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TMI Blog1928 (2) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... covers seven printed pages. It necessarily gives an abstract of the contents of various correspondence, and it would be a hopeless task to summarize it at this stage. The defendant did not deny the completion of the contract for the purchase of the French francs. But his main pleas were that subsequently, in June 1920, the plaintiff entered into another contract with the defendant for the purchase of 500 ordinary and 500 preference shares of the Premier Oil Mills, which were to be taken over by the plaintiff in the month of December following, and in case the plaintiff failed to take them over the defendant would be at liberty to set off and adjust the accounts for profit and loss as the case may be on the two transactions. There was no express mention in the written statement that the plaintiff was to pay up the amount borrowed by him within any fixed time or that he had broken the contract by not paying the amount within that time. It was, however, pleaded that the plaintiff failed to perform his part of the contract and the defendant was therefore justified in putting an end to the whole affair on 16th April 1922. There was also a plea that the plaintiff accepted the position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Oil Mill shares from the defendant. 4. The learned Subordinate Judge was impressed by the demeanour of the defendant and considered that his statement on oath should be preferred to that of the plaintiff, inasmuch as he was a more respectable gentleman than the plaintiff, who had at one time been an undischarged insolvent. Accordingly he has accepted practically the whole of the story told by the defendant and has found all the main questions of fact and law in his favour. 5. We agree with the Court below to this extent: that the evidence of the plaintiff, if not corroborated by the documentary evidence, should not be accepted as his testimony is not reliable. We also agree that the statement of the defendant, if not inconsistent with the documentary evidence, and if to some extent supported by it, should also be accepted. But where the defendant's statement is either inconsistent with the correspondence which passed between the parties or is directly contradicted by it we would not be prepared to accept his statement. The Court below has not borne in mind the fact that both parties are business men and are directly interested in the result of this litigation. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;s approval. It was on 15th April 1920, that the defendant in writing asserted that the plaintiff had in February promised to pay interest monthly and ₹ 500 towards the principal from June onwards, and regretted that he had not up to that time paid a single pie. The plaintiff's reply dated 26th July 1920 expressed surprise at the contents of this letter and stated that the defendant had been kind enough to specify a period of two years in which time the loan had to be liquidated. The plaintiff, however, again held out a hope to pay ₹ 5,000 before Christmas, 1920, and suggested that it would be better to make half-yearly payments on account of interest. The defendant in his reply dated 28th July 1920, did not re-assert that there had been a distinct contract for the payment of interest monthly or the payment of any instalment in June. The plaintiff's reference to the period of two years fixed for the liquidation of the loan was met by the statement: No doubt I agreed that the loan may be liquidated within two years, but it did not mean that you should pay it in a lump sum at the end of the second year. 8. It is clear to us that the defendant was not afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mills shares. There was again no reply from the plaintiff and no denial. In his letter, dated 27th January 1921, the defendant again referred to this contract and asked the plaintiff to send the money. This was later followed by another letter, dated 20th February 1921, in which the defendant again asked for the margin money on account of the Premier Oil Mills shares purchased by the plaintiff from him. It was to this last letter that the plaintiff replied on the 22nd February 1921. This was couched in carefully chosen language, and although it did not attempt to deny the negotiation as regards the Premier Oil Mills shares in its entirety, it asserted that the plaintiff recollected no completed transaction regarding the purchase. The defendant was surprised on the receipt of this letter and wrote on the 19th March 1921, that when the Premier Oil Mills shares had gone down the plaintiff had, after keeping silent deliberately on the question, written that he had never purchased them, which was anything but truth, and it had disappointed the defendant extremely. On the 29th August 1921. the defendant in another letter again mentioned that he would, on the settlement of accounts, de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Premier Oil Mills shares was by insisting on the two accounts being adjusted together. The omission of any reference to any such agreement prior to the plaintiff's repudiation makes us suspect that this part of the defendant's statement is not correct. Although if the second transaction had not fallen through there might very well in the ordinary course have been an adjustment, we are not prepared to hold that the defendant has proved that there was an express agreement between the plaintiff and the defendant in June 1920, as alleged by the latter that the two accounts should be adjusted together and should thence forward be treated as forming part and parcel of one transaction. We accordingly find this point against the defendant. 12. The fourth question of fact was whether the defendant sent any letter of which Ex. G is a copy. The Court below has believed the defendant's statement that he did send such a letter. The Court below, however, has overlooked one significant fact to which weight ought to have been attached. The defendant in his cross-examination admitted that he had received a registered letter from Sir Henry Stanyon written on behalf of the plai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same and if there was any loss he would have to make it good. In August 1921, the plaintiff requested the defendant to instruct the bank by a cable to transfer the equivalent amount of francs in rupees to Bombay. The intimation was, however, received that the fixed deposit would not fall due till the 15th April 1922. Due notice of this fact was given by the defendant to the plaintiff in the letter, dated 4th September 1921. It is thus clear that up to the 15th April 1922, when the fixed deposit was to fall due, the defendant never denied that the francs which had been