NAROTAM MORARJI GOKULDAS Vs. INDIAN SPECIE BANK

JUDGEMENT

(1.) The first plaintiff was the owner of 161 shares in the Indian Specie Bank which were held for him in the names of the 2nd, 3rd and 4th plaintiffs. In April 1913, as he was leaving for Europe he directed the 2nd plaintiff", his Secretary, to sell the shares. He had only receipts for the certificates which had remained with the Bank ever since the shares had been bought in 1910. On the 17th May, the 2nd plaintiff took these receipts with blank transfers duly signed to Chunilal, the Managing Director of the Bank and asked him to sell the shares. It was part of the Bank s business to sell shares for their customers and a Register was kept of securities handed to the Bank for sale. Chunilal said the Bank would sell the shares and asked 2nd plaintiff to come back in a few days. On the 22nd May, he went to the Bank and was told the shares had been sold at Rs. 66 and was paid Rs. 6000 on account for which he passed a receipt. He was asked to come back in a few days when the account would be settled. He returned on the 29th when he received a further sum of Rs. 4,500 and passed a receipt in the same form as before. The gross sale proceeds were Rs. 10626 and a rough calculation was made of expenses for stamps and trans-fer fees but it does not seem that the exact amount was arrived at, as the amount of stamps required depended on the number of shares sold on each transfer. As a matter, of fact 2nd plaintiff never went back to have the account settled. The sums of Rs. 6,000 and Rs. 4,500 were debited in the Bank s books to suspense account. On the 6th August, they were credited to suspense account and debited to the plaintiff in the Miscellaneous Ledger as if the money had been advanced by the Bank as a loan on security of the shares. In August, warrants for dividend on the shares for the half year ending the 30th June were sent to plaintiffs 2, 3 and 4. The 2nd plaintiff took these to Chunilal who asked him to get them signed and returned to him as the purchasers were entitled to the dividends, As a matter of fact the amount of the dividends was credited to the plaintiff s account in the Miscellaneous Ledger. After the Bank went into liquidation plaintiffs 2, 3 and 4 were placed on the list of contributories by the liquidator and they then discovered that the shares had never been sold so that their names still remained on the register IN of share-holders. Their claim to be removed from the list was disallowed and when the liquidator under an order of the Court made a call of Rs. 50 per share the first plaintiff had to pay Rs. 8250.

(2.) The plaintiffs have now filed this suit to recover that amount on the ground that the Bank became their agent for the sale of the shares and on account of the neglect and misconduct of the Bank s Managing Director the shares were not sold, so that as the direct consequence of that neglect and misconduct they had to pay the liquidator the amount of the call. The liquidator in his written statement disputed the facts which I have set out, relying on the entry in the Miscellaneous Ledger, but considering the entry in * the Register of shares lodged with the Bank for sale and the receipts given to the Bank for the payments of Rs. 6000 and Rs. 4500 it cannot possibly be contended that the Bank made a loan on the security of the shares. It has also been contended that because in the Register the column " Rate at which the shares are to be sold " was not filled in in ink with " Market rate " but contained an entry in pencil " ask the Sheth" the plaintiffs lodged the shares to be sold only when Chunilal thought fit. I believe the evidence of the 2nd plaintiff and reject this contention. It is common knowledge now that Chunilal was interested in keeping up the price of the shares and it did not suit him to put these on the market. I think that when the 2nd plaintiff asked Chunilal to sell the shares without fixing any limit it cannot be taken that it was implied that the shares should be sold at the market rate, but the question is immaterial as I am satisfied that Chunilal represented to the 2nd plaintiff that the shares had been sold.

(3.) It is not suggested that Rs. 66 was not the proper market value of the shares in May 1913.