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TMI Blog1935 (5) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... Mela Ram whose good faith is in controversy, the evidence bearing on the points is all circumstantial. In all cases of fraud which is not capable of proof by direct evidence, we have to fall back upon inferences to be drawn from circumstances established by evidence. The party alleging fraud is nevertheless bound to establish it by cogent evidence and suspicion connot be accepted as proof. Unless, therefore the proved circumstances are incompatible with the hypothesis of the person charged with fraud having acted in good faith, they can not be accepted as affording sufficient proof of fraud. I have approached the case with this point of view, and have been driven to the conclusion that the evidence as a whole excludes all hypothesis of good faith on the part of Mela Ram in granting the receipts to Beltie Shah Gilani. The plaintiff's case, in the first instance, is that there was a conspiracy between Mela Ram and Beltie Shah Gilani, in pursuance of which the sum of Rs. 39,750 was embezzled. I may say at once that the evidence falls far short of establishing any such conspiracy. I am convinced that Mela Ram was not in Beltie Shah's confidence when the latter misappropriated the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (XII of 1855) allows an action to be maintained against the legal representatives of a wrong-doer for damages for wrongs committed within one year before his death. This left a big loophole for application of the maxim, inasmuch as the Act covers only torts committed by a person since deceased, during the year preceding his death. In this case before us Raghu Mal died in 1926 and the alleged fraud committed by his servant occurred in 1923. The Act therefore does not help the plaintiffs. Another inroad made on the maxim by the Indian legislature was the rule enacted by section 89, Probate and Administration Act (V of 1881) since reacted in section 306, Succession Act (XXXIX of 1925) which provides: "All demands whatsoever and all rights to prosecute or defend any action or special proceedings existing in favour of or against a person at the time of his decease, survive to and against his executors or administrators; except causes of action for defamation, assault, as defined in the Indian Penal Code, or other personal injuries not causing the death of the party; and except also cases where, after the death of the party the relief sought could be enjoyed or granting it would be nug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of in this case prevented a timely disclosure so as to deprive the company of a chance of recovering more than it was able to do later when the fraud came to light in another manner. It is a wrong which affected the company's property. The Advocate for the defendants seemed to suggest that personal injury includes injury to the "personal property" as distinguished from "real property" known to English Law. This is too far-fetched a construction of the simple words "personal injuries" occurring in an Indian statute book which does not recognise the classification of property adopted in the English Law, I cannot persuade myself to accept such interpretation of the words in question. I would hold that the executors of Raghu Mal are liable for damages just as he would have been liable if he had been alive. In other words the cause of action survived to Raghu Mal, and his estate should pay such damages as can be awarded to the plaintiffs. The only question that remains to be considered is as regards the amount of damages to which the plaintiffs are entitled. They claim the entire sum embezzled by B.S. Gillani and might have been held to be entitled to it if it had been established th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the finding of the Court below on this question of fact. The issue to be remitted by us should be decided by the lower Court with due regard to the observations contained our judgments. Allsop, J. This is an appeal against a judgment and decree of the Subordinate Judge of Dehra Dun who dismissed a suit instituted by the Dehra Dun Mussourie Electric Tramway Company, Ltd. (in liquidation) through its official liquidators for the recovery of a sum of Rs. 39,750 against the defendants. These defendants were six persons, Hansraj and four others were the representatives in interest of Lala Raghu Mal, deceased and the sixth was Lala Mela Ram. The defendants are the respondents in the appeal and the Official Receiver of Bengal has also been impleaded as a respondent as the estate of Raghu Mal is the subject of dispute and the Receiver is in possession of it. The plaintiffs are the appellants. The Dehra Dun Mussourie Electric Tramway Company was floated in the year 1921 by Beltie Shah Gilani who acted as the Managing Agent of the Company. In the month of March 1926 the company went into compulsory liquidation. Thereafter, as the result of misfeasance proceedings Beltie Shah Gilani and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onspiracy with Beltie Shah to misappropriate the money claimed. The second was based upon the allegation that Mela Ram issued false receipts in order to conceal the embezzlement. The learned Subordinate Judge found that the allegation of conspiracy had not been proved and that it had not been established that any part of the money embezzled by Beltie Shah had passed to Mela Ram or Raghu Mal. No such evidence has been brought to our notice as would justify us in differing from the learned Subordinate Judge and I hold that he was right in the conclusion to which he came. We are thus left with the second allegation that the wrongful act which gave rise to the claim for damages was the issue of the false receipts and the concealment of the defalcation. The respondents argue that there can be no decree because this wrongful act did not cause any loss. The money, they say, had already passed into the possession of Beltie Shah and had been lost to the company before the receipts were issued, and even if it cannot be said that it was lost beyond re-call, still they are not liable unless it can be shown that all of it or some definite part of it could have been recovered from Beltie Shah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to their Lordships of the Privy Council, but when matters had reached that stage the parties with the leave of the company Judge settled their dispute out of Court. The liquidators of the company accepted a sum of between Rs. 18,000 and Rs. 19,000 in full satisfaction of their claim and the auditors withdrew their appeal. The respondents argue that the appellants' right to institute a suit has merged by these orders in rem judicatam. The appellants rely upon the rule in the case of Koursk [1924] 93 LJ 72 , that a suit against one wrongdoer does not bar a suit against the other when there are two wrongs which jointly cause a single loss and the rule in Gouldrei Foucard Sons v. Sinclair and Russian Chamber of Commerce in London [1918] 1 KB 180 that a suit to recover a specific sum of money paid does not bar a suit to recover damages for the deceit which led to the payment. It may be that the former rule applies to Mela Ram and the auditors and the latter to Mela Ram and Beltie Shah, but I do not think that it is necessary to express any definite opinion upon these points. The fact in this case is that the liquidators never sought and never obtained any decree for damages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the company must be deemed to have had knowledge at least on the date (November 7, 1924) when the directors passed their resolution sanctioning the transfer of this sum from the ledgers of Madho Ram Budh Singh and Madho Ram Hardeo Das to the materials purchased awaiting delivery account because the directors should have known then that no cash payment had been made to the two firms. There is no force in the argument. It is clear that the directors were deceived and had not knowledge. The liquidators have established that the fraud came to light only when Mela Ram made a statement in 1928 in the course of misfeasance proceedings. The liquidators were appointed in April 1926 and one of them has stated that they first became suspicious about the transactions in dispute in December 1926 after making an investigation into the affairs of the company. There is no reason to doubt this statement. Even if time began to run in December 1926 the suit was within time. The appellants also relied upon the provisions of Sections 14 and 18, Limitation Act, but it was not necessary to invoke the aid of these provisions. I hold that the suit was not barred by limitation. It was one of the po ..... X X X X Extracts X X X X X X X X Extracts X X X X
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