K. Muneyya and Others vs P. Venkayya and Others

Jaganmohan Reddy, J.—The Plaintiffs-Appellants sued the Defendants for recovery of Rs. 1,588-1-0 being the balance due of Khata dealings between them inclusive of a fine of Rs. 600/- and Rs. 523-3-0 towards legal expenses, rents and interest incurred by the Plaintiffs in defending criminal proceedings against them. The first Defendant is a firm carrying on business at Bezwada in pulses and millets etc. being represented by the managing partner, Rao Sahib Potti Swamy, who died after the suit was filed, when Defendant No. 6 was added as his legal representative in LA. 1239/47 dated. 14-8-1948. The case of the Plaintiffs is that the Defendants had .dealings with them and were purchasing from time to time cholum, ragi and pulses from (chin, that on 28-5-43 the Defendants purchased 128 bags of cholum, on 7-6-43, 52 bags of cholum and on 9-7-43. 5 bags of ragi, that for all these they paid part of the price, that at the time of these purchases the Defendants'' agent, Chekka Bapanayya, it is alleged, represented to. the Plaintiffs that die Defendants-firm had a licence to purchase millets and acting on that representation the Plaintiffs sold the cholum and ragi. It is further alleged that the said Bapanayya left the goods with the Plaintiffs representing to them that he would Btain a permit from the District Collector, West Godavary to move them to Bezwada but in the meanwhie the Asst. Commercial Tax Officer, West Godavary examined the accounts of the Plaintiffs'' firm and discovered that they had sold millets to the Defendants who had no licence to deal in them and therefore he Juiced a complaint: against the Plaintiffs in C. C. 2 of 1944. ''the Plaintiffs were convicted by the Deputy Fust (.''lass Magistrate, Eluru and sentenced each to a line of Rs. .150/- which amounted to Rs. 600/- as there were four partners in the Plaintiffs'' firm. The Plaintiffs filed an appeal being C. A. 69/44 in the Sessions Court of West Godavary but that was dismissed and so was also a Criminal Revision Petition No. 914/44 filed in the High Court. In conducting the defence and appeals the Plaintiffs alleged that they had incurred expenses iiicmdi. g fees to the Counsel amounting to Rs, 553-2-0 which the Plaintiffs claimed the Defendants were bound to-make good. They further claimed that since the goods were left in their custody by the Commercial Tax Officer from the date of their seizure to 6-7-1945 when they were delivered to the Defendant; they were entitled to Rs. 395-4-0 at die rate of Rs. 0-1-0 per bag per month and also claimed interest at 9 per cent, per annum on the balance of the price and other expenses incurred by them. The Defendants did not deny the purchase of chillum and Ragi on the dates mentioned by the Plaintiff, but they denied that they or their clerk, Bapanayya made any representation to the Plaintiffs as alleged and they further denied the correctness of the account. They filed a copy of their own account which showed that they over-paid the Plaintiffs to the extent of Rs. 2-5-6. They further denied that, the Plaintiffs were; entitled to receive any go down rent and at any rate the; usual rent charged by all Commission Agents in Eluru was As. 4 per 10 bags per month, that they were not liable to pay tile Plaintiffs any damages towards fine paid or other expenses incurred by the Plaintiffs in defending criminal proceedings, nor are the Plaintiffs entitled to any interest. The trial court found that the Plaintiffs were bound to satisfy themselves before they sold cholum and Ragi to the Defendants that they had the necessary licence, to purchase the same, and that they were not entitled to recover Rs. 600/- or other expenses incurred by them in defending criminal case and appeal, that there was no amount due from the Defendants for the balance of sale price to the Plaintiffs, that no rent was payable by them and no interest was thereupon due. The suit was consequently dismissed with costs. In appeal the appellate court held that the Defendants had misrepresented to the Plaintiffs that they had necessary licence to purchase the millets, that the Plaintiffs bona fide believed them and sold the same, that the Defendants were made liable to make good the loss incurred by the Plaintiffs, that they wore entitled to go-down rent at As. 4 per 10 bags per month and interest at 6 per cent, per annum and in this view passed a decree in favour of the Plaintiffs, for a part of the amount.

In S. A. No. 935 of 1949 (A) the High Court set aside the judgment in appeal and remanded the case for fresh disposal according to law. After the remand the first appellate court considered the evidencb afresh and held that Bapar.ayya who is alleged to have made the representation was not o.\\amin-ed by either party, and even if Bapanayya''s deposition in the criminal case, Ex. B. 20, was taken into consideration, it did not show that any representation was made as alleged. In these circumstances it held that the Plaintiffs were bound to insist upon the production of the licence itself or to make independent inquiries- and satisfy themselves that the Defendants had possessed that licence. It is not sufficient to say that the Plaintiffs merely believed the representation of the Defendants because the Defendants happened to be doing business on a very large scale and paying Income Tax to- the Government, nor does it avail the Plaintiffs to say that the Defendants purchased millets'' from other merchants in Eluru at or about the same time. The learned Judge observed:

If that is true, ii only shows that the Plaintiffs were themselves responsible for believing that the Defendants had a licence to purchase millets and cannot blame the Defendants.

