V RAMASWAMI AYYAR Vs. SSKRISHNASA AND SONS

JUDGEMENT

(1.) The facts out of which this appeal arises are these : Defendants 1 to 4 are a firm of merchants trading in Madura, Defendant 5 and his undivided son, defendants, are merchants carrying on business in Tiruvalur. The plaintiffs are cloth merchants in Conjeeveram. Defendants 1 to 4 became indebted to the plaintiffs and various other creditors to the extent of nearly Rs. 45,000. They had outstandings due to them to the extent of Rs. 12,000 and their stock in trade amounted to Rupees 30,000. Under these circumstances they entered into an arrangement with defendant 5 according to which defendant 5 should take over the stock in trade of defendant 1, put on his own signboard and carry on the business. Ganpathy Ayyar, defendant 5's brother, should also remain in the shop to see that everything is properly done and only Ganapathi Iyer should be in charge of collecting the outstandings due to defendant 1 and defendant 5 undertook to realise Rs. 30,000 by sale of the stock by 9 December and as the sums are being collected he undertook to pay up the creditors of defendant 1. This arrangement is embodied in Ex. IX. This document also shows that practically it is a sale of the stock-in-trade by defendant 1 to defendant 5 because if by 9 December he is not able to collect Rs. 30,000 defendant 5 should pay the difference to defendant 1 with interest and if more is collected it should be retained by defendant 5.

(2.) Now it appears from the documents earlier than Ex. IX such as Exs. II, III and IV that this arrangement was really arrived at after consultation with the creditors particularly the plaintiffs. Ex. IX-a is a counterpart of Ex. IX. A month after this arrangement, that is, on 31st July 1924, Ex. B was written by defendant 5 to the plaintiff. In this he refers to the fact that the prior arrangement was arrived at after consultation with the plaintiff's agent and clerk Doraiswami Mudaliar. Then defendant 5 proceeds to say that he was able to raise Rs. 10,000 and to pay it to the most pressing and worrying among the creditors of defendant 1, that he was not able to collect further amounts to pay to the plaintiff on account of his illness and because the times are bad and money is-not available. Then he says that he expected to realise more money within a week. He says: As soon as I get the said amount if you ask me to send it to Conjeeveram I shall send it by registered post. I have also written to your clerk that I would either send the money to him to Madura or he may on his return halt at Tiruvalur and take the money that I may collect here.

(3.) Finally he says: I shall return the amounts due to you in course of time.