RAMNATH GOURI SANKAR DAWAY Vs. CHANDULAL BMODI

JUDGEMENT

(1.) The amount claimed in this suit is comparatively small, but the matter for decision, which is purely a question of fact, is by no means simple. This is largely due to the lack of trustworthiness which, in my opinion, characterizes both plaintiff and defendant. The impression which they made on me is that they are neither of them persons on whose statement reliance can be placed in the absence of corroboration in the shape of documentary evidence or inherent probability. The plaintiff and defendant have been acquainted for many years, and they are both engaged in trade. The defendant's financial position appears on the whole more substantial than that of the plaintiff, but they are both persons who have resources and should not be open to financial temptation. The story begins as long ago as the mon April, 1930. At that period the defendant held on deposit on the plaintiff's account certain cash certificates and fixed deposit receipts, and a considerable sum in cash. The plaintiff at that period was contemplating a visit to Kathiawar where his home is, and during the last week of April he requested the defendant to purchase on his account out of the money that was lying with the -defendant two Government promissory notes of the face value of Rs. 2000 each. The notes were purchased through a broker of the name of Ganny and paid for by the defendant. Government promissory notes bearing interest at 3i per cent. were at that time at a considerable discount, and the broker's receipt shows that the cost of the two notes after making the necessary adjustments for interest and income-tax amounted to Rs. 2669-10-1. The interest had not been drawn by the sellers of the note when they were purchased by the defendant on the plaintiff's account. On one of the notes interest was due as from January 1929 and as to the other interest was due from May 1929. The particular note with which this suit is concerned is No. 375163 of 1865. On that a sum was due on the date of sale by way of interest amounting to Rs. 35-3-1, and further interest was to accrue in June following the ? month of sale.

(2.) On 3 May 1930, when the plaintiff was about to leave for Kathiawar he obtained from the defendant all the postal securities and fixed deposit receipts held by the defendant and also the other Government promissory note which had been purchased two days previously. Note No. 375163 however remained with the defendant, and the issue which I have to decide is whether it remained with him, as the plaintiff states, only for the purpose of the collection of interest, or whether, as the defendant states, it was held by him as security for a sum of about Rs. 1100, which is said to have been owing by the plaintiff to the defendant. The plaintiff returned from Kathiawar about the beginning of August. Meanwhile the defendant had hypothecated the Government promissory note along with certain securities, which were his own property, to the Eastern Bank, which was the Bank employed on financing the import side of his business. This incident is not of much importance, because the defendant's account with the - Bank was subsequently cleared and the Government promissory note was released by the Bank. In September 1931 the defendant instructed the Eastern Bank to sell the Government promissory note which the Bank accordingly did and credited Rs. 1125, being the sum realized by the sale, to the defendant. According to the defendant the sale was effected with the express consent of the plaintiff, who was at the time, indebted to the defendant for a sum in excess of the price realized. The plaintiff on the contrary states that nothing was due from him to the defendant, and that the sale was without his authority and consent and amounted to a wrongful conversion on the defendant's part. The plaintiff states that he first became aware of the sale by the defendant in April 1933, whereupon, after some correspondence between the attorneys of the parties, the plaintiff made a complaint to the Chief Presidency Magistrate on 24 April 1933, charging the defendant with criminal breach of trust. On 11 May 1934, the defendant was convicted of an offence punishable under Section 406,I.P.C., and sentenced to pay a fine of Rs. 500, or to undergo rigorous imprisonment for six months in default of payment. The Court also directed that Rs. 400 out of the Rs. 500, if the fine were realized, should be paid to the plaintiff as compensation.

(3.) The defendant appealed against his conviction and sentence, but his appeal was dismissed on 22 January, 1935, and I understand that the fine was thereafter paid, and that the plaintiff received Rs. 400 as compensation in terms of the Magistrate's order. This suit was filed on 23 July 1935, and the relief asked for is the return of the Government promissory note or its value at the date of the institution of the suit. There is also a claim for the costs incurred by the plaintiff in the criminal proceedings less the sum of Rs. 400 realized under the Court's order. The latter claim however has been abandoned, and the suit is now one for damages for conversion. The history of the case, which I have to set out, sufficiently indicates the issues that arise, and they are whether the terms on which the defendant retained the Government promissory note were that the defendant should keep it for safe custody and collection of interest, or whether that he should hold it as security for the dues of the plaintiff. In coming to a conclusion on this point, it is necessary to decide what the position was as between the plaintiff and the defendant on 3 May 1930. The defendant admits that he, but for a certain transaction with which I will deal shortly, held cash on the plaintiff's account to an extent quite sufficient for the purchase of the two Government promissory notes, but he says that this situation which subsisted up to 30 April 1930, was altered to the detriment of the plain-tiff by the dishonour of certain cheque for Rs. 1000.