United Brokers vs Alagappa Corporation

Rajamannar, J.—This appeal arises out of a suit brought by the respondents to compel the appellants to specifically perform certain

agreements to deliver in all 700 shares of Steel Corporation of Bengal, Limited, or in the alter-native to recover from the appellants a sum of Rs.

13,506-4-0 being the estimated damages on account of the appellants'' failure to perform the contracts entered into by them. There was also a

claim for a sum of Rs. 612-8-0, the dividend which had accrued on the shares; but this claim was disallowed and the plaintiffs have not chosen to

appeal against the disallowance. There is also no dispute in regard to another sum of Rs. 484- 6-0 claimed by the respondents from the appellants.

In May 1945 the defendants who were carrying on business as stock and share-brokers sold and agreed to deliver to the respondents

described as Alagappa Cor-poration by its sole proprietor, Dr. Sir RM. Alagappa Chettiar in all 700 shares of the Steel Corporation of Bengal,

Limited, at rates varying from Rs. 31-11-0 to Rs. 33-1-6 per share. In spite of repeated demands the defendants failed to deliver the shares and

after a final demand the suit was instituted on the 26th April, 1946 for specific performance or in the alternative for damges. Besides a technical

plea in regard to the frame of the plaint and description of the plaintiffs, the main plea in defence was that the transactions between the plaintiffs and

the defendants were not of purchases or sales, but on the contrary the plaintiffs and the defendants were acting as brokers and were intermediaries

in putting through and bringing about contracts between other parties. Alternatively the appellants pleaded that the plaintiffs were acting as agents

for the defendants who in turn were acting as agents for other parties. The relationship between the parties was according to the appellants one of

employment and not of vendors and purchasers.

At the commencement of the trial the plaintiffs abandoned the relief of specific performance and elected to proceed with the suit only in respect

of the relief of recovery of damages. The learned Judge who tried the case held that there were no merits in the main plea taken by the appellants in

defence. He held that the contracts of sale were entered into by the parties as principals and not as brokers or agents. As the defendants

committed default in delivering the shares the learned Judge held that the plaintiffs were entitled to damages which he assessed in the difference

between the rate obtaining in the market on the date of the institution of the suit and the contract rate. In the result he passed a decree in favour of

the plaintiffs for the sum of Rs. 13,990-10-0 and also granted the plaintiffs their costs of the suit. The defendants appeal.

The learned advocate for the appellants attempted at the outset to raise a point which according to him would disentitle the plaintiffs from

obtaining any relief whatever in the suit. He contended that when the plaintiffs chose to abandon the relief of specific performance, it amounted to a

declaration that they were not ready and willing to perform their part of the contract and they were therefore not entitled to claim even damages on

that footing. It is clear from the Judgment that the point was not taken before the learned Judge in the way in which it has been attempted to be

raised before us. In the grounds of appeal the only ground which according to the appellants'' advocate raises this point is ground No. 11. That

reads as follows.

The learned Judge ought to have held that in the event of the plaintiff not being entitled to a decree for specific performance no damages could be

awarded.

I do not think that the language of this ground can be held to cover the point now sought to be raised. I do not think it either just or proper that

the appellants should be permitted to raise an objection which goes to the root of the plaintiffs case at this stage in appeal. As we have not

permitted, the appellants'' advocate to raise the point, it is unnecessary to deal with the decision of the Judicial Committee in AIR 1928 208 (Privy

Council) cited by him in support of his contention.

It was again contended here, as it was contended in the Court below, on behalf of the appellants that the relationship between the parties was

one of employment, that either both the plaintiffs and defendants were agents or in the alternative that the plaintiffs were the agents of the

defendants. The form of the contracts, the correspondence between the parties and the admissions of the defendants completely negative this

contention of the appellants. The contracts of which Exhibit P-1 is an example purport to be sales by order and on account of the plaintiffs. There

is also corresponding bought-notes which show the defendants as sellers. The contracts do not purport to have been entered into by the

defendants acting as agents on behalf of principles disclosed or undisclosed. The words are We have this day done by your order and on your

account. The correspondence between the parties conclusively demonstrates the way in which both the parties treated the transactions. It is

sufficient to refer to two letters of the defendants; one addressed to the advocate of the plaintiffs, dated the 12th November, 1945, in which they

say as follows.

