CHUNDRA GURUVIAH Vs. GUGGILAM KOTIAH

JUDGEMENT

(1.) The defendants carried on business in Cheerala and at Madras and in the beginning of 1912 found themselves in difficulties. Five or six persons representing the Madras creditors went to the defendants at Cheerala, looked into their accounts, ascertained what assets they had and proposed a means of paying off their liabilities. It was arranged that certain assets shall be set apart to satisfy the claims of the Madras creditors and certain other assets should go to the mofussil creditors. An agreement Ex. I dated the 21st May 1912 was drawn up to which all the Madras creditors were made parties, and in a list of the same persons, Ex. II, the details of their claims and the total amount are set out.

(2.) The persons who arranged this agreement were evidently under the impression that if they did the best they could for their fellow-merchants, the latter would be sensible enough to fall in with the arrangement. They seem to have taken no step s before they left Madras to obtain the concurrence of the other creditors, but to have been satisfied that the arrangement they proposed would be so eminently satisfactory that it could not fail to be accepted by the other creditors of the defendants firm. The whole of the wording of the agreement is consistent with these facts, and shows, I think, that none of the parties who arranged it doubted that all the creditors would fall in with the arrangement and sign the agreement. The steps taken subsequent to the agreement were very informal. No meeting of the creditors seem to have been called the parties seem to have done what they thought right in their own eyes with regard to the realization of the defendant s property; there was an informal alteration of the agreement, Ex. I, with regard to interest; and it is clear that the whole body of creditors were never formally consulted. The consequence of this informal action was that some of the creditors thought that they would try to get the whole of the claim by taking proceedings on their own account. They brought suits and part of the property included in the agreement was attached. The plaintiffs now claim that the consideration which they obtained under the agreement has failed and sue for the whole amount of their debt.

(3.) I do not believe the 1st plaintiff when he says that there was an express stipulation on his part that all the creditors should sign. I think, on the facts of the case and the wording of the agreement, that no one contemplated that any creditor would be so filled up with greed as to refuse assent to it. This, I think implies that a party should not be bound unless all the creditors consented. It is evident that, if one creditor has chosen to claim the total amount of his debt, the property divisible amongst the rest must be protanto diminished and the consideration for the contract must fail. I think the case falls within the principlelaid down in the decision of their Lordships of the Privy Council in Ajudia Prasad v. Sidh Gopal (1887) I.L.R. 9 A. 330. I hold therefore that the plaintiffs are not bound by the agreement and are entitled to claim the whole amount of their debt. The alleged arrangement that a sum said to be due by the 2nd plaintiff to the defendant should be included in the agreement. There must be a decree for the whole amount claimed by the plaintiff viz., Rs. 4211--9--0 with interest at 6 per cent till payment and costs.