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Muhammad Khaleef Shirazi And Sons v. Les Tanneries Lyonnaises And Another

Privy Council

Feb 4, 1926

Judgment

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Judgment Summary — Appeal to His Majesty in Council (Madras High Court appeal)

Factual and Procedural Background

The plaintiffs (residents of Madras) instituted suit with leave of the High Court on 3 February 1919 in the ordinary original civil jurisdiction of the Madras High Court to obtain a decree against Les Tanneries Lyonnaises (a French company at Oullins, near Lyons) and their agent Monsieur J. Marret for money alleged to be due under two contracts: one dated 25 May 1917 (sale and delivery of goatskins) and one dated 26 January 1918 (sale and delivery of sheepskins). A third named defendant, C. Sowrimuthoorya Oodayar, was included but no relief was claimed against him.

The trial Judge (Mr. Justice Phillips) on 20 October 1920 made a decree for Rs. 1,76,242-0-5 with interest and costs against the French company, dismissed the suit against Marret and Oodayar (but taxed costs and interest were awarded against Marret). The plaintiffs did not appeal the dismissal as against Marret. The French company and Marret jointly appealed to the High Court.

On 14 March 1922 the High Court in its appellate civil jurisdiction modified the decree against the French company (in respect of the 25 May 1917 contract), found that the French company was not liable under the 26 January 1918 contract, and dismissed the suit against Marret and Oodayar. The plaintiffs then appealed to His Majesty in Council against that High Court decree.

At the Privy Council stage the French company and Marret were represented by different counsel. Preliminary objections were raised (and initially stood over) concerning: (a) whether the suit was within the cognizance of the High Court in its ordinary original civil jurisdiction, and (b) whether the appeal to His Majesty in Council was in effect an impermissible direct appeal from the trial Judge's decree insofar as Marret was concerned.

Legal Issues Presented

Whether the suit fell within the cognizance of the High Court in its ordinary original civil jurisdiction.
Whether, insofar as the appeal concerned Monsieur J. Marret, the appeal to His Majesty in Council was effectively a direct appeal from the trial Judge's decree dismissing the suit against Marret and thus not allowable under the Code of Civil Procedure, 1908, or the Letters Patent of the High Court (including the application of O.41, R.33 of the Code).
Whether the defendants (particularly Marret and the French company) discharged the burden of proving that payments had been made to a person (Oodayar) who had authority from the plaintiffs to receive them (i.e., questions of agency and "holding out").
Whether the High Court, acting as a court of appeal, properly admitted additional evidence under Section 107 of the Code of Civil Procedure, 1908, and the effect of such admission on the appeals.

Arguments of the Parties

Plaintiffs' (Appellants') Position

The plaintiffs sought to recover sums due under the contracts of 25 May 1917 and 26 January 1918 and proceeded in the Madras original jurisdiction with leave of the High Court.
They denied that Oodayar ever had authority, or had been held out, to receive payments on their behalf.
The plaintiffs appealed to His Majesty in Council against the High Court's appellate decree which modified the trial decree and dismissed the suit as against Marret and Oodayar.

Respondents' Positions

Les Tanneries Lyonnaises (French company)

Filed a joint written statement at the High Court stage with Marret; alleged (in that joint statement) that payments had been made to Oodayar as a partner of the plaintiffs (a defence later abandoned when it was proved that Oodayar was not a partner).
At the Privy Council stage the French company stated that they had been first informed (via Marret's London solicitors) that the appeal had been presented and alleged they had previously had no knowledge that a suit had been brought against them and that Marret had defended the proceedings without their knowledge or consent; they therefore instructed separate representation for the Privy Council appeal.

Monsieur J. Marret (Agent/Respondent)

Contended that the suit was not within the cognizance of the High Court in its original civil jurisdiction.
Contended that the appeal to His Majesty in Council was, in effect, an appeal against the trial Judge's decree dismissing the suit against him (except as to costs), from which the plaintiffs had not appealed, and that such an appeal was not permitted under the Code of Civil Procedure, 1908, or by the Letters Patent of the High Court.
In his evidence he alleged that Oodayar had been authorized by the plaintiffs to receive payments or that Oodayar had been held out by the plaintiffs as having such authority (a contention which the Privy Council found lacked reliable evidence).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Gangadhar v. Banabashi [1915] 22 C. L. J. 380	Authority cited in relation to the interpretation and application of O.41, R.33 of the Code of Civil Procedure (appealability principles).	Referred to by their Lordships in support of the conclusion that an appeal to His Majesty in Council in respect of Marret would, in effect, be a forbidden direct appeal from the trial Judge's decree and therefore not allowable.
Bhaidas Shiodas v. Bai Gulab [1921] 45 Bom. 718 : 48 I. A. 181 (P. C.)	Authority cited regarding the scope of appeals and the proper construction of provisions governing appeals (again in the context of O.41, R.33).	Referred to by their Lordships as part of the authorities supporting the conclusion that the Code provision (O.41, R.33) was not intended to permit the type of direct appeal represented by the plaintiffs' appeal as against Marret.

