R GOPALAKRISHNA IYER Vs. DGOPALAKRISHNA IYER

JUDGEMENT

(1.) This second appeal is preferred by the plaintiff in a suit which he instituted in the Tinnevelly Subordinate Judge's Court to recover Rs. 3,200 consisting of principal (Rs. 3,000) and interest (Rs. 200) from six defendants of whom defendants Nos. 1, 3 and 6 are respondents before us and the question with which we are concerned relates to their liability. The sum of Rs. 3,000 was due on account of advances made from time to time by the plaintiff to defendants Nos. 1 and 3 who on the 19 November, 1902, executed a hypothecation deed (Exhibit-- A) in favour of the plaintiff, by which they hypothecated the money due to them both from the S.I.R. Co., the 6 defendant in the case, on account of certain work done by them for the Railway Company in what is called the 1 Division and also the amount due to the 1 defendant alone from the same Railway Company for works done by him on the 2nd Division of the line. On the same date as the deed of hypothecation the 1 defendant executed a power-of-attorney (Exhibit--D) authorizing the plaintiff to receive from the Railway Company so much of the Rs. 9,400 due by them to the 1 defendant as could then be drawn and to give a proper discharge for the amount to the Company. The plaintiff out of the sum when drawn was to satisfy the debt due to himself from the 1 andthe 3rd defendants and pay over the balance to the 1 defendant. Notice of the assignment was duly given to Mr. Lindsay, an Executive Engineer of the Railway Company but he refused to recognize the assignment at all. Further correspondence ensued with the result that the plaintiff placed the matter in the hands of his lawyers who very properly pointed out to Mr. Lindsay that the attitude he thought fit to take up on behalf of the Railway Company was absolutely indefensible and in defiance of the law. But Mr. Lindsay was not willing to acknowledge his mistake and pay to the plaintiff the amount which had become payable to the 1 defendant by the Railway Company. So what he did was to send for the plaintiff and the 1 defendant to his office where a bill for Rs. 4902-3-6 for the 1 defendant's works was drawn up and signed by the 1 defendant and attested by the plaintiff and two cheques one for Rs. 3,500 and the other for the balance were made out in favour of the 1 defendant. The cheque for Rs. 3,500 was then at the desire of Mr. Lindsay endorsed and made over by the 1st defendant to the plaintiff. Directly the plaintiff and 1 defendant went out of the Engineer's room, the endorsement on the cheque in favour of the plaintiff was scored out by the 1 defendant who then endorsed it to his own servant and this man cashed the cheque. The entire amount of the cheque less a small sum which was paid to the plaintiff on account of the interest which was due till then was received by defendants Nos. 1 and 3 who were in need of money for carrying out further works for the Railway Company. The power-of-attorney (Exhibit--D) executed by the 1 defendant was cancelled but not the hypothecation bond Exhibit--A which remained in possession of the plaintiff. All this happened on the 9 February, 1903, and on the 1 May, 1903, defendants Nos. 1 and 3 executed a power-of-attorney (Exhibit--E) in favour of the plaintiff authorizing him to receive from the Railway Company the sum of Rs. 3,000 which was still due to the plaintiff under Exhibit--A, out of the amount of the final bill which became due to them from the Railway Company for the works executed by them in connection with the 1 Division and which had been mortgaged to the plaintiff under Exhibit-- A.

