Manasseh Film Co. v. Gemini Pictures Circuit, Madras

The plaintiff is a firm called Manasseh Film Company and its only partners are A. Thiruvengada Mudaliar and his undivided minor son Soundararajan. The suit has been brought for the recovery of a sum of Rs. 4,500 which the plaintiffs paid to the defendants—Gemini Pictures Circuit—in connection with the hiring of a picture called Baktha Naradar which was being produced by the defendants at Madras and which the plaintiffs wanted to exhibit in the Federated Malay States, Singapore and Penang. The hiring was to be for a period of three years in consideration of a payment of Rs. 9000. It is stated in the plaint that the understanding between the parties was that the delivery of the picture was to be on the 1st March 1942. Owing to the outbreak of war between Japan and Great Britain, the contract became impossible of performance and hence the plaintiffs seek a return of the sum paid by them together with interest, which they have roughly fixed at Rs. 5,050, apparently to bring the suit in the High Court, as otherwise it would have had to be instituted in the City Civil Court with heavier Court-fees.

The main defence is that there was no such frustration of venture as to justify the plaintiffs in demanding a return of the money paid by them. The defendants do not admit that delivery of the picture was to be on the 1st March. They also put the plaintiffs to proof of the fact that the firm consisted of no others besides Thiruvengada Mudaliar and his undivided son.

At the trial, Mr. V.C Gopalratnam appearing for the defendants wanted to raise a point of law, namely, that as the plaintiffs were alien enemies according to their own showing in the plaint, the suit could not be maintained. He filed a Judge's summons for this purpose and I allowed him to raise the question.

On the evidence given by A. Thiruvengada Mudaliar for the plaintiffs and none was examined for the defence it is clear that he and his undivided minor son are the only proprietors of the firm. There was another partner called Manasseh prior to February 1940; but the partnership was then dissolved. He had also stated that it was agreed that the picture should be delivered by the 1st March 1942.

Mr. Gopalratnam conceded very properly that he could not maintain the position that there was no frustration of adventure and that his clients were not under a liability to return the sum of Rs. 4,500 which they had received in connection with the exhibition and the exploitation of the picture in the Federated Malay States, Singapore and Penang. He would not have made this concession if the law was really as laid down in Chandler v. Webster (1). But the latest decision of the House of Lords in Fibrosa Spolka Ackyjna v. Fairburn Lawson Combe Barbour Ltd. (2), has laid down that the proposition of law in Chandler v. Wesbster , could not be supported and that the decision should be overruled.

Therefore the learned Advocate for the defendants had to pin his faith on the new objection that the plaintiffs were alien enemies. It is for the defendants, who say that the plaintiffs are alien enemies, to make out that there are facts and circumstances which will bring them within this description in the eye of the law. The allegations in paragraphs 3 and 4 of the plaint were relied on in this connection. They are to the effect that the company was formed in the Straits Settlements at Singapore to distribute and exhibit talkies and movies, that the plaintiffs had been residents of Singapore for a long period, and that, when the first plaintiff came over to Madras in or about October 1941, he had authorised one Mr. Wong Si Loong by means of a power-of-attorney to act on his behalf in connection with the affairs of the company during his absence from Singapore. The suit contract was concluded at Madras in the month of November 1941, as the receipt for the payment of Rs. 4500, marked Ex. P-1, dated 4th November 1941 would show. In his affidavit dated 30th June 1942, in support of the application for permission to act as the next friend of his son, the first plaintiff stated once again that he and his son were the “proprietors of Manasseh Film Co., formed and run by us at Singapore.” It was urged that on these statements made by the plaintiffs themselves they were alien enemies and that they could not maintain the suit.

