Madhusudan Sen v. Rakhal Chandra Das Basak

This is an appeal by the first Defendant in a suit for accounts. The facts material for the decision of the questions of law raised before us may be briefly stated. On the 5th September 1895 the Defendant was appointed agent of the Plaintiffs and their co-sharers for management of their estate. The Defendant and his father at the time hypothecated immoveable property as security for the due performance of the duty of the first Defendant as agent. This bond was executed in favour of persons who were proprietors of a half share of the entire property. One of these, Radhika Mohon Das, was interested to the extent of one-eighth share; another, Rakhal Chandra Das, for himself and as guardian of his infant brother Brojo Gopal Das, was interested to the extent of another one-eighth share. Two other persons, Gobind Lal Das and Keshab Lal Das, were each interested to the extent of one-eighth share. The proprietors of the remaining one-half share were not parties to the transaction, but it has been alleged—and that statement has not been challenged—that the Defendant was also their agent for the purpose of collection of rent. This agreement continued in force till the 19th August 1904, when its terms were varied in the manner following, viz., the Defendant undertook to collect the rent of one-fourth share separately and to submit separate collection papers in respect of that share year after year. In the interval, Radhika Mohon Das had died in the year 1900 and his interest in the property had vested in Rakhal Chandra Das and Brojo Gopal Das; but there was no new contract in writing between these persons and the Defendant, although the latter continued to act as their agent as previously. The Defendant was discharged from his office on the 7th August 1908. This suit for account was commenced against him on the 7th August 1911 by the Plaintiffs who are representatives of the one-fourth share-holder other than Gobind Lal Das and Keshab Lal Das. These latter have not joined as co-Plaintiffs and have consequently been joined as pro formâ, Defendants. The Plaintiffs claim accounts for the period from the 14th April 1901 to the 7th August 1908. The claim is resisted by the Defendant on the merits as also on the ground of limitation; he urges that he has rendered accounts and is under no further obligation to the Plaintiffs, and further contends that, if this plea is not established, the claim is barred by limitation. The Court of first instance decided in favour of the Defendant and dismissed the suit. Upon appeal the Subordinate Judge has set aside that decision and has made a preliminary decree for accounts from the 14th April 1901 up to the 7th August 1908. On the present appeal, it has been urged on behalf of the Defendant that the entire claim is barred by limitation. In our opinion, this contention cannot possibly prevail.

The Defendant and his father hypothecated immoveable property as security for the due discharge of the duty of the Defendant as agent of the Plaintiffs and their co-sharers. The Plaintiffs seek to realise from the Defendant whatever sum may be found due to them on adjustment of accounts, by sale of the immoveable properties hypothecated. The suit is consequently one to enforce a charge on immoveable property within the meaning of Article 132 of the Indian Limitation Act. This view is supported by the decisions in Hafizuddin Mandal v. Jadu Nath Saha, Troilokhya Nath Mandal v. Abinas Chandra Roy(2), Sures Kanta Banerjee v. Nawab Ali Sikdar(3) and Venkatachallan v. Narayanan(4). It has been pressed upon us, however, on behalf of the Appellant that a contrary view is supported by the case of Jogesh Chandra v. Benode Lal Roy. But as was pointed in Troilokhya Nath Mandal v. Abinas Chandra Roy, the case of Hafizuddin Mandal v. Jadu Nath Saha was not brought to the notice of the Division Bench that decided the case of Jogesh Chandra v. Benode Lal Roy. For this reason that decision was not followed either in Troilokhya v. Abinas or in Sures Kanta v. Nawab Ali Sikdar. In these circumstances, we adopt the view taken in Hafizuddin Mandal v. Jadu Nath Saha and hold that the claim of the Plaintiffs in so far as they are in a position to enforce a lien on immoveable property is not barred by limitation. This brings us to the question, whether the Plaintiffs are entitled to enforce a lien on immoveable property in respect of their entire claim.