Court's Reasoning and Analysis

The Privy Council set out a sequential analysis addressing first jurisdictional objections, then the appealability issue concerning Marret, then the merits as against the French company, and finally the question of additional evidence.

1. Jurisdiction of the High Court in its ordinary original civil jurisdiction:

The court found that the 25 May 1917 contract was made in the city of Madras and that it was agreed payments under that contract would be payable at a bank in Madras.
It also found that payments under the 26 January 1918 contract were to be payable at a bank in Madras.
The High Court had, under its Letters Patent, given leave to bring the suit in its ordinary original civil jurisdiction. On these bases their Lordships disallowed the objection that the suit was not within the cognizance of the High Court in its ordinary original civil jurisdiction.

2. Appealability in respect of Monsieur J. Marret:

The Privy Council considered the contention that, because the plaintiffs had not appealed from the trial Judge's decree which dismissed the suit against Marret (except as to costs), the present appeal to His Majesty in Council was in effect a direct appeal from the trial Judge's decree and therefore not allowable by the Code or the Letters Patent.
Their Lordships referred to O.41, R.33 of the Code of Civil Procedure, 1908 and to the cited authorities (Gangadhar v. Banabashi and Bhaidas Shiodas v. Bai Gulab) and concluded that the appeal insofar as it related to Marret was, in effect, a direct appeal from the trial Judge and was not permitted. They held that O.41, R.33 was not intended to apply to such an appeal.
Accordingly, the Privy Council decided that the appeal as regards Marret should be dismissed (but without costs).

3. Merits as against Les Tanneries Lyonnaises (the French company) — agency and authority to receive payments:

The Privy Council summarized the elementary law applicable in India and England: where a debtor alleges payment to a third person in discharge of debt, it is for the debtor to prove that that third person had, or had been held out by the creditor as having, authority to receive payment on the creditor's behalf.
They reviewed the pleadings and evidence. The joint written statement had alleged payments made to Oodayar as a partner of the plaintiffs — a defence abandoned when it was shown Oodayar was not a partner.
Marret asserted in evidence that Oodayar had been authorized or held out by the plaintiffs as authorised to receive payments. The Privy Council found no reliable evidence to support that assertion; they therefore rejected the defence that payments to Oodayar discharged the defendants' liability.
It was admitted by counsel for the French company that Marret made the 25 May 1917 contract as the agent of the French company, and counsel conceded that Marret was the agent for the 26 January 1918 contract if he represented himself as their agent. The Privy Council proceeded on those bases in assessing liability.

4. Admission of additional evidence by the High Court under Section 107, Code of Civil Procedure:

The Privy Council observed that Section 107 gives the High Court, as a court of appeal, a power to admit additional evidence but that this power should be exercised with caution, only where in the interests of justice it should be, and only where such evidence would have been admissible at trial.
Although the appellants complained that the High Court admitted documents not in evidence at trial (and that these admissions may have affected the High Court judgments), their Lordships concluded that the admission of the additional evidence did not affect their judgment in the Privy Council in the slightest degree.

Holding and Implications

Holding:

As to Les Tanneries Lyonnaises (the French company): The appeal is ALLOWED in favor of the appellants. The decree of the High Court in appeal is set aside against both respondents; the decree of Mr. Justice Phillips (the trial Judge) is restored and affirmed. Costs are to be paid by Les Tanneries Lyonnaises (including the appellants' costs in the High Court and in this appeal).
As to Monsieur J. Marret: The appeal insofar as it relates to him is DISMISSED (dismissed without costs), on the ground that the Privy Council could not entertain an appeal which was in effect a direct appeal from the trial Judge's decree dismissing the suit against Marret, a type of appeal not permissible under the Code and the Letters Patent.

