MUTHU KARU V ALAGAPPA CHETTIAR Vs. KRISHNIER

JUDGEMENT

(1.) The question to be decided in this appeal is whether the plaintiff is entitled to the return of the advance paid by him in respect of a yarn contract. The contract was entered into between the plaintiff and the 1 defendant. The 2nd defendant is sought to be made liable on the ground that he guaranteed the performance of the contract by the 1 defendant and also on the ground that he was guilty of some fraud which would fix him with responsibility. The 3 defendant is the agent of the 2nd defendant and for the purpose of this appeal it is unnecessary to make any distinction between the 2nd and 3 defendants as it is not disputed that the 3 defendant acted for and on behalf of the 2nd defendant.

(2.) The facts are simple, although the judgment of the lower Court has given them the appearance of great complexity.

(3.) Ramalinga Mudaliar and Sons agreed to sell the 2nd defendant 50 bales of Madura yarn of 24 counts. The 2nd defendant agreed to assign this contract in favour of the 1 defendant. The consideration for the assignment was Rs. 600. This transaction is evidenced by Ex. I, dated 9 August 1918. For this sum of Rs. 600 the 1 defendant executed in favour of the 2nd defendant a promissory note see Ex. 6, dated 9 August 1918. In pursuance of this arrangement R. M. & Sons (which shall represent Ramalinga Mudaliar and Sons in this judgment) passed a letter to the 1 defendant dated the 10 August 1918, Ex. 4. It recites that they originally agreed to sell the goods to the 2nd defendant and that at his request they consented to sell them to the 1 defendant. The sale was in respect of future goods, and the 2nd defendant, having regard to the fluctuating market, thought it more prudent to get a clear profit of Rs. 600 than be involved in obligations under a speculative contract. The 1 defendant thus became the owner of the goods. Then there was first an attempt to sell those goods to Hanumantha Iyer and get the latter in his turn to sell them to the plaintiff. It was the 2nd defendant who made this attempt but it failed. Exhibit A, dated 21 August 1918 is an agreement executed by the plaintiff in favour of Hanumantha Iyer agreeing to purchase these goods. The attempt to get Hanumantha Iyer to buy the goods having failed, direct relations were brought into existence between the 1 defendant and the plaintiff. The varthamanam or contract Ex. B, dated 25 August 1918 was executed by the 1 defendant in favour of the plaintiff. This is the contract with which we are concerned. The 2nd defendant for bringing about this transaction, received a brokerage of Rs. 400. It will thus be seen that the 2nd defendant carefully avoided being himself a party to any contract but succeeded in securing to himself a sum of Rs. 1,000 clear of all obligations. The plaintiff paid the 1 defendant under Ex. B Rs. 7,200. It was thus made up: The price settled was Rs. 19-11-0 per case; the original price payable to the mill was Rs. 15-8-0. The excess payable over the mill price was Rs. 6,700. Advance at the rate of Rs. 10 for 50 bales amounted to Rs. 500. The plaintiff was to pay at the time of delivery the price calculated at Rs. 15- 8-0 a case less Rs. 10 a bale. Pausing here just for a moment we find that the net amount received by the 1 defendant in this transaction is Rs. 2,900.