UDAI CHAND PANNALAL Vs. THANSING KARAMCHAND

JUDGEMENT

(1.) The short facts of this case are as follows: Shortly before the events in issue in this suit, the firm of Chandanmull Khanmull, big jute dealers, were indebted to the Bank of India, and as security for this indebtedness they had deposited with that Bank a number of balas of jute to the extent of 41,000. Before the events in suit, the liability and the security had been transferred to the National Bank. This firm of Chandanmull Khanmull were also indebted to creditors other than the Bank, in particular to a firm of the name of Udai Chand Pannalal, the plaintiff in the present suit. As one means of obtaining payment, the plaintiff firm in the beginning of 1933 instituted insolvency proceedings against Chandanmull Khanmull whom I will call the debtor firm. Pending these proceedings a system of payment or satisfaction was discovered and certain creditors including Udai Chand Pannalal made an arrangement to take over certain bales at a certain price, paying to the National Bank a sum of Rs. 19 per bale which represented the fractional or proportionate amount of the indebtedness of the debtor firm to the Bank, the remaining value of the bales being applied in discharge of the debtor firm's indebtedness to the creditor other than the bank. In the case of the plaintiff firm, the number of bales was 10,750. Those are the goods in question in this suit. The transfer was prior to 29 May. On or about that date another arrangement was entered into between the plaintiff firm and the Bank. I should have mentioned, earlier perhaps, that the plaintiff firm, apart from the arrangements between themselves and the debtor firm, had guaranteed the total indebtedness of the debtor firm to the Bank. A letter of guarantee was issued on 27th May 1933 and in support of that guarantee the 10,750 bales were pledged to the Bank, a letter of lien in the usual form being executed on 29 May 1933.

(2.) On 30 May 1933 the Bank made over to the plaintiff firm a letter (see first letter in the Brief of Correspondence) recognising the transfer from the debtor firm to the plaintiff firm acknowledging payment of their dues from the plaintiff firm, and acknowledging that they held the goods "deliverable to you in trust for you under an arrangement arrived at with you." Something turns upon the language of that clause, the position being unless it can be successfully argued that the declaration of trust nullifies the pledge that the bank were not only trustees of the goods but that it was also entitled to certain possession as pledgee. Shortly after this the defendant firm Thansing Karamchand filed an application for attachment before judgment. It is obvious from paras. 4, 5, 6 and 7 that the defendant firm must have had fairly accurate information from some source or other of what had taken place between the debtor firm and the other creditors. The paragraphs in question reads as follows: On 2nd June 1933 upon the allegations contained in those paragraphs, an order was made in terms of the notice of motion attaching "the 41,000 bales of jute belonging to the defendant firm in the hands of the National Bank of India Limited, subject to the claim of the said Bank." On the same date Messrs. Khaitan & Company for the plaintiff firm called upon the defendant firm to withdraw the attachment and claimed a sum of Rs. 50,000 as damages. On 5 June the bank wrote to the solicitors of the defendant firm stating "the number of bales in the Bank's hands belonging to the defendant firm is approximately 25,302."

(3.) So far as the correspondence relates to negotiations for settlement between the attaching creditor, and the debtor firm I need not refer to it. On 5 June the attorneys for the defendant firm answered Messrs. Khaitan & Company's letter (see page 10 of Brief) denying knowledge of the sale by the debtor firm of 10,750 bales, and stating that they had "not attached any goods belonging to the plaintiff firm" and quoting the words of the writ of attachment. On 5 June also the sub-manager notified the parties concerned of the order of attachment treating it as an attachment of 41,000 bales of jute. On the 5 also an application was filed by the plaintiff firm to have the attachment removed, and on the 7 (see p, 23 of Brief) the attorneys for the defendant firm refused to discuss the matter further with Messrs. Khaitan & Company as the matter had been argued in Court and was subject to the proceedings in Court. The attachment in question, and apparently another attachment with which we are not concerned were removed by 10 June though actually the plaintiff firm did not receive notice of the withdrawal of the attachment until the 13th. I should mention that the motion for removal of the attachment came up for hearing on the 13 or there about and the attachment having already been removed no order was made except that the plaintiffs in this suit were awarded the coats of the application. The plaint in this suit was filed on 16th August 1933. The issues raised were as follows: (1) Did the defendant cause 10,750 bales to be attached as alleged in the plaint? (2) If so, did the defendant act with malice and/or negligence? (see para. 6 of the plaint). (3) If so, were the said bales by reason of such attachment withheld from the plaintiff until 13 June 1933? (see para. 4 of the plaint). (4) Was the plaintiff by reason of such attachment deprived of possession of the goods, or power of disposing same? (see para. 4). (5) Damages.