Implications:

Direct effect: The trial Judge's decree for Rs. 1,76,242-0-5 (with interest and costs) against Les Tanneries Lyonnaises is restored and stands affirmed; the plaintiffs' challenge to the High Court's appellate modifications on that point succeeds. Les Tanneries Lyonnaises are ordered to pay the appellants' costs in the High Court and in the Privy Council appeal.
The appeal as to Marret cannot proceed to His Majesty in Council because, practically, it would be a forbidden direct appeal from the trial Judge's decision; therefore the Privy Council dismissed that limb of the appeal without costs.
The opinion applies and relies on pre-existing authorities and Code provisions (including O.41, R.33 and S.107) rather than announcing a novel principle. The judgment focuses on applying established rules about jurisdiction, agency/authority to receive payments, and the cautious use of appellate powers to admit additional evidence.

Result announced by their Lordships: Appeal allowed in respect of Les Tanneries Lyonnaises; appeal dismissed in respect of Monsieur J. Marret (without costs). Appeal allowed (overall) as against the French company; costs to appellants from that respondent. (Final line of the opinion: "Appeal allowed.")

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Sir John Edge. -

This is an appeal by the plaintiffs from a decree, dated the 14th March 1922, of the High Court at Madras, which was made in its appel late civil jurisdiction and varied a de cree, dated the 20th October 1920, of a Judge of the same Court, which was. made in the ordinary original civil jurisdiction of the High Court.

The appeal arises in a suit which was instituted with the leave of the High Court on the 3rd February 1919, in the ordinary original civil jurisdiction of the High Court by the plaintiffs, who live in the city of Madras, to obtain a decree against Les Tanneries Lyonnaises and their agent Monsieur J. Marret for money alleged to be due to the plaintiff's under a contract for the sale and delivery of goatskins under ' a contract of the 25th May 1917, and under a contract of the 26th January 1918, for the sale and delivery of sheepskins. There was another defendant to the suit named, C. Sowrimuthoorya Oodayar, against whom no relief was claimed. The suit was tried and the decree of the trial Judge was made in the ordinary original civil jurisdiction of the High Court. The French company carries on business at Oullins, near Lyons, in France. Mar ret and Oodayar live at Pondicherry. The contract of the 25th May 1917 was made by Marret as the agent of the French company with the plaintiffs in the city of Madras, and the money which might become due under it was payable at a Bank in the city of Madras. The contract of the 26th January 1918 was made by Marret at Pondicherry, and the money which might become due under it was payable to the plaintiffs at; the Bank in the city of Madras. The trial Judge made on the 20th October 1920 a decree for Rs. 1,76,242-0-5, with inter est thereon and for costs against the French company, and by his decree dis missed the suit against Marret and Oodayar, but decreed that Marret should pay to the plaintiffs taxed costs and interest thereon. The plaintiffs did not appeal to the High Court against the decree of the trial Judge dismissing the suit against Marret. They had obtained a decree against the French company for their entire claim, and with that they were then content. As appears by the record, the French company and Marret jointly appealed to the High Court against the decrees which had been made against them. On that appeal the High Court found that the French company was not liable to pay anything in res pect of the claim under the contract of the 26th January 1918, and by its decree modified the decree against them made in respect of their liability under the contract of the 25th May 1917, with certain costs, and dismissed the suit against Marret and Oodayar. Against that decree of the High Court this appeal by the plaintiffs has been brought.

In the High Court Mirret on behalf of the French company and himself had filed a joint written statement. In this appeal for the first time the French com pany and Marret are represented by different counsel instructed by separate firms of solicitors. Those learned counsel raised preliminary objections to the appeal the consideration of which their Lordships decided should stand over until the argu ments on the appeal had been heard. Their Lordships will now state what those preliminary objections were and what is their decision on them. Each of the learned counsel contended that the suit was not within the cognizance of the High Court in its original civil jurisdiction. The learned counsel for Marret further contended that this ap peal to His Majesty in Council is, in effect, an appeal against the decree of the trial Judge dismissing the suit as against Marret, from which decree the plaintiffs had not appealed, and that such an appeal was not allowed by the Code of Civil Procedure, 1908, or by the Letters Patent of the High Court. As to the objection that the suit was not within the cognizance of the High Court in its original civil jurisdiction, their Lordships find that the contract of the 25th May 1917 was made in the city of Madras, and it was agreed that the money payable under that contract should be paid in the city of Madras, and that it was agreed that the money payable under the contract of the 26th January 1918 should be paid in the city of Mad ras, and further find that the High Court, under its Letters Patent, gave leave to the plaintiffs to bring the suit in the ordi nary original civil jurisdiction of the High Court, and consequently hold that the suit was within the cognizance of the High Court in its ordinary original civil jurisdiction, and disallow that ob jection. As to the objection especially raised by the learned counsel for Marret, that as the plaintiffs had not appealed against the decree of the trial Judge dis missing the suit, excepting as to costs against Marret. no appeal lay against him, their Lordships have been referred to the Code of Civil Procedure, O. 41, R. 33 : Gangadhar v. Banabashi [1915] 22 C. L. J. 380 and, Bhaidas Shiodas v. Bai Gulab [1921] 45 Bom. 718 : 48 I. A. 181 (P. C.). Their Lordships think that this appeal to His Majesty in Council in so far as Marret is concerned, is in effect, an appeal direct to His Majesty in Council from the decree of the trial Judge, which is not allowable under the Code of Civil Proce dure 1908, or under the Letters Patent of the High Court, and they hold that the Code of Civil Procedure 1908, O.41, R. 33 was not intended to apply to such an appeal, and they accordingly decide that the appeal, so far as Marret is con cerned, should be dismissed, but without costs.