On behalf of the Appellant, it has been contended that when Radhika Mohon Das died in 1900, the agency of the Defendant under him terminated. In support of this view, reliance has been placed upon sec. 201 of the Indian Contract Act, which provides that an agency is terminated by the death of either the principal or the agent. On behalf of the Plaintiffs-Respondents, it has been argued that a contrary view may be supported by a reference to the terms of sec. 209 which defines the duty of the agent on termination of the agency by the death of the principal. In our opinion, there is no foundation for this contention. Sec. 209 is in these terms:—When an agency is terminated by the principal dying or becoming of unsound mind, the agent is bound to take, on behalf of the representatives of his late principal, all reasonable steps for the production and preservation of the interests entrusted to him. This provision does not indicate that the agent continues to be the agent as he was before the death of the principal. If he continues to be the agent, no such provision as is embodied in sec. 209 is needed. On the other hand, if we contrast the provisions of sec. 253 which defines the effect of the death of any partner on a partnership, it becomes plain that under sec. 209 an agency is terminated by the death of the principal or the agent. Cl. (10) of sec. 253 lays down that, in the absence of any contract to the contrary, partnerships, whether entered into for a fixed term or not, are dissolved by the death of any partner. In sec. 209 we miss the expression “in the absence of any contract to the contrary” which finds a place in sec. 253. We hold accordingly that the agency of the Defendant was terminated in 1900 with regard to the share of Radhika Mohon Das, and that thereafter a new agency was created by implication in respect of that share as between the Defendant and the representatives of the deceased: Molienclra Nath v. Jadu Nath(6). In respect of the account of this share consequently the Plaintiffs are not entitled to enforce a lien on immoveable property under the terms of the original contract of the 5th September 1895 [Behari Lal v. Hara Kumar(7) and Sures Kanta v. Nawab Ali].

The question next arises, what period of limitation is applicable with regard to this portion of the claim of the Plaintiffs. On behalf of the Appellant, it has been contended that Article 115 applies and that as, on the 19th August 1904, the parties agreed that accounts would be submitted from year to year, there was a breach of obligation of the Defendant at the end of each year, so that under Article 115, this portion of the claim is barred by limitation. In support of this view, reference has been made to the decisions in Motilal v. Amin Chand(8), Easin v. Baroda Kishore, Jogesh Chandra v. Benode Lal and Jhapajhannessa Bibi v. Barna Sundari(10). The first three of the cases mentioned, no doubt, lend some support to the contention of the Appellant. But it must be observed that, as pointed out in Jhapajhannessa Bibi v. Bama Sundari, there is a strong current of authority in the contrary direction. The cases of Jogendm Nath v. Dev Nath Chatterjee(11), Shib Chandra Ray v. Chandra Narain Mukerjee, Hafizuddin Mandal v. Jadu Nath Saha and Chandra Madhab Barua v. Nabin Chandra Barua show that Article 89 is applicable to cases of this description. It is worthy of note that in the cases of Easin v. Baroda Kishore and Jogesh Chandra v. Benode Lal Roy, the attention of the Court was not invited to the decision in Shib Chandra v. Chandra Narain where it had been pointed out, on a review of the earlier authorities including the decision of the Judicial Committee in Asghar Ali Khan v. Khurshed Ali Khan, that Article 89 is applicable to a suit for accounts by a principal against his agent. We may observe parenthetically that the Appellant has argued that the case before the Judicial Committee was not in reality a suit by a principal against his agent. We are unable to give effect to this contention. The suit was brought by the then Plaintiff for money in the hands of the Defendant, who had consequently to account for the sum which he had taken and spent; and the Judicial Committee held that the suit was one for accounts, governed by Article 89 of the Indian Limitation Act. We hold accordingly that Article 89 is applicable in respect of this portion of the claim of the Plaintiffs. We do not think it necessary to refer the question for the decision of a Full Bench of this Court, first, because the point is really concluded by the decision of the Judicial Committee in Asghar Ali Khan v. Khurshed Ali Khan, and, secondly, because the later decisions to the contrary did not take notice of the earlier decisions which are precisely in point. It is further worthy of note that Mr. Justice Coxe who reluctantly followed the decision in Jogesh Chandra v. Benode Lal Roy in Jhapajhannessa Bibi v. Bama Sundari was of opinion that the contrary view taken in Shib Chandra v. Chandra Narain gave effect to the true intention of the legislature.