purchased, belonged to the plaintiff and that he was holding them on the plaintiff's account. Of course, the defendant had admittedly a lien on the money to be realized on this account, for the amount which he had advanced. This was made clear even in the first letter written by him, viz., the 16th February 1920, in which it was mentioned that the defendant would be retaining the fixed deposit receipt of the francs as security for loan advanced by him. But both the parties understood all along that the purchase of the francs had been made by the plaintiff through the defendant, and that it was the plaintiff who wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of those two sets of shares was one and the same, though the rates for the two were separately mentioned. It is impossible to hold that these two constituted two separate contracts and not one contract. The learned advocate for the defendant has to concede that so far as 500 preference shares are concerned they could not be said to have been definitely ascertained goods at that time when the defendant in fact possessed 2,000 such shares. So long as the share certificates were not delivered and the numbers were not specified they remained unascertained, and it would have been open to the defendant to hand over any 500 out of the 2,000 shares possessed by him. As regards the 500 ordinary shares no doubt the defendant had only that number at that time, but as the delivery was to take place in December it would have been open to the defendant to hand over any other 500 ordinary shares which he might acquire before that date to the plaintiff. It, is therefore, not possible to hold that even the 500 ordinary shares which the defendant would sell to the plaintiff were definitely ascertained in June 1920. We would also hold that such contract for the sale of two sets of shares was one and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would show that his calculation was correct. We have already referred to his ambiguous statement as to whether he had given credit for any dividends that he might have received during the interval. 17. On the other hand, the learned advocate for the defendant has argued that under Section 78, Contract Act, the sale was complete by mere offer and acceptance inasmuch as both delivery and payment were to be postponed to a future date. 18. Section 28, Companies Act (Act 7 of 1913) provides that the shares or other interest of any member in a company shall be moveable property, transferable in manner provided by the articles of the company. Section 17 authorizes a company to frame Articles of Association and adopt all or any of the regulations contained in table A in Schedule 1. The Articles of Association of the Premier Oil Company were apparently not produced before the Court below, and at the last hearing of this appeal we directed the learned Counsel for the parties to produce them before us. The defendant has not produced any copy of such Articles of Association, but the learned advocate for the appellant has put before us a printed copy of such Articles of Association which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be found in the cases of the Muir Mills Co. Ltd. of Cawnpore v. T.H. Condon [1900] 22 All. 410 and Bahadur Singh v. Shiam Sunder Tug [1914] 36 All. 365. On the authority of these cases it is contended that the registration by the company is a subsequent act which in no way affects the completion of the sale of the shares. We might point out that to say that the registration of the transferee's name is no part of the contract between the transferrer and the transferee, is not the same thing as saying that sale can take place even without registration. If the transferrer does not undertake to get the name of the transferee registered and indeed when the objection to the registration of the transferee's name may be on account of the director's disapproval of him, there may not be any such implied undertaking. The question to be considered really is whether a sale can take place before the registration, or even before any instrument of transfer is executed or the share certificates are handed over to the transferee. The learned advocate for the appellant has drawn our attention to the case of Nanney v. Morgan [1885] 37 Ch. D. 346 where it was held that non-compliance with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to take all reasonable steps to mitigate the loss consequent upon the breach and cannot claim as damages any sum which is due to his own neglect. But the loss to be ascertained is the loss at the date of the breach, and if at that date he could do something or did something which mitigated the damage the other party was entitled to the benefit of it. 21. Still more clearly their Lordships have made the same pronouncement in the case of Manekji Pestonji Bharucha v. Wadilal Sarabhai and Co. A.I.R. 1926 P.C. 38. At p. 659 of 24 A.L.J. their Lordships remarked that it was quite true that the full property in shares in a company is only in the registered holder, and that an unregistered transferee had not a perfected right of property which he would have had if he had been the registered holder of the shares which he was sailing, the company is entitled to deal with the share-holder who is on the register, and only a person who is on the register is in the full sense of the word owner of the share. 22. It was also held that the word goods as defined in the Contract Act included every kind of moveable property, including shares of the company, and that Section 78 might, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the francs was concerned and he was bound to render account. It might be that on a proper account being rendered nothing remains due to the plaintiff from the defendant; but that is no justification for refusing to render account. We are unable to make out how the Court below dismissed the suit in its entirety without calling upon the defendant to render account in Court, specially when he could not make a definite statement as regards the way in which he had calculated the account. 25. Mr. Peare Lal Banerji, on behalf of the appellant, accepts the liability of his client to give credit to the defendant for the loss which he suffered on account of the breach by the plaintiff of the contract to purchase the Premier Oil Mills shares up to 16th April 1922, and expresses his willingness that amount should be deducted from anything that is found due to his client on account of the purchase of the francs. The defendant would be entitled to add interest at 6 per cent. per annum on the amount of his loss from 22nd February 1921 onwards up to the date of the receipt of the money realized from the conversion of the francs. On this last-mentioned date this amount would have to be ded ..... 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