1928 (2) TMI 1 - HC - Indian Laws

Summary

Issues Involved:
1. Whether the plaintiff agreed to make monthly payments by way of instalments of the amount advanced by the defendant.
2. Whether there was a complete contract for the purchase of 500 ordinary and 500 preference shares of the Premier Oil Mills Company.
3. Whether it was part of the contract that the two accounts (purchase of francs and purchase of Premier Oil Mills shares) should be adjusted together.
4. Whether the defendant sent any letter on 16th April 1922, intimating that he would put an end to the whole affair after a fortnight if no reply was received.
5. Whether there was only a contract for the purchase of the Premier Oil Mills shares or a complete sale.
6. Whether there was any breach committed by either party.
7. The legal consequences that would follow from the above issues.

Detailed Analysis:

1. Agreement on Monthly Payments:
The court examined the contradictory oral statements of the parties and the documentary evidence. The original letter dated 16th February 1920 did not mention any instalments but stated that the loan should be liquidated within two years. The plaintiff's letters indicated a proposal for monthly payments, but this was not part of the express contract. The court concluded that there was no agreement by the plaintiff to pay any instalment or to pay interest monthly.

2. Contract for Purchase of Premier Oil Mills Shares:
The court found that there was a complete contract between the parties in June 1920 for the purchase of 500 ordinary and 500 preference shares of the Premier Oil Mills Company at specified prices. This conclusion was based on the documentary evidence, including letters from the defendant to the plaintiff, which the plaintiff did not deny at the time. The court agreed with the lower court that the plaintiff dishonestly denied the existence of such a contract subsequently.

3. Adjustment of Accounts:
The court found no evidence to support the defendant's claim that there was an agreement to adjust the two accounts together. The defendant's letters prior to the plaintiff's repudiation did not mention such an agreement. The court concluded that there was no express agreement to adjust the two accounts together and found this point against the defendant.

4. Letter of 16th April 1922:
The court doubted the credibility of the defendant's claim that he sent an unregistered letter on 16th April 1922, given the importance of the letter and the previous practice of sending registered letters. The court found it unlikely that such a crucial letter would be sent unregistered and concluded that the defendant did not send the letter.

5. Contract vs. Complete Sale of Shares:
The court concluded that the transaction relating to the Premier Oil Mills shares did not pass beyond the stage of a mere contract. The shares were not definitely ascertained at the time of the contract, and the defendant admitted that they were never transferred to the plaintiff's name. The court held that the legal title to the shares did not pass to the plaintiff, and the transaction amounted to a mere contract.

6. Breach of Contract:
The court found that there was no breach by the plaintiff in connection with the purchase of francs up to April 1922. However, the plaintiff committed a definite breach of the contract to purchase the Premier Oil Mills shares in December 1920 and again on 22nd February 1921 when he denied the contract. The court held that the defendant was entitled to claim damages for the difference between the contract price and the market price at the time of the breach.

7. Legal Consequences:
The court held that the defendant was acting as the plaintiff's agent for the purchase of francs and was bound to render an account. The defendant's remedy was to recover the amount from the plaintiff by recouping himself out of the amount realized by the conversion of the francs. The court ordered the defendant to render an account of the transaction of the purchase of francs and to deduct the loss suffered due to the breach of the contract to purchase the Premier Oil Mills shares up to 22nd February 1921. The court set aside the lower court's decree and passed a preliminary decree under Order 20, Rule 16, Civil Procedure Code.

Conclusion:
The appeal was allowed, and the court directed the defendant to render an account of the transaction of the purchase of francs and to deduct the loss suffered due to the breach of the contract to purchase the Premier Oil Mills shares. The parties were allowed to produce further evidence on the point, and each party was ordered to bear their own costs in the lower court and costs in the High Court up to this stage.