plaintiff far from being a young man of weak intellect and easily imposed upon, as his Vakil suggests, is a shrewd man of some 24 years of age and well able to look after his own interests. The valuation of the stock commenced on the 7 September. The goods in the shop had tickets attached to them. In the case of imported goods the tickets contained the invoice number, the costs or invoice price in code language and the sale price. It is, no doubt, said on behalf of the plaintiff, that the tickets were missing in many cases. But the goods which had no tickets and about the value of which Cannan Chetty had any suspicion, were very few in number, less than half a dozen. Cannan Chetty had access also to the invoice book which shows the price of every article and the date of its arrival. He prepared what are called the stock sheets which apparently contained all the information he wanted with his remarks in regard to various matters. They went not now produced at the trial on the side of the plaintiff in whose possession they ought to be and the explanation for their non- production is unsatisfactory. The plaintiff also made his own notes Exhibit 34. Exhibit 33 is a memo, of objections to the stock-taking in the handwriting of Cannan Chetty. A copy of this is attached to and forms a part of Exhibit 10, which embodied all the objections the plaintiff and his advisers had, to the stock valuation. In it the plaintiff pointed out, that in the course of stock-taking the defendants were guilty of omitting many goods from their lists and he referred to certain instances, where the defendants entered them in the lists after the omission was pointed out to them. The plaintiff also charged the defendants with concealment of goods, and with instructing their subordinates to conceal them just before they went to each department for stock-taking. He also referred to the fact that the values fixed by the defendants ranged from 15 to 85 per cent, of the invoice prices. The valuation of the Boots and Harness department was stated to be a mere sham. On receiving this objection Mr. Krishnasami Chetty issued further instructions, Exhibit 21, in which he directed that stock should be taken by the plaintiff of the Harness Department, that the defendants should make out a statement of stock pointed out by the plaintiff to have been omitted and that the plaintiff should also have the help of Jagannatham, an assistant in the shop. An account was also to be made up of goods sold subsequent the 5 July. The defendants subsequently submitted the abstract statement Exhibit 23, which includes also the cost of goods sold after the 5 July. They made the valuation of these goods on the footing that one shilling should be regarded as equal to 10 annas. But Mr. Krishnasami Chetty and Narasimhaloo Chetty held that it should be counted as 12 annas. After some objection the defendants yielded. The effect of this alteration from 10 annas to 12 annas was to add Rs. 6,000 to the plaintiff's share. Then there were certain damaged goods which were set apart by the defendants to be sold by auction, as according to the defendants no satisfactory valuation of them could be made. The arbitrators valued them so as to add to the plaintiff's share about Rs. 3,000. The plaintiff thereupon abandoned his objections. The arbitrators then considered that it would be well to Hare a submission in writing from the parties and on their so informing the parties the defendants on the 9 November, 1904, wrote Exhibit XIA in which they agreed to abide by their decision. The plaintiff's submission is dated the 5 December. The arbitrators then worked out the figures, and the paper was shown to the plaintiff, who told Krishnasami Chetty that he was satisfied. The plaintiff's share was valued at Rs. 40,000, though the correct amount according to the figures was a little less. He had already received Rs. 4,000 a sum of Rs. 5,000 was payable by the plaintiff to the 1 defendant, and Rs. 1,000 was paid in cash. It was agreed that the balance (Rs. 30,000) should be paid to the plaintiff in monthly instalments of Rs. 1,000, with interest at 9 per cent, and the necessary deeds, including the deed of release Exhibit II, were executed to give effect to this arrangement. The decision was declared by the arbitrators in the plaintiff's presence. There was, however, no award in writing as the parties thought it would be sufficient to actually carry out the award. The plaintiff received his instalments for 16 months, and then refused to receive anything further on the ground that he had been defrauded and brought this suit. The plaint alleges: That the defendants have grossly undervalued the stock in trade, that they have omitted to place any value on the so-called damaged goods and cut pieces, that they have not valued the goodwill of the firm, that debts to the extent of Rs. 56,000 have been represented as bad though many of them were in fact good debts, and that the defendants falsely represented that the business had been worked at a great loss.

(3.) As to the omission to place any value on the damaged goods, it has been already stated that the plaintiff's share on these was valued by the arbitrators at about Rs. 3,000 and the appellant's pleader has not pointed out that there were any other damaged goods than those referred to by the arbitrators. Nor is there any reliable evidence to show that the defendants told the plaintiff that the business had been worked at a loss or that the plaintiff acted on any such representation. It is, no doubt, a matter for observation that the goodwill has not been valued. But the plaintiff and his advisers knew of the omission at the time. Tine submission to arbitration in writing was made with that knowledge and the plaintiff chose to accept the settlement with that knowledge and received payments under it for 16 months. He was quite competent to look after his own affairs, and it is not now open to him; to contest its validity on that ground. With, reference to undervaluation and bad debts, it was strongly pressed upon us, that the learned Judge shut out the evidence intended: to prove the plaintiff's contentions in regard to them. With reference to the valuation of the goods the arrangement was that the plaintiff, who apparently had some intention of himself opening a shop, should be entitled to take for himself any goods which were: not properly valued by the defendants, and the plaintiff had the same facilities for valuing them as the defendants, with whom, so far as this valuation was concerned, he was certainly dealing at arm's length. In these circumstances we are of opinion that there is no foundation for the contention that the plaintiff is now entitled to claim a re-valuation. It is clear from Cannau Chetty's evidence that the plaintiff's interests were carefully looked after, and that he and the plaintiff were fully aware of the so-called undervaluation. There was no misrepresentation nor did the plaintiff act upon any statement by the defendant. Exhibit 10 shows that almost all the objections, if not all, that are now raised were then taken, and it was, therefore, with full knowledge of the facts that the plaintiff finally accepted the settlement proposed. He cannot, therefore, be allowed to re-open the settlement on this ground, nor was he prejudiced by the exclusion, if any, of evidence at the trial with regard to the valuation of the goods. It was also urged upon us that the accounts would show that in the stock-taking during the previous year, the invoice price was accepted for the purpose of valuation. The deed of partnership does not require the acceptance of that price in valuing the share of a retiring partner or of the representative of a deceased partner, and its adoption for one purpose does not show that the same mode of valuation must be adopted for other purposes. On the other hand it is obvious that a valuation for the purpose of paying a partner the value of his share in cash, would be likely to be on a lower scale than the biennial valuation contemplated by the partnership deed. It was also open to the plaintiff not to insist upon a valuation on the same basis as the biennial valuation and there can be no doubt that Caiman Chetty, who was a party to the stock-taking on the three previous occasions knew that a different method was pursued in 1904. He must have told this to the plaintiff will therefore, accepted the award with that knowledge.