We now proceed to examine the effect of the application of Article 89 to the case before us. That article provides that a suit by a principal against his agent for moveable property received by the latter and not accounted for may be instituted within three years from the date when the account is, during the continuance of the agency, demanded and refused, or where no such demand is made, when the agency terminates. On behalf of the Respondent it has been strenuously urged that the case is governed by the second alternative, namely, that time runs against the Plaintiff from the date when the agency terminates. The reason for this contention is obvious, because if it prevails, the Plaintiffs would be entitled to accounts for the entire period claimed; for, as was pointed in Suras Kanta Banerjee v. Nawab Ali Sikdar and the same view had been taken by the Judicial Committee by implication in Jawahir Singh v. Lachman Das(15) and by the Bombay High Court in Nathubhai v. Devi Das(16), if the suit has been brought within three years, the Plaintiff is entitled to accounts for the entire period of the agency. The Appellant has fully appreciated the danger of this argument, and accordingly contended strenuously that the case falls within the first alternative, namely, that here the account was demanded and refused during the continuance of the agency. To substantiate this contention, reliance has been placed upon a letter written admittedly by the Plaintiffs to the Defendant on the 24th April 1909. In this letter, it was stated that the Defendant had submitted account papers for 1311 and 1312 but had not explained them. He was accordingly called upon to appear before the Plaintiffs and explain, as soon as possible, the accounts up to the end of the year 1312. The Defendant admittedly has not responded to this call. The question is, whether there has been a demand and refusal within the meaning of Article 89. Our attention has, in this connection, been invited to the cases of Hori Narain Ghose v. The Administrator-General of Bengal(17), Easin v. Baroda Kishore and Chandra Madhab Barua v. Nabin Chandra Barua. The cases of Hori Narain Ghose v. The Administrator-General of Bengal and Easin v. Baroda Kishore show that if there has been a demand for accounts and the agent has not responded to the call, there is, by implication, a refusal within the meaning of Article 89. A different view appears to have been taken in Chandra Madhab Barua v. Nabin Chandra Barua. In that case, there were apparently repeated demands by the principal, with which the agent had failed to comply. The Court held that as the demands were made while the business was in existence, limitation would run from the termination of the business. The facts of the case do not appear, however, fully either from the judgment or from the report; but, if this was intended as a formulation of a general principle applicable to all cases, we are unable to accept it as well-founded on principle. In our opinion, if there has been a demand, failure to respond to the demand is refusal within the meaning of Article 89. There may however be cases where omission to render accounts may not be a refusal within the meaning of Article 89. To take one illustration, if the principal demands an account and the agent submits papers, there is not necessarily a refusal on the part of the agent to render accounts. But, in the case before us, after the papers had been submitted, there was a further demand upon the agent to explain them. To this he failed to respond. In these circumstances, there was a refusal within the meaning of Article 89. Consequently the claim for accounts up to 1312, in respect of the share of Radhika Mohon Das, is barred by limitation. In respect of the accounts for the remaining period, there is nothing to show that there was a demand and refusal; consequently the claim for accounts from 1313 is governed by the second alternative in the third column of Article 89 and is not barred by limitation.

Finally, we have to deal with the question of the mode in which accounts should be rendered. On behalf of the Defendant, the position has been maintained that as soon as the Defendant as agent of the Plaintiffs submitted his account papers, his duty was discharged, and that the Plaintiffs are under an obligation to examine these papers without his assistance. In support of this position, reliance has been placed upon observations in Chand Ram v. Brojo Gobind Das(18) and Upendra Krishna v. Ramtara(19). We are unable to agree in the view put forward on behalf of the Appellant. The duty of an agent when he is called upon to render account to his principal was explained by the Judicial Committee in the case of Hurrinath Ray v. Krishna Kumar(20). It is well-settled that his obligation towards his principal does not terminate merely by the submission of account papers; he is bound to explain those papers, and if, on accounts taken, it is found that he has in his hands money which belongs to his principal, he is bound to pay that sum. This principle has been recognised in a long series of cases: Shushee v. Suleem(21), Mahomed Alai Ahmad v. Bibee Nusibun(22), Annoda Prosad v. Dwarka nath(23), Ram Chunder v. Manick Chunder(24), Shib Chandra v. Chandra Narain and Ramdas v. Bhagwat Das(25). But the Defendant here has not explained the papers, at any rate, the papers subsequent to 1310, and, consequently, he must render accounts when they are taken by a Commissioner.

