B NAND KISHORE Vs. BEHARI LAL

JUDGEMENT

(1.) These two appeals arise out of the same suit brought by the plaintiff-appellant under the following circumstances: It appears that a number of mills which did the business of grinding corn were in existence in Moradabad in 1927. Fourteen persons, among whom was the plaintiff, agreed that only five of the mills should carry on the business of grinding corn, that they should charge the public at certain rates fixed, that they should contribute a certain amount towards a common fund and that fourteen members should receive out of the common fund a certain share as their profits. The whole idea of the agreement was to avoid competition and a consequent cutting down of the rates, so that the mills may not be obliged to work at a loss. The plaintiff's case is that by para. 17 of the agreement he was to get his share of the profits at the rate at which he was getting them, if the agreement could not last for the whole year for which it was meant. The agreement according to the plaintiff came to an end on 8 January 1928. The plaintiff accordingly claims a certain sum of money as his share of the profits. The lower appellate Court found that the pooling agreement did work for the year as agreed and that the whole charges to be made to the public for grinding corn were reduced as also the amount to be contributed to the pooling fund. The lower appellate Court accordingly directed payment to be made to the plaintiff, according to the reduced rate contributed to the common fund. In this Court it has been urged that the learned Subordinate Judge entirely misunderstood and misconstrued the pooling agreement of 1 September 1927 and that on foot of that agreement the plaintiff was entitled to a much larger sum. (After discussing the agreement, their Lordships proceeded.) If we look to the entire circumstances of the case, we should have no difficulty in finding that there must be minimum costs at which the mills must work in order to work without any loss. The idea of having a common fund has behind it the principle that the mills which do work should have the working cost paid to them, and the profits alone should be shared. In this view, when it was provided that the grinding charges given "below" were liable to increase and decrease, it must have been in the mind of the parties that with the change in the grinding charge there would be a change in the contribution towards the common "fund. It cannot be said the language of the agreement is absolutely clear. It cannot be expected that out of four annas three pies, the rates declared at the meeting of 8 January 1928, the mill-owners who worked their mills were to get only three pies and were to contribute four annas to the pooling fund. This would induce the mill-owners to close their mills and no mill could work under these conditions. The result would be that the whole agreement would come to an end. This would be an absurd conclusion.

(2.) Their Lordships of the Privy Council have decided in unreported case (Privy Council Appeal No. 145 of 1920, Decided on 5 May 1924), Venkata Subhadrayymma V/s. Venkatapati Raju Since reported in A.I.R. 1924 P.C. 162, that where a written contract was doubtful in its meaning, the surrounding circumstances existing at the creation of the contract and the subject-matter to which it was designed and intended to apply could be looked into. Again their Lordships held in another unreported cases (Privy Council Appeal No. 10 of 1923, Bedded on 18 December 1923) Ma Thaung V/s. Ma Than Since reported in A.I.R. 1924 P.C. 88 that where a written contract was of doubtful import the conduct of the parties might be looked into to help the Court to obtain an explanation of the true moaning of the contract. These cases apply clearly to the facts of this case, and from the conduct of the parties and from the absurdity to which the plaintiff's contention would reduce the contract, we can clearly infer that the idea of the parties to the agreement was that not only the grinding charges could be charged, hut also the amounts that were to go to the pooling fund. In this view, the opinion of the Court below was right.

(3.) As to whether the pooling contract held good for the entire period of one year or not there is the finding of the Court below that it did hold good. This is a question of fact, but it was argued that new partners were introduced on 8th January 1928 and therefore the original contract came to an end. This is not a correct view of the situation. The original contract was no doubt confined to fourteen persons, but there is nothing in it which precluded other mill owners being allowed to join in the transaction. Indeed, if the new mill-owners were left free to compete, the whole object of the contract would become infructuous. We find from the resolutions passed at the meeting of 8 January 1928 that no less than six new comers were invited to coma to the meeting to be held on that very day at 4-30 p.m. Under Section 253, Contract Act, with the consent of all parties to the contract new partners could be introduced. We have already mentioned that the plaintiff himself was the president of the meeting of 8 January 1928. He never objected to the introduction of new partners. The finding of the learned Judge therefore that the pooling agreement did hold good for one year is not liable to be successfully attacked. The result is that the appeal fails, and we hereby dismiss them with costs, including counsel's fees in this Court on the higher scale.