Jamsetji Nassarwanji Ginvalla v. Hirjibhai Navroji Anklesaria

1. This suit was filed by Hirjibhoy Naoroji Anklesaria as the administrator with the will annexed of Naoroji Nasserwanji Ginwalla against Jamshedji Nasserwanji Ginwalla, Ardeshir Nasserwanji Ginwalla, and Dinshaw Pestonji Ginwalla, the first two being the surviving partners of Naoroji Nasserwanji and the third being the administrator ad litem of the estate of Pestonji, another partner who survived Naoroji, but is now dead. Naoroji "Nasserwanji died on the 7th of February 1885 being then a partner with his three brothers in the cotton-ginning and trading business in Gujarat which was carried on under the title of Nasserwanji Hirjibhai Cotton Ginning Company.

2. The plaintiff prays that the first two defendants and the third defendant as administrator of the estate of Pestonji Nasserwanji Ginwala be directed to render an account of all the assets of the deceased Naoroji Nasserwanji Ginwala at the time of his death retained and employed by the first two defendants and the said Pestonji Nasserwanji Ginwala in their business with compound interest with half yearly rests at the rate of nine per cent, per annum.

3. His suit was filed on the 21st of January 1909, that is to say, about twenty-five years after the death of Naoroji Nasserwanji.

4. We gather from the findings of the District Judge that Maneckbai, widow of Naoroji, was his executrix according to the tenor of his will and acted as such until her death in the year 1905. The assets of the deceased Naoroji were retained in the firm by the surviving partners after his death and his estate was treated by them as if Maneckbai had in her representative capacity entered into an agreement with them to remain as a partner although as a matter of fact no such agreement was entered into. The learned Judge concludes from those facts, and we think correctly, that the property left by Naoroji and used in the business was a loan under Section 241 of the Contract Act.

5. It appears that until 1895 certain sums were drawn by Maneckbai from the firm for the maintenance of herself and her children and that she was credited with interest on deposits and a share in the profits. In the year 1895 the firm was in difficulties and the formation of a joint stock company was resorted to in order to prevent a financial disaster. By Ex. 394, which was executed on the 30th of November 1895, the three surviving partners, together with Maneckbai as executrix of Naoroji and Dinbai as executrix of another predeceased partner Edalji, transferred to a joint stock company, registered in Bombay on the 21th of May 1895, the ginning factories which were the property of the partnership and of the estates of the deceased partners in consideration of Rs. 1,04,000 in fully paid up shares of the value of Rs. 200 each, it being arranged that out of those shares the creditors of the partnership should receive fully paid up shares to the amount of their claims, and as between the partners and the widows of the deceased partners it was arranged that three hundred and sixty fully paid up shares should be held on their behalf in trust by a man named Gandhi according to the terms of a document Ex. 428, which is dated the 26th of November 1895.

6. It was urged against the defendants that the assent of Maneckbai to the conveyance of the 30th of November 1195 to the company was induced by fraud. As to that the learned District Judge finds that it has not been proved that she was induced to sign it by means of fraud except that she was induced to believe that she had joined the family firm, bat the Judge says that it is possible that the defendants themselves thought that she had become a partner because the monies of the deceased in the partnership had not been withdrawn.

7. Then it was contended that if the signature of Maneckbai to this document was not obtained by fraud, at all events fraud was practised subsequent to the execution of the document in a manner detrimental to the estate of Naoroji and that the defendants are liable to the plaintiff in respect of it. The fraud alleged is that certain creditors of the partnership received fully paid up shares in excess of the nominal value of their claims. Maneckbai, however, took no action in the matter until her death in 1905, and then, on the 21st of April 1909, the plaintiff obtained letters of administration to the estate of Naoroji with the will annexed. The plaintiff in paragraph 17 A of the plaint alleges that he became aware of the falsehood of the representations and fraudulent character of the transactions mentioned above in October 1907 for the first time.

8. Now I will assume for the purpose of argument, without coming to a definite conclusion upon the point, that the claim of the representative of Naoroji for an account against his surviving partners was not barred in 1895. It is contended that it was not barred because of the drawings which had been allowed to Maneckbai between 1885 and 1895. In 1895, however, upon the facts found, there was a ovation. The situation was completely changed with the asse(sic) of Maneckbai in order to save the assets of the partnership in which she, as representing the estate of Naoroji, was much interested. She became a party to the transfer of those assets to the joint stock company and she took as part consideration for the arrangement ninety-five fully 26 paid up shares in the company as the equivalent of the amount of the deposit due to Naoroji from the partnership.

9. That was an arrangement that she as executrix was perfectly competent to enter into, and it has been found, as I have already pointed out, that she was not induced to enter into it by fraud.

10. Therefore prima facie the arrangement is binding upon the . estate, and if it is so binding then the plaintiff's claim for an account against the partners on the footing of a continuance of the original relations between Naoroji's estate and the partnership which subsisted in 1885 cannot be sustained.