Their Lordships will now consider the appeal so far as it relates to the French company alone. The contract for goat skins of the 25th May 1917, was made with the plaintiffs by Marret as the agent of the French company, and it is now ad mitted in this appeal by the learned counsel for the French company that Marret, in making with the plaintiffs the contract of the 26th January 1918, for sheepskins, was the agent of the French company if he represented that he was making it as their agent. (Their Lord ships then discussed the pleadings in the suit and the material evidence and procee ded.) Before considering separately the contracts of the 25th May 1917, and the 26th January 1918, their Lordships will state, so far as it is necessary to do so in this suit, what is the law in India as well as in England with regard to payments of debts to a person who, as in this suit, is alleged by a debtor to have had the creditor's authority to receive them on his behalf. It is elementary law that when a creditor sues the debtor for the payment of a debt and the defence is that the debtor paid the debt to another person, it is for the debtor to prove that the other person had, or had been held out to the debtor by the creditor as hav ing had the authority of the creditor to receive payment of the debt on behalf of the creditor.

In the joint written statement which, according to the record, the French com pany and Marret filed, it was alleged that payments had been made to Oodayar as a partner of the plaintiffs. It was proved at the trial that Oodayar was not a partner of the plaintiffs in either of the contracts with which this suit is concer ned. That defence was abandoned and it was alleged by Marret in his evidence, as their Lordships understood his evi dence, that Oodayar had been autho rized by the plaintiffs to receive the pay ments on their behalf, and later that Oodayar had been held out by plaintiffs to him as having their authority to re ceive them. That authority and the alleged holding out of it, is not admitted and is denied by the plaintiffs, and in their Lordships' opinion there is no reli able evidence that Oodayar ever had or had been held out as having any such authority. (Then their Lordships consi dered the contract of 25th May 1917, for goat skin and the contract of 26th January 1918 for sheepskins and procee ded). Their Lordships think that in fairness to the French company they should state what the French company allege was the position in which that company found itself after this appeal to His Majesty in Council had been presented. The French company say that they were first infor med by the solicitors in London appear ing for Marret that this appeal had been presented, and as their Lordships under stand the French company's statement that company had previously no know ledge that a suit against them and Marret had been brought. The French company say that the proceedings in the suit in Madras were defended by Marret with out the knowledge or consent of the French company, and that on receiving that information from Marret's London solicitors that this appeal had been pre sented, the French company was advised that they should be separately represen ted in this appeal, and instructed their London agents that their case in the appeal should be settled and lod ged with all due expedition. If facts could have been proved which would have justified application to amend the decree no such application was made.

There is one other question raised by the appellants in this appeal. It relates to the admission in evidence by the Court of appeal of documents which were not in evidence before the trial Judge, The High Court as a Court of appeal in this suit had under S. 107 of the Code of Civil Procedure, 1908, power to take additional evidence. In their Lordships' opinion it is a power which should be exercised by a Court of appeal with much caution and only in suits where it is satisfied that in the interests of justice it should be exercised, and that such additional evidence when admitted will be evidence which, if produced at the trial, would have been admissible. The additional evidence admission of which is complained of on behalf of the appellants, however much it may have affected the judgments in the Court of appeal has not affected the judgment of their Lordships in the slightest degree.

Their Lordships will humbly advise His Majesty that the appeal, so far as it relates to Les Tanneries Lyonnaises, should be allowed, and the decree of the High Court in appeal should be set aside against both respondents, with costs payable by Les Tanneries Lyonnaises, and the decree of Mr. Justice Phillips should be restored and affirmed and that the appeal, so far as it relates to Mon sieur J. Marret, should, save as aforesaid, be dismissed without costs. The respon dents, Les Tanneries Lyonnaises should pay to the appellants their costs in the High Court and in this appeal.

Appeal allowed.