Apart from English decisions on the subject, the question whether a person is an alien enemy has to be determined on the terms of S. 83 of the Civil Procedure Code and the Defence of India Act, 1939, and the rules thereunder. The plaintiffs are not alien enemies by reason of their nationality. They are not Japanese or Germans, but Indian subjects of the Crown, now residing in British India. Even alien enemies permitted to reside in British India, which permission may be presumed from the mere fact that they are residing in British India without objection can institute a suit in British Indian Courts as if they were subjects of His Majesty. The explanation to S. 83 of the Code does not apply for several reasons. First of all, the plaintiffs are not residing in a foreign country. Secondly, the words “The Government of which is at war with the United Kingdom of Great Britain and Ireland” mean obviously the lawful or recognised Government of the foreign country in question. It can have no application to such Government as may prevail temporarily at Singapore owing to its military occupation by the enemy a Government to which no recognition has been given or could be accorded by Great Britain. Holland, for instance, occupied by Germany cannot be said to be at war with us; on the other hand it is our ally with its Government functioning in England for the time being. Thirdly, there is nothing whatever to show that the plaintiffs are carrying on business “in that country” that is, a foreign country the Government of which is at war with the United Kingdom of Great Britain and Ireland. They were carrying on business till October 1941 in Singapore and it was no doubt intended by the power-of-attorney that was given to Mr. Wong Si Loong that the business was to be continued even after the plaintiffs left the place. But there are no data for holding that the business is still being continued notwithstanding the declaration of war between Japan and Great Britain in December 1941, unless we are to presume that a state of things which continued till October 1941 is still continuing notwithstanding the outbreak of hostilities and the military occupation of Singapore by the enemy. Such a presumption could be unwarranted. The overrunning of an allied country by the enemy does not by itself render a person resident in such country or a company incorporated in such country and carrying on business there an alien enemy. This position is laid down in the case of In re An Arbitration , and can be deduced from a proper interpretation of the language of the explanation to S. 83 of the Code. Whether the word “and” in that section was deliberately used to postulate the need for the existence of both the conditions before a person could be treated as an alien enemy, or whether it was meant to convey the disjunctive “or” and one of the requisites is alone enough to make a person an alien enemy, there should be, in either view, a foreign country, the Government of which is at war with the United Kingdom of Great Britain and Ireland. Residence in any other foreign country—we shall assume for the purpose of this case that Singapore was and is a foreign territory—or the mere carrying on of business in such country is not enough to render the person or the company an alien enemy disentitled to sue in British Indian Courts.

It was urged strenuously by the learned Advocate for the defendants that a different result followed from a consideration of the Defence of India Act, 1939, and the rules framed thereunder, and he referred to the definitions of “enemy” and “enemy territory” given in R. 2 and to the rules commencing with R. 97 in Part XV of the said rules. “Enemy” is a person or State at war with His Majesty, and “enemy territory” includes “any area which is administered by, or for the time being in the occupation of, a State at war with His Majesty.” The plaintiffs are not at war with His Majesty. Singapore, no doubt, is now administered by or is in the occupation of Japan, which is a State at war with His Majesty and may be said to be “enemy territory” for this reason. But this interpretation does not take note of the further words found in Sub-Cl. (a) of Cl. (2) of R. 2, namely, “not being an area in the occupation of His Majesty or of a State allied with His Majesty.” These words cannot mean the existing state of affairs but have obvious reference to the nature of the area before it was occupied by the enemy. If the area was in the occupation of His Majesty or of a State allied with His Majesty, the mere fact that it has been overrun by an enemy and is in the military occupation of that enemy for the time being will not render the territory “enemy territory” within the meaning of R. 2. Let us now look at Part XV. There is nothing in the rules contained in this Part which can be said to widen the definition of “enemy” or “enemy territory” and bring within its scope persons who would not otherwise be such. Cl. (b) of S. 97 does not apply because the plaintiffs are not “resident in enemy territory”. Cl. (c) has no application either as they are not a “body of persons constituted or incorporated in enemy territory, or in, or under the laws of a State at war with His Majesty.” They have not been declared by the Central Government to be enemies, to attract Cl. (d). Cls. (e) and (f) alone remain for consideration. Cl. (e) can be ruled out as the company is not “controlled by a person who, under this rule, is an enemy.” Cl. (f) will come in only if it is established, the burden being on the objector to the suit to prove this, that the individual or body of persons is carrying on business in enemy territory as defined by the rules. The other rules that were referred to, namely, Rr. 98, 99 and 104 and Sub-R. (4) of R. 114 are all dependent upon the applicability of R. 97. As there is no “enemy” or “enemy territory” the very foundation of the objection is demolished.

