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TMI Blog1964 (11) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... uld first, pay the commission, interest and disbursements due to themselves out of the realized proceeds of the mica sales, then pay various creditors of the Naidus in certain proportions and hand the balance, if any, to the Naidus. Clause 12 provided that the Company should, subject to Clause 11, have a lien on all cash and mica in their hands as security for the repayment of all sums which might fall due under the agreement. The agreement was to continue to be in force for five years from 1st of March 1906, and all moneys due to the Company, including the standing advance of ₹ 55,000, were to be paid off and discharged not later than two months before the expiration of the agreement, i.e., by the 1st of January 1911. 2. The agreement duly came into force, and under it quantities of mica were sold and payments made by the Company to the various creditors of the Naidus, including the plaintiff. Meanwhile the Naidus were being pressed by the plaintiff for further security and a further share of the proceeds of the mines. He had apparently obtained decrees against them to an amount exceeding a lakh of rupees. In these circumstances the Naidus entered into an arrangement wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plaintiff, who was also acquainted with it, noticed the variation in phraseology. It has been suggested in this Court that we ought to suppose that the parties deliberately and with intention altered the rights of the Company under the agreement of February 1906 by this correspondence, and that we may assume that some forbearance on the part of the plaintiff in pursuing his remedies against the Naidus was the inducement offered to the Company for giving up their right of priority in payment of interest and disbursements. There is no trace of anything of the sort in any of the documents, and no evidence to that effect was sought to be given at the trial. Mr. Simson, the Managing Director of the Company, was examined as a witness, and even although it was not directly in issue, it is almost impossible to believe that he would not have been asked some question about it if any such tripartite arrangement had taken place. In accordance with the instructions contained in the letter of the 20th November 1908 (Exhibit A1), the Company proceeded to remit the balance of the proceeds of the Kalichedu and Tellabodu mica to the plaintiff. It is not in evidence what deductions they made fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sale-proceeds of the 36 cases of mica. The Company then applied to the Court to have Heinrich Brandt, the 4th defendant, added to the suit on the ground that he, as a secured creditor of the Naidus, had claims against the proceeds of the mica, which might conflict with the claims of the plaintiff. They also filed a written statement in which they set out the provisions of the agreement of February 1906, and asserted their claim to deduct interest, commission and disbursements under that agreement and disclaimed any interest in the balance, asking only to be protected against the rival claims of the plaintiff and the Naidus and the 4th defendant (vide paragraphs Nos. 11, 13 and 16). Subsequently the claim of the 4th defendant was in some manner satisfied and withdrawn; and sin application was made to Bakewell, J., by the defendant Company to amend their written statement. Leave was given and certain amendments were made. It was strenuously argued by Mr. Rangachariar on behalf of the plaintiff that this leave ought never to have been given and that the amendments should be disregarded, on the ground that until the amendments were made the defendant Company had only taken up the pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company that there was no contract between the defendant Company and the plaintiff and, assuming that to be established, there was no contract between the Naidus and the defendant Company on which the plaintiff could sue. Mr. Rangachariar for the plaintiff, while resisting those propositions, further contended that the point was not open to the defendant Company, as it was not raised in the pleadings and that the first additional issue settled by Sankaran Nair, J., after the 3rd defendant had amended his written statement, implied the existence of a valid contract between the plaintiff and the defendant Company. It is no doubt a strong thing to allow the defendant to take a point which does not appear in the pleadings and the issues, and both the trial Judge, Wallis, J., and the Bench before whom this appeal was originally heard, refused to allow them to do so. This, however, is a very exceptional case, because, in our opinion, it is reasonably clear that, at the time of the drafting of the pleadings and the first settlement of issues, certainly the defendant Company and probably the plaintiff, and their respective advisers, had not grasped the extent of the plaintiff's ultima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word commission in Exhibit A1 or in the defendant Companys adoption of it in Exhibit A we should be constrained to hold that the defendant Company had given away their right to interest and disbursements It is to be observed that by Section 132 of the Transfer of Property Act, the assignee prima facts takes subject to all existing equities It is the duty of the assignee to ascertain the extent of the existing equities Vide Mangles v. Dixon (1852) 3 H.L.C. 702 : 1 Mac. G. 437 : 1 Hall. Tw. 542 : 19 L.J. Ch. 240 : 10 E.R. 278 : 88 R.R. 296 and where there is an existing right, the onus will be upon the assignee to show affirmatively that the. Assignment to him was free of it. We have come to the conclusion that Exhibits A and Al when carefully examined, do not amount to an assignment free from the claims of the defendant Company to interest and disbursements. In the first place Exhibit A1 speaks of the mica as being delivered as per agreement between ourselves. That clearly informed the plaintiff that mica was being delivered in accordance with a contract subsisting between the Naidus and the defendant Company. It is evidence that the plaintiff was cognizant of the terms of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k that without prejudice meant without prejudice to the Company's existing legal rights, that is, to their rights under the agreement of 1906, to which express reference was made in Exhibit A1. There is in fact no offer, only a notice that they were aware of a certain assignment, and an assurance that the instructions would be given effect to without prejudice to their own rights and without binding themselves to any course in future. That is, in our view, the effect of the letter. 12. This disposes of the main point in the appeal for Mr. Rangachariar concedes that, if the defendant Company's claim to deduct interest and disbursements is good, no enquiry is necessary to ascertain whether the proceeds of the 36 cases of mica will be exhausted thereby. But the further question was decided by the learned trial Judge, and is before us, as to whether, as after 1st January 1911, the defendant Company were entitled to exercise a lien on the goods for their advances which then became repayable, as well as for interest and disbursements. As we have held that the plaintiff took subject to the defendant Company's rights under the agreement of 1906, it follows that he took sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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