Bayya Chinnamma and others vs Sree Dhanalakshmi Rice Co., rept. by two of its partners and others

S.H. Sheth, J.—This appeal has been filed by defendants 2, 4 and the legal representatives of defendant No. 3 under the following circumstances. The Plaintiffs filed the present suit against defendants 1 to 4 to recover a sum of Rs. 3,352 33 ps with interest and costs. They sought decree against 1st defendant personally. So far as defendants 2 to 4 were concerned, the plaintiff prayed for a decree against the estate of Bayya Venkatasubbaiah whose legal representative defendants 2 to 4 are. 2nd defendant is Bayya Venkata Subbaiah''s wife and defendants 3 and 4 are his daughters. 3rd defendant died during the pendency of this litigation. It is the plaintiffs'' case that they supplied to 1st defendant thought one Punnaiah 40 bags of rice on credit. The transaction was concluded through Bayya Venkata Subbaiah who was the broker. The defendants failed to pay that amount and, therefore, the plaintiffs instituted the suit against 1st defendant. The legal representatives of Bayya Venkata Subbaiah were impleaded because, according to the plaintiffs, he was the broker who guarantied the payment by Ex. A-5 dated 6th January 1969, it was also contended in the alternative that by virtue of Ex. A-5 Bayya Venkatasubbaiah was liable to indemnify the plaintiff''s for the loss which might be sustained by them in this transaction.

1st defendant who contested the suit contended that the goods were not supplied to him through Punnaiah or anyone eke. Defendants 2 to 4 contended that Bayya Venkatasubbaiah had not guaranteed the payment of the amount to the plaintiff. The learned trial Judge found that Bayya Venkatasubbaiah had not guaranteed the payment, that the goods were delivered to Punnaiah and that there was no satisfactory evidence to show that they were supplied to 1st defendant. The learned trial Judge, therefore, dismissed the suit. The plaintiffs challenged the decree in appeal to the District Court. The learned Appellate Judge found that the goods were not supplied by the plaintiffs to 1st defendant. He therefore, confirmed the decree passed in favour of 1st defendant. However, he recorded the conclusion that the goods were delivered to Punnaiah at the instance of Bayya Venkata Subbaian and that since Bayya Venkatasubbaiah had undertaken to pay the amount to the plaintiffs, defendants 2 to 4 were liable to pay the amount to the extent of Bayya Venkatasubbaiah''s assets in their hands. The learned Appellate Judge, therefore, reversed the decree so far, as defendants 2 to 4 were concerned and passed decree in favour of the plaintiff''s directing defendants 2 to 4 pay the decretal amount to the plaintiffs. It is that decree which is challenged by 2nd defendant, 4th defendant and legal representatives of 3rd defendant in this second appeal. The only contention which has been raised on behalf of the appealing defendants is that Bayya Venkatasuobaiah had neither guaranteed the payment nor had he agreed to indemnity the plaintiffs if any loss was caused to the latter.

The controversy between the parties turns upon the construction of letter dated 6th January, 1969 (Ex.A-5) written by Bayya Venkatasubbaiah to the plaintiffs. Mr. M.V. Ramana Reddy who appears on behalf of the plaintiffs had contended that while construing Ex.A-5 the Court should bear in mind the circumstances attending upon the transaction. In particular, he has lard emphasis upon the fact that the plaintiffs did not know 1st defendant nor did they know Punnaiah to whom goods were actually delivered. They knew Bayyavenkatasubbaiah who was the broker and who had introduced Punnaian to them. Ex.A-5 which Bayya Venkatasubbaiah wrote to the plaintiffs was in Telugu. The following is its official translation:

I will bring the sum of Rs. 3,012/- (three thousand twelve rupees only) for the rice which relates to the permit and which has been taken this day and in respect of which a credit bill has been prepared in the name of Vemula Basavaiah and I will pay the said sum and take return of this letter.

Vemula Basavaiah was 1st defendant. Punniah to whom goods were delivered was not a party to the suit Whereas Mr. M.V. Ramana Reddy emphasizes the fact that this letter, Ex. A.5 in terms states that Bayya Venkatasubbaiah agreed to pay the amount to the plaintiffs and take back the letter, Ex. A-5 from the plaintiffs. Mr. P. Sitaramaraju has emphasized the fact that what Bayya Venkatasubbaiah had agreed to was to bring a sum of Rs. 3012/- and pay it to the plaintiffs. The question is whether an assurance to bring the amount from 1st defendant and to pay the amount, it was an assurance to collect the amount from 1st defendant and to pay it to the plaintiffs.

Section 126 of the Contract Act defines a "contract of guarantee" in the following terms:

A "contract of guarantee" is a contract to perform the promise or discharge the liability, of a third person in case of his default.............

It further provides that a guarantee may be either oral or written. In the facts and circumstances of the case the question which has arisen before me is whether the assurance from 1st defendant to collect the amount and to pay it to the plaintiffs amounted to a promise to pay the amount due from 1st defendant or to discharge his liability in case he committed default. If a third party assures a vendor to collect a particular amount from the vendee and to pay it to the vendor then, in my opinion, he merely acts as a bill collector of the vendor and nothing more. It is difficult to read in such an assurance a promise to pay the amount due from the vendee to the vendor or to discharge the liability which the vendee owes to the vendor. Ex. A-5, therefore, does not in my opinion, amount to a contract of guarantee.

Section 123 of the Contract Act defines the contract of indemnity in the following terms:

A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself or by the conduct of any other person, is called a "contract of indemnity".

Bayya Venkatasubbaiah by writing letter, Ex. A-5 did not promise the plaintiffs to save them from the loss which might be caused to them by the conduct of 1st defendant. The maximum which can be said in regard to Ex. A-5 is that Bayya Venkatasubbaiah had assured the plaintiffs to collect the amount from 1st defendant and to pay it to them. It is difficult to say that an assurance to collect the amount and to pay it to the plaintiffs is a promise to save the plaintiffs from the loss which might be caused by the conduct of 1st defendant. Ex. A-5 only shows that Bayya Venkatasubbaiah introduced Puanaiah to the plaintiffs because Pennaiah held the permit granted to 1st defendant. All that he did was to tell the plaintiffs that he would collect the amount and pay it to them I do not find in Ex. A-5 that Bayya Venkatasubbaiah had undertaken to pay the amount to the plaintiffs irrespective of whether he collected it or not. The liability to pay the amount to the plaintiffs flows from Ex. A-5 only it Bayya Venkatasubbaiah collects it from 1st defendant. If he does not collect it, there is no liability for him to pay that amount to the plaintiffs. To read Ex. A-5 either as a contract of guarantee or as a contract of indemnity is to elevate it to a very high status which, in my opinion it does not deserve.

I am therefore, of the opinion that the learned Appellate Judge was in error in holding that Bayya Venkatasubbaiah had undertaken the liability to make good the amount to the plaintiffs in case 1st defendant committed default in payment thereof It is true that while construing a document the intention of the parties must be ascertained. While ascertaining the intention of the parties the Courts have to accept the natural meaning of the words used therein In my opinion, the natural meaning of the expression ''to bring the amount and to pay'' is not to guarantee the payment of amount or to undertake to indemnify the amount of loss caused in the transaction. The learned Appellate Judge was therefore, in error in passing decree against defendants 2 and 4 and legal representatives of 3rd defendant. In the result, the appeal is allowed. The decree passed by the lower Appellate Court is set aside, the decree passed by the trial Court is restored. No costs.