JIWAN DAS Vs. SAHU SARJU PRASAD

JUDGEMENT

(1.) This is one of four connected appeals from the judgment and decree of the learned Civil Judge of Mirzapur in suits in?which the plaintiff, who carries on business at Mirzapur under the firm name of Jagdish Prasad Satish Prasad, has sued the partners of a firm called Prag Das Gobind Das, which also carried on business at Mirzapur, until it was adjudicated insolvent on a petition in the Calcutta High Court filed on 26 April 1938. The Official Assignee of the property of the insolvent defendant firm was made a defendant to the suit, and is the present appellant. The plaintiff, Sahu Sarju Prasad, who, as I have said, carried on business in the name of Jagdish Prasad Satish Prasad, also carried on a separate business at Mirzapur in his own individual name. In the course of one or other of these businesses the plaintiff lent the insolvent defendants various sums of money amounting in all to Rs. 49,302-4.0 which are the subject-matter of this particular suit. It appears that the plaintiff's business was in the nature of a money-lending business. The first two defendants, whom for convenience shall refer to as the defendant firm, on the other hand, dealt in metals, and, among other metals, in zinc. In the course of its business the defendant firm in April 1937 made a number of forward purchases of zinc from abroad of which they became, or were about to become, liable to take delivery. In those circumstances they approached the plaintiff with a view to obtaining from the plaintiff the finance wherewith to meet their obligations on these con. tracts of purchase as they fell due, and on 9 April 1937 an agreement was reached between the plaintiff and the defendant firm, the terms of which are to be found in Ex. 3, which is printed at page 11 in First Appeal No. 93. This document provided as follows: To : Messrs. Sarju Prasad Sao, Mirzapur. From : Prag Das Gobind Das, Mirzapur. Our compliments to you. We have purchased foreign zinc in the market by means of forward transaction, for taking delivery of which we are in need of money. Hence we will take from you as much money as we will require in any month and after getting the goods weighed shall keep it in a separate room in our godown, which will be locked by you. The goods will remain in your possession so long as we do not pay the money and on payment of the money due to you we shall take possession of the goods. We shall pay you interest on money which we will take from you at the rate of 9 annas 6 pies per cent, per mensem. Dated Chait Badi, 12 Sambat 1993. (Equivalent to the 9 April 1937) Written by the pen of Jagan Nath Prasad Tewari. Please note the contents of the letter. Signature of Prag Das, Gobind Das by the pen of Gwal Das Binani.

(2.) In due course the plaintiff from time to time made some nine advances of money to the defendant, firm at various dates between 10 April and 24 July 1937, which are set out more particularly in Schedule A attached to the plaint. It is not disputed on the pleadings that these sums were advanced by the plaintiff to the defendant firm. The plaintiff alleged by his petition that the nine advances were all made in pursuance of the agreement of 9 April 1937 and that with the money so obtained the defendant firm purchased a little over 3407 maunds of zinc. This, according to Para. 6 of the plaint, was all placed under lock and key of his own by the plaintiff at first in a separate part of the defendant firm's godown or shop premises and later - from about 1 January 1938 onwards-in a portion of a godown in the plaintiff's own premises which had theretofore been rented to. the defendant film for the purpose of the storage of carpets. On 26 April 1938, certain creditors of the defendant firm filed a petition in insolvency against them founded on an act of insolvency dated 23 April 1938, and in due course this defendant firm, was adjudicated insolvent. On the adjudication order all the assets of the defendant firm vested in the defendant, the Official Assignee, of, its property. The 3400 odd maunds of zinc in question remained, however, for the time being in the plaintiff's godown and no attempt was made by the Official Assignee to take possession of them for the reason apparently that the plaintiff claimed to be entitled to hold them as a secured creditor in respect of the Rs. 49,000 odd so advanced by him as aforesaid, together with interest thereon. It is possible that in these circumstances the plaintiff might have taken steps out, of hand to satisfy his debt by selling the zinc in his possession, but, instead of taking that course, he launched Suit No. 9 of 1938 out of which this appeal arises. It is perhaps worth pausing to observe the manner in which he has framed his prayer for relief, since the real issues have been somewhat obscured by the manner in which he has put forward his claim. After setting out the facts and alleging that under the circumstances the plaintiff is entitled to realize the security , the plaintiff proceeded to ask for the recovery of Rupees 53,507-14 0 in respect of principal and interest, together with the costs of the suit, and that a decree for this sum might be "passed in favour of the plaintiff as against the defendants." In view of the insolvency, this prayer was, of course, from the outset misconceived. He asked, however, in addition that what was due to him might "first be realized by sale of the goods which stand as security for the money claimed..." Allowing some latitude to the draftsman of the plaint, it may, therefore, be said that the plaint did include a prayer for the realization of the security by sale, meaning, it is to be supposed, by a sale by the Court of the zinc in the plaintiff's possession at the date of their insolvency.

(3.) The defendant firm, for obvious reasons, did not appear in the suit. The Official Assignee, after admitting the agreement of 9 April 1937, and that the sums in question had in fact been advanced, denied that the whole of the money borrowed from the plaintiff had been borrowed for the purpose of or applied in the purchase of zinc as provided for by the agreement of 9 April 1937. He admitted only that Rs. 29,800 had been so borrowed and applied, and alleged that only 1700 maunds of the zinc in the possession of the plaintiff were covered by the security constituted by the agreement. As to the remaining 1707 odd maunds of zinc and the balance of Rs. 19,502, he said, in effect that these constituted transactions altogether outside the agreement, and that the circumstance, that this 1707 maunds of zinc found its way into the plaintiff's godown was due only to the fraud of the gomashta of the defendant firm who, being the brother of the munif of the plaintiff, in collusion with the latter, had had it transferred about 1st January 1938 from the defendant firm's godown to the plaintiff s, premises for the fraudulent purpose of establishing a security to which the plaintiff had no title. In these circumstances the Official Assignee while admitting that the plaintiff was a secured creditor to the extent of Rs. 29,800 and that out of the zinc in possession of the plaintiff 1700 maunds were covered by the security, denied that the balance of 1707 odd maunds was covered by the agreement, and he accordingly claims the latter as part of the assets of the insolvents free from any charge in favour of the plaintiff.