As regards the submission of the papers, it has been argued on behalf of the Defendant that up to the time when collection was joint he had submitted some of the collection papers to the pro formâ Defendants and other papers to the proprietors of the eight annas share known as the Guha Babus. The Court of first instance found that the papers had been so submitted and in this view the Defendant is under no obligation to submit papers again to the Plaintiffs. It is plain, in so far as the papers relating to the time during which the collection was joint are concerned, that it is a matter between the landlords them selves and steps must be, taken by the Court at the instance of the Plaintiffs to compel the pro formâ Defendants and the Guha Babus to produce the papers which were made over to them by the Defendant. The powers of the Court in this respect are ample and have certainly not been exhausted; every endeavour must be made by the Court below to obtain the papers from those persons. But, we desire to make it clear that the Defendant cannot be held responsible for the production of the papers, if they are not produced by the persons to whom they were submitted by him.

There remains only one other point for consideration. On behalf of the Defendant it has been urged that the Trial Court found expressly in his favour that the papers up to 1310 had not only teen submitted but explained. Upon this point, the Subordinate Judge has not come to an explicit finding. One fact, however, is patent; namely, that the co-sharers of the Plaintiffs are satisfied with the accounts up to the end of 1310; they, at any rate, have not put forward a claim in respect of the accounts for that period. In view of the special circumstances of this case, we hold that in respect of the accounts up to the end of 1310, the Plaintiffs must establish that the accounts have not been explained to them by the Defendant. If they make this out to the satisfaction of the Court below, the Defendant must explain the papers before the Commissioner. But in respect of the period subsequent to 1310 the Defendant is clearly under an obligation to produce such papers as have not already been produced and to explain all the papers to the satisfaction of the Court.

The result is that this appeal is allowed in part and the decree of the Subordinate Judge varied in the manner following. The Plaintiffs, will have a decree for accounts against the Defendant in respect of one-eighth share for the entire period claimed in the suit, and for the sum which may be found due on account of this share, they will be allowed to enforce their claim by sale of the immoveable properties hypothecated. In respect of the one-eighth share originally vested in Radhika Mohon Das, the claim for accounts is dismissed up to the 13th April 1906 (that is, up to the end of the year 1312). But the Plaintiffs are entitled to an account in respect of that share for the period commencing with the 14th April 1906 (corresponding to the 1st Baisakh 1313) up to the date of the termination of the agency on the 7th August 1908. In respect of any sum which may be found due to the Plaintiffs with regard to this share, the Plaintiffs will have a money decree against the Defendant. Steps will be taken by the Court below to compel the pro formâ Defendants and the proprietors of the one-fourth share who are not parties to this suit, to produce such papers as were placed in their hands by the Defendant. The Defendant will explain the accounts subsequent to 1310 and he will produce such papers as have not already been filed by him. In respect of the accounts antecedent to 1310, the Plaintiffs must establish to the satisfaction of the Court that they have not been explained by the Defendant; and the Defendant will be called upon to explain the accounts antecedent to 1310, only if the Plaintiffs establish this. If the Court fails to secure the production of the papers made over to the co-sharers of the Plaintiffs, the accounts covered thereby will be taken only if the Plaintiffs are able to place other relevant materials before the Commissioner; if the Plaintiffs fail to do so, the accounts covered thereby will not be taken. Each party will pay his costs in this Court. The costs in the Court of first instance and before the Subordinate Judge, as also the costs of the accounts now directed, will abide the ultimate result of the suit.