NUSERWANJI CURSEDJI BHESANIA AND CO Vs. MAHAMAYI AMMAL

JUDGEMENT

(1.) The appeal arises out of a suit filed by the appellant in the Court of the Subordinate Judge of Dindigul to recover a sum of Rs. 77,770 with interest from K.S.N. Periathambi Nadar, who was sued as the principal debtor, and from U.P.A. Pachayappa Nadar, who was sued as his surety. They were defendants 1 and 6 respectively, and as it will be necessary in the course of this judgment to mention them frequently, it will be convenient to refer to them here as defendants 1 and 6. Defendant 6 died during the pendency of the suit and the respondents are his legal representatives. The appellants are a firm of produce merchants with their head office at Bombay. In 1915, they opened a branch at Bodinaickanoor in the Madura District, where they carried on business in coffee and cardamoms under the style of M.N. Bodiwala and Company. In the course of their business at Bodinaickanoor, they became associated with defendant 1, who, they say, pressed them to open a branch at Pattiveeranpatti and to allow him to become a working partner so far as the business at Pattiveeranpatti was concerned. Whether the suggestion came from defendant 1 matters not, but the suggestion was made and carried into effect on 15 July 1926. The arrangement was that the appellants were to provide the capital and were to share the profits or losses with defendant 1 in the proportion of ten annas and six annas respectively. It is the appellants case that defendant 6 undertook to guarantee the payment of defendant 1's share of any loss that might result from the business and that the partnership was formed on this basis. They say that on. 15 July 1926, three documents were executed, namely a vartamanam letter by defendant 1, embodying the terms of the partnership (Ex. A); a counterpart vartamanam letter executed by Manchand Hathi Chand, the appellant's agent in Bodinaickanoor (Ex. A-1); and a vartamanam-letter by defendant 6 in which he undertook to make good to the appellants "the loss pertaining to defendant 1's share" and also any amount which might be found to have been misused by him out of the moneys provided by the appellants. This last letter is Ex. Rule Defendant 1 by his written statement admitted the appellants case so far as the formation of the partnership was concerned and also admitted the genuineness of the three documents to which I have just referred, but defendant 6 denied that he had ever Undertaken to guarantee defendant 1 and averred that Ex. B was a forgery.

(2.) It is an undisputed fact that defendant 1 carried on business in partnership with the appellants at Pattiveeranpatti on the basis of the vartamanam letters, Exs. A and A-1, and that the appellants advanced consider, able sums of money for the purpose. The business was conducted on behalf of the appellants by Manchand. The market, however, proved to be a falling one and by the e August, 1927 heavy losses had been sustained. The appellants allege that on 2 September, 1927 it was agreed between them and defendant 1 that the latter should take over all the assets and liabilities of the Pattiveeranpatti business and pay to them a sum of Rs. 70,000. They further allege that defendant 6 agreed to guarantee the payment of this sum and that the arrangement was embodied in three other documents, Exs. D, E and XXVI, all dated 2 September, 1927. Ex. D is a promissory note payable on demand for Rs. 70,000, bearing interest at is 3/4 per cent, per mensem executed by defendant 1 in favour of the appellants. According to its terms Ex. B is a vartamanam letter addressed by defendant 6 to the appellants in which he undertook to pay the amount due on the promissory note within one year in the event of defendant 1 failing to do so. Ex. XXVI is a vartamanam letter executed by Manchand on behalf of the appellants and addressed to defendant 1. It reads as follows: Today I checked all the accounts relating to the coffee and cardamom business which you in partnership with our Company were carrying on under the name and style of Moolji Bhai Nuserwanji Bodiwala and Company, at Pattiveeranpatti from 15 July 1926 to 2 September, 1927; the out-standings and the profit and loss in the business pertaining to the aforesaid vilasam have been given up to you and I have obtained from you a promissory note for Rs. 70,000 (Rupees seventy thousand) in favour of Messrs. Nuserwanji Karpudji Basania and Co. at Bombay and as security for the amount of that note I have also obtained a security varthamanam from M.R. Ey. U.P.A. Pachayappa Nadar Avergal. The ledger, day book, etc., and the promissory notes of the parsons from whom amounts are due are also received. Yourself and myself shall within four days from this date start and go to Bombay, inform the principals of the N.C. Basania and Company, of these matters and I shall obtain from them a power of attorney In your favour enabling you to collect the out standings and pay the amount to us.

(3.) It will be observed that this document states that the out-standings and the profit and loss of the business had been given up to defendant 1, who had signed a promissory note for the agreed amount, but that who books and the promissory notes given by debtors of the partnership had been handed over to Manchand and that he and defendant 1 were to proceed to Bombay to interview the principals, who were to furnish a power of attorney in favour of defendant 1 in order that he might realize the assets of the business. It is however untrue that the assets had been handed over to defendant 1. Defendant 1 admitted the genuineness of these documents, but defendant 6 denied that he had undertaken to act as the surety of defendant 1 and alleged that Ex. B wag also a forgery. Exs. D and XXVI are undoubtedly genuine and it is true that after these documents had been executed Manchand and defendant 1 left Pattiveeranpatti for Bombay where they interviewed the appellants. The evidence also discloses that the appellants were reluctant to carry out the arrangement entered into by Manchand, and defendant 1 left Bombay without the power of attorney. When defendant 1 returned to Pattiveeranpatti he wrote several letters to the appellants pressing them to hand over to him (a) the promissory notes and other securities which the debtors of the partnership had executed or provided and (b) the power of attorney, but the appellants did not comply with his demands. They had not been complied with by 29 June 1928, when Jagan Mohandas (P.W. 9), a partner in the appellants firm, arrived at Pattiveeranpatti. Discussions then took place between him and defendant 1 which resulted in two further vartamanam letters, being executed (Exs. FFF and GGG). The first of these letters was executed on 16th July 1928 by defendant 1 and is in the following terms: Whereas I made an agreement on 2 September, 1927 after looking into the accounts, to the effect that I would undertake all the responsibilities of the business of coffee seeds and cardamoms carried on under the name and style of Moolji Bhai Nuzervanji Bodivala and Company, in this place started on 26 July 1926 under the agency of Manchand Hatichand Sait, the agent of your firm at Bodinaickanoor, and pay you Rs. 70,000, whereas I accordingly undertook the same and executed a promissory note in your favour and whereas there is still time up to 2 September, 1928 for the vartamanam letter (letter of agreement) executed by M.R. Ry. U.P.A. Pachaiappa Nadar Avergal, in your favour as security, for the said sum, I declare that I or my surety shall pay the (said) money within the said due date, that in default you may make arrangements for the recovery of the said sum and that I will not alienate my moveable and immovable properties of nanja and punja lands, hills, gardens, houses, etc. all properties belonging to me by way of hypothecation, otti (mortgage with possession) etc. I declare that I have not prior to this encumbered any of the said properties to any one by way of mortgage, otti etc. You have this day agreed to prepare a general power of attorney similar to the copy of the power of attorney sent by me by registered post on 16 October 1927 and send the same as soon as possible, after reaching Bombay for the purpose of recovering the out-standings due under promissory notes, accounts, usufructuary mortgage, hypothecation, lease, etc, all the documents and true accounts relating to the said firm of M.N. Bodivala and Company, and you have executed a vartamanam letter also to that effect. I shall from time to time pay the money collected by me out of the out-standings of the aforesaid M.N. Bodivala and Company, into your firm at Bodinaickanoor and obtain receipt.