In the course of his argument, Mr. Gopalratnam referred to Porter v. Freudenberg , Daimler Co., Ltd. v. Continental Tyre and Rubber Co. (Great Britain) Ltd. and Janson v. Driefontein Consolidated Mines Ltd. (3). These decisions establish the following propositions. The test to determine whether a person is an alien enemy or not is not nationality, but the place of carrying on business. Such an alien enemy cannot sue in our Courts, but can be sued. His right to sue or proceed either by himself or by any person on his behalf in the King's Courts is suspended during the progress of hostilities and until after peace is restored. A Company incorporated in England but with all its shares except one held by a German Company and all its directors resident in Germany will be deemed to be an enemy company, though on this point there was a slight difference of opinion expressed by four of the learned Law Lords. In the case before us, however, there are no facts which justify us in holding that the Manasseh Film Co. having as its partners Thiruvengada Mudaliar and his undivided son, is an alien enemy. It is not an incorporated body. It consists only of these two persons as its proprietors. They are both resident here. They are British Indian subjects. From the fact that the company was originally formed at Singapore and continued to exist there till October, 1941 or even thereafter, we cannot conclude that it is still carrying on business at that place. Even if the plaintiffs were resident in Singapore on the date of the suit and the company was carrying on business at that place, it cannot be said that they are alien enemies, merely because Singapore has been subjected to military occupation by the enemy. So far as I am able to see there is nothing in the Defence of India Act and the rules made thereunder which compels us to hold that they are such enemies. The contract was made here with the defendant company which is here, the money is repayable here and the plaintiffs are residing here. By directing the return of the money which has to be returned because the venture or adventure has become frustrated by reason of the outbreak of hostilities and the contract has therefore become void, we are not authorising any trade with the enemy in the sense that any commercial, financial or other intercourse with the enemy is being encouraged or sanctioned. If there is nothing in S. 83 of the Code and the Defence of India Act and the rules to prohibit the passing of a decree in plaintiffs' favour, it is not strictly necessary for us to go elaborately into English decisions except it be for understanding the principles which should govern us in the decision of these cases though they may be of help in interpreting the language of the section or of the rules.

For the reasons given above, I am of the opinion that the plaintiffs cannot be regarded as alien enemies disentitled to sue for the return of the money that they had paid in respect of a contract that has become void and for which the consideration to move from the other party has entirely failed for reasons beyond the control of both the parties to the contract. Reference may be made in this connection to Ss. 56 and 65 of the Contract Act. A contract to do an act which, after the contract was made, has become impossible, becomes void when the act becomes impossible. When a contract becomes void, any person who has received any advantage under such contract is bound to restore it or to make compensation for it to the person from whom he received it. The rule in Chandler v. Webster is not the law under the Indian Contract Act. Fobrosa Spolka Ackyjna v. Fairburn Lawson Combe Barbour Ltd., merely brings the English Law into line with the Indian Law.

There will be a decree in favour of the plaintiffs for the sum of Rs. 4,500 with interest at six per cent per annum from the date of the plaint till the date of realisation.

Mr. Gopalratnam said that, as the defence proceeded on the basis of Chandler v. Webster and as the House of Lords' case reversing that decision appeared only after the written statement was filed, his clients should be excused the payment of costs. At first I was inclined to agree with him, but on going through Ss. 56 and 65 of the Contract Act, I find that there was little justification for the view that the rule in Chandler v. Webster was the law in India. Costs, I am afraid, must follow the event.

He asked me to stay the execution of the decree till he preferred an appeal and got an order from the appellate Court. While I consider that this is perhaps a proper case for an appeal so that we may have an authoritative pronouncement of a Bench of this Court on the point of law raised by the defendants in bar to the maintainability of this suit, I do not think that any foundation has been laid for the grant of an immediate stay. I shall however make an order that no execution shall proceed without notice to the defendants.

N.R.R