11. But it is said that though Maneckbai was not induced to enter into the arrangement by fraud there was, at all events, a fraud in the distribution. The learned Judge finds that certain creditors were enabled to put pressure upon the partners and to get an unfair advantage for themselves in the distribution of shares. But that does not indicate any fraud aimed by the surviving partners at Maneckbai or at Naoroji's estate. Naoroji's estate and its representative Maneckbai got in the distribution an amount of shares which they had arranged to take. Assuming, however, that there was fraud in the distribution, that is to say in the performance of the contract, apart from its making, that is no ground for rescision and restoration of the parties to the position in which they were before the contract was entered into. It appears to us, therefore, that the act of Maneckbai in 1895 cannot be set aside and that the plaintiffs claim upon that ground must fail.

12. The learned Judge has, however, come to the conclusion, which does not appear to follow very clearly from his findings of fact, that Article 95 of the Limitation Act can be invoked in the plaintiff's fovour and that, therefore, the plaintiff is entitled to the relief by way of accounts which he claims in the plaint.

13. Now it is sufficiently clear upon the authorities, both in this Court and in Calcutta, that Article 95 has no application where on the face of the plaint no equitable relief is claimed on the ground of fraud : see Abdul Rahim v. Kir par am Daji (1891) I.L.R. 16 Bom. 186 and Gour Mohun Gouli v. Dinonath Karmokar (1897) I.L.R. 25 Cal. 49.

14. The learned Judge, however, finds that there was unfair dealing which was not disclosed until 1898 when Maneckbai was still acting as executrix. It is, we think, clear that if it was disclosed to the knowledge of Maneckbai, as it appears to have been from a written statement put in by her in Suit No. 608 of 1897 to which we have been referred, she would be obliged to sue for any relief that she might be entitled to on the ground of fraud in distribution within three years from 1897 or 1898; but she lived and acted as executrix until 1905 without taking any action.

15. In order, however, to get rid of the difficulty which, it was foreseen, would arise owing to the fact that Maneckbai acted i as executrix, the plaintiff applied after the institution of this suit to the District Judge Mr. Tyabji for an order to revoke the probate which was supposed to have been granted to Maneckbai in 1895 of the will of Naoroji. As a matter of fact in 1895 -an order had been made by Mr. Moore, the Assistant Judge, that probate should issue to Maneckbai as executrix of the will of Naoroji. Maneckbai, however, never took out probate. Therefore no probate ever was issued. Nevertheless Mr. Tyabji was induced to make an order revoking the grant of probate made on March the 7th, 1895. There was no such grant in existence, and if Mr. Tyabji under the terms of Section 234 had a jurisdiction on the grounds stated to him to revoke the probate which, we think, is extremely doubtful, he certainly had no jurisdiction to purport to revoke a probate which had never been issued, quite apart from the fact that letters of administration to the same estate had already been granted by him and that person who, he supposed had obtained probate, was already dead. He seems to have recognised his mistake after the appeal in this suit had come before him, because, he states in his judgment that "When the order for probate was revoked it was not known that Maneckbai had acted as executrix." This attempt to revoke the probate, which did not exist, was apparently resorted to with the idea that it might help the plaintiff in argument to get over the effect of the acts of Maneckbai as executrix.

16. It was contended by Mr. Jayakar, as we understood, on behalf of the respondents, that the Court would not regard the acts of Maneckbai as the acts of an executrix, because she had not taken out probate of the will. But the plaintiff has himself got over that difficulty by taking out letters of administration with the will annexed. That appears clearly from Williams on Executors, page 222, and the case of Johnson v. Warwick (1856) 17 C.B. 516, which is there referred to.

17. Then the District Judge having come to the conclusion, without stating his reasons, that time did not run against the executrix from the time when she became aware of the unfair distribution in 1898, says-" Assuming that the plaintiff knew all the facts which entitle him to sue the defendants before 1909, an assumption which is not borne out by the evidence, although it appears from his letters and evidence that he and his elder brother and others took part in a consultation with Mr. Manecksha Taleyarkhan, who was a High Court Pleader, before shares were distributed, and that he heard in or about 1895 that the estate of his father was not legally a partner, that he suspected in 1896 that the full amount due to the estate had not been paid, all this information was received by him before he became administrator." That, however, does not appear to us to be any answer, because time was running against Maneckbai as executrix of the will from the date of the death of the testator, she being a person who even without probate was capable of instituting a suit, although she might not be able to proceed as far as decree without taking out probate. The learned Judge then proceeds to state that " He, that is, the plaintiff, had not become fully acquainted with the facts on or before the date of the plaint and the failure was not due to negligence on his part." We are not aware upon what ground he bases this conclusion, and if it were necessary to decide the question with reference to the plaintiff's knowledge we might have to remand the case for a further and better finding upon the point.

18. We are, however, of opinion that the suit is barred for the reasons already stated. We, therefore, reverse the decree of the District Judge and dismiss the suit with costs throughout on the plaintiff.