(2.) Here we may conveniently pause and deal with the contentions which as grounds of defence are common to the 1 and 3 defendants as well as the 6th defendant. The first contention is that by what happened on the 9 February, 1903, in the room of Mr. Lindsay, the hypothecation bond was discharged. It is absolutely clear from the facts just stated, and these facts are as found both by the Subordinate Judge and the District Judge, that so far as the parties to the bond were concerned, they never intended that the plaintiff should have the proceeds of the cheque or that the liability of defendants NOS. 1 and 3 under the bond should cease. The 3 defendant was not even present at the interview. What the learned District Judge, however, says is that payment by a cheque was treated both by the 1 defendant in whose favour it was drawn by the Railway Company as well as by the plaintiff as absolute payment in the same sense as if the payment was made in current coin of the realm. This has not been disputed by the learned Advocate-General who appeared for the appellant nor does he quarrel with the conclusion of the District Judge that the liability of the Railway Company for the amount due to the 1 defendant in respect of the 2nd Division Works was extinguished by such payment. And here we take it--and it has not been contended otherwise--that although the cheque was drawn by Mr. Lindsay in favour of the 1 defendant and made over by the former to the latter and not to the plaintiff to whom the amount due was assigned, yet since the 1 defendant at the request of Mr. Lindsay endorsed the cheque in favour of the plaintiff who took it, the plaintiff could not call upon the Railway Company to pay him over again the amount payable by the Company in respect of the 2nd Division Works for which the cheque was given. This, not because the liability of the Railway Company in respect of that debt was satisfied by payment to the plaintiff who alone was entitled to it but because the plaintiff having permitted and been content that payment should be made to a third person, would be estopped from holding the Railway Company still liable for that amount. And apparently both the plaintiff and the 1 defendant taking this view of the transaction cancelled Exhibit--D the power-of-attorney in respect of the money due for the 2nd Division Work. But the lower appellate Court goes further and finds evidently on the evidence of Mr. Lindsay that this gentleman representing the Railway Company intended that the hypothecation bond by which not only the amount payable to the 1 defendant for the 2nd Division Works but also the money which was payable for the 1 Division Works to the 1 and 3 defendant's was mortgaged should be discharged. The Railway Company were not a party to the bond and no demand was made upon them and no payment was made by them with respect to the 1 Division Works. It is not easy, therefore, to conceive how any intention on the part of Mr. Lindsay could affect the operation of the bond in respect of what might be due to the 1st and 3 defendants for works that had not been paid for. Of course it was open to the plaintiff and the 1 and 3 defendants to treat the bond as discharged although the debt due by the latter to the former was not in fact satisfied but such agreement has not been found and is negatived by the proved facts of the case. The District Judge is, therefore, wrong in holding that the hypothecation bond is discharged. We also agree with the contention of the plaintiff that the power-of- attorney, (Exhibit --E) dated the 1 May, 1903, was in itself a valid assignment to the extent of Rs. 3,000 out of the amount payable by the Railway Company for the 1 Division Works. The answer given by the District Judge to that contention is that Exhibit--E was intended to be provisional in the sense that it was not to be acted upon unless it was approved by Mr. Lindsay. But that was never the case of the defendants with respect to Exhibit-E and the parties did not go to trial on such an issue. We, therefore, hold that it was not open to the District Judge in appeal to make out a new case on the point for the defendants. But before us, Mr. Grant, who appeared for the Railway Company, has argued that in the plaint the suit is based on the hypothecation bond alone and not on the power-of-attorney of the 1 May 1903. But the power-of-attorney is distinctly set out in the plaint and its legal effect was one of the points discussed in both the lower Courts. We think there is no force in this objection.

(3.) The only question which now remains for consideration is whether there was sufficient and valid notice of the assignment to the 6 defendant. This, of course, concerns only the 6 defendant. The facts in this connection are not in dispute. On the 1 May, the day Exhibit--E was executed, defendants Nos. 1 and 3 sent a letter (Exhibit--F2) to the Executive Engineer No. 1 Division informing him that they owed Rs. 3,000 to R. Gopalakrishnier, the present plaintiff and had executed a power-of-attorney in his favour authorizing him to draw from the Railway Company Rs. 3,000 out of the amount due on their final bill and at the same time requested the Executive Engineer to pay this amount to the plaintiff when the bill would be ripe for payment in due course unless in the meantime they themselves had otherwise paid off the debt due by them to the plaintiff. On the 7 May the plaintiff himself wrote a letter (Exhibit--F) to the Engineer saying that the defendants Nos. 1 and 3 owed him Rs. 3,000 for which they had executed in his favour a hypothecation bond under which the debt still due to them from the Railway Company was mortgaged to him and that they also executed a power-of- attorney entitling him to draw Rs. 3,000 from the Company and wound up with a request for payment. The plaintiff at the same time forwarded copies of the bond Exhibit--A and the power-of-attorney Exhibit--E to the Engineer. In this notice there was no qualifying clause as in the notice given by defendants Nos. 1 and 3, namely, that the payment of Rs. 3,000 was to be made by the Company if the debt due by the defendants Nos. 1 and 3 to the plaintiff had not already been discharged. On the 11 May the Executive Engineer wrote (Exhibit--F 4) to defendants Nos. 1 and 3 in reply to their letter Exhibit--F2: "I decline to have anything to do in their private transaction nor do I recognise any power-holder. Payments will only be made to the contractors as per agreement," and on the 12th May, he forwarded a copy of this reply to the plaintiff in answer to the latter's letter of the 7 May. Whatever the nature of the agreement mentioned in Exhibit- -F4, if there was any such agreement no reliance was placed 1m it either in the lower Courts or before us. What has to be noted here is that the Railway Company on this as on the previous occasion simply refused in utter defiance of the law to recognise any assignment of the money due by them to the contractors and not that they thought that there was any risk in paying the plaintiff because of the qualifying words mentioned above in the notice given by the contractors. On the 21 May the plaintiff sent another letter, Exhibit--Fl insisting that the Company could not disregard the assignment and that if they failed to pay him he would be obliged to seek redress in a Court of law. He received no reply to this; and on the 23 October being informed that the defendants Nos. 1 and 3 had completed their works and that the bill was ready for payment he wrote again to the Engineer requesting him to pay the amount of Rs. 3,000 to himself and on no account to pay it to defendants Nos. 1 and 3. The Railway Company, however, gave no heed to these letters and soon afterwards paid Rs. 11,000 to defendants Nos. 1 and 3, the entire amount due for the work done on the 1 Division.