We are in receipt of your letter of the 9th instant in respect of 700 Steel Corporations due from us to Messrs. Alagappa Corporation. We have not

yet received the relative documents from our sellers and we shall complete delivery of the same immediately we receive the same from our sellers.

And the other, dated the 2nd January, 1946, in which the defendants say,

We shall deliver to you the 700 Bengal Steels at the original sale rates immediately the documents for the 700 Steel Corporations are received by

us from our sellers.

A partner of the defendants'' firm was in the box and he was asked by the learned Judge whether he did not look to the plaintiffs for payment for

the shares sold by the defendants. The answer was ""yes"". The learned Judge pursued the matter by asking again ""Not to any buyer from him?"" and

the answer was ""No"". The witness also admitted that in the contracts it was not stated that the defendants acted as brokers for others. Having

regard to these circumstances I have no hesitation in holding that the transactions between the parties must be deemed to be one of sale and

purchase and it is impossible to hold that the relationship between the parties was one of employment. No assistance can be derived from Patiram

Banerjee v. Kanknarrah Co., Ltd. ILR (1915) Cal. 1050 and Nanda Lal Roy v. Gurupada Haldar ILR (1924) Cal. 588 cited to us by the learned

advocate for the appellants because in those cases it was evident on the face of the contracts that they were entered into on behalf of principals.

The next question is the measure of damages to which the plaintiffs would be entitled. The learned Judge has accepted the plaintiffs'' claim which

was based upon the difference between the rates at which the shares were sold and the market rate prevailing on the date of the plaint. It was

contended on behalf of the appellants that the market rate prevailing on the date of the plaint would not be material. It was suggested on behalf of

the appellants that the appropriate date would be the date of trial when the plaintiffs declared their intention to abandon their relief of specific

performance. I cannot agree that on principle the date of breach can be postponed to the date of trial. It is clear from the plaint that the plaintiffs

elected to claim damages on the footing that damage was suffered on the date of the plaint by which date the defendants had failed to deliver the

shares. It is true that the plaintiffs were claiming specific performance but before the date of suit the defendants had not agreed to comply with this

demand. Looking at the matter from another point of view, assuming that the trial had proceeded on the question of specific performance and the

Court had found that though the defendants had defaulted, it was not a case in which specific performance could be decreed, it would even then be

open to the Court to award compensation or damages to the plaintiffs. In that case the damages would have been calculated as on the date of the

institution of the suit. No authority has been cited to us to show that the date adopted by the plaintiffs and accepted by the Court, namely, the date

of plaint, was not the proper date for calculation of damages suffered by the plaintiffs.

The appellants complain that costs should not have been awarded against them on the full amount of the plaint claim which was on the basis of

the market value of the 700 shares amounting to Rs. 37,496-14-0. When the plaintiffs abandoned the claim for specific performance, there could

be no justification for awarding costs to them on an amount which represents the market value of the shares. The proper order will be to award the

plaintiffs costs on the amount decreed to them.

Except as regards the costs the appellants have failed in the appeal on the other points. The appellants are therefore directed to pay to the

respondents three-fourths of the costs of this appeal.

Frederick William Gentle, C.J.

I agree and wish to add a few words relating to the con-tention, which learned Counsel for the appellants wished to make, and which was

refused. In my view, ground No. 11 of the appeal in no way seeks to raise the point which learned Counsel desired to argue. If it had been

intended, in the grounds of appeal, to rely upon a contention that on the abandonment of the claim for specific performance the right to claim

damages would be forfeited, it would have been, and could be, clearly and expressly so stated. It has not been even referred to, and the word

abandonment"" does not appear in any ground of appeal. It is clear that that point was never raised before the learned Judge; that is manifest from

his judgment.

In regard to the question of costs, whilst it is correct to say that the appellants should not be made to pay costs except with reference to

matters where the respondent has succeeded, in my view they should not be paid any costs of appeal by the successful party inasmuch as, from the

judgment it is manifest that the question of proportionate costs was not raised before the learned trial Judge.