He further held that the Plaintiffs were themselves Particeps Criminis and having participated in the commission of the offence, they cannot seek to recover any fine paid or other expenses incurred by them. In so far as the purchase price of the goods bought is concerned both the courts held that that has been paid off and the amount now sued for represented substantially a sum of Rs. 600/- paid towards fine and other legal expenses, godown rent and interest. In the result it dismissed the appeal.

In this Second Appeal the learned Advocate for the Appellants, Sri Sankara Saslry, contends that where a representation is made that the Defendants were possessed of a licence and the Plaintiffs acting upon that representation sold them goods and were consequently convicted of an offence dm; to a transgression of law, the Plaintiffs are entitled to recover the loss suffered by them due to this false misrepresentation. On behalf of the Respondents it: is urged that since Plaintiffs were participants in the crime and were proved to be guilty, they cannot come to court and sue the Defendants for being indemnified. He relies on a Bench judgment in E.A. Janu Sait Vs. N. Ramaswami Naidu, i In that case Plaintiff and Defendants who were both merchants entered into a .contract for the purchase of rice from the Defendant on certain terms which were contrary to the rule in accordance with which alone import and transport of rice was permitted. The Defendant obtained a licence from Government to import certain rice from Burma, which he agreed to sell to the Plaintiff. The rice was delivered to the Plaintiff but shortly afterwards 2123 bags were dorm and eared by the Government and the Plaintiff had received only the actual controlled price, whereas he had paid to the Defendant a considerably larger sum. The balance of 1320 bags had already been re-sold by the Plaintiff and the Government took no action in regard to them. The Plaintiff therefore claimed damages for loss which he had sustained by this action on the part of the Government and alleged that he sustained this loss owing to fraudulent representations of the Defendant. In that case Phillips, J., observed at page 628.

If the Plaintiff was aware of the conditions governing the sale of rice, conditions which had been, enacted by Government for the good of the country generally, it is obvious that, in entering into this contract in contravention of those conditions, the Plaintiff knew, that he was inducing the Defendant to sell the rice to him, and that such sale was undoubtedly opposed to public policy, if not actually illegal..........., it is clear that the contract was opposed to public policy. under Sections 23 and 24 of the Contract Act the contract is, therefore, void and the Plaintiff can base no claim upon it.

Dealing with the argument that the claim was not based upon the contract but upon the fraud of the Defendant the Bench held that such fraud was not proved, but even if it is so, there can be no clime apart from the contract, and that when both parties are in Pari Delicto the maxim in pari delicto potior est conditio possidentis applies and the Courts will not assist the Plaintiff to recover in such a case.

The learned Advocate for the Appellants submits., that tire case is distinguishable because there it was held that no fraud was proved. He cites in support of his contention the case of Burrows v. Rhodes and Jameson, 1899 1 QB 816 (C). In this case a person was induced by the fraudulent misrepresentation of another to do an act which in consequence of such misrepresentation he believed to be neither illegal nor immoral but which is in fact a criminal offence; that is, he was persuaded to join tho expedition to invade the territory of a friendly power with a hostile armed force on the representation that the service on which they wished to em''poy him was lawful, that it was necessary to protect women and children and drat this expedition had the sanction of Her Majesty''s Government.

It turned out that these representations were false and the Plaintiff suffered damages by loss of his kit, loss of earnings, loss of pay, loss of leg etc., amounting in all to about 3,000. It was there held that if a person has knowledge that a particular offence is criminal he has no right of indemnity. Kennedy, J., at page 830 observed:

But I am unable to accept the Defendant''s proposition, where the act, though a criminal of l''ence-inalum prohibited is, upon the state of facts which the doer by the fraudulent misrepresentation of the person against whom he claims indemnity had been? induced to believe to be the true state of facts, neither criminal nor immoral.

Grantham J., stated at page 827:

As the Defendants have entirely failed to refer us to any authority that in my judgment justifies their contention that the Plaintiff''s declaration discloses no good cause of action for which he can sue, I am glad to be able to say that our law has been purged'' from the suggestion that fraud and false representation injurious to an innocent person can be committed with impunity if the injured person has by such fraud and false representation been unwittingly and. innocently made to commit what the law has said shall be called a crime.

In the above referred case tire facts clear demonstrated that the representation was to the effect that the raid was legal, moral and laudable and the Plaintiff in his belief, innocently got into it and suffered loss. He did not know that it was a crime. It true that in the case of Merry weather v. Nixart, (1799) 8 STR 186 (D), "the rule that one wrongdoer cannot have redress or contribution against the other was settled, bat Best, C. J., in Adamspn v. Jarvis (1827) 4 Bing 66, at p. 73 ''(E), said that the rule in (1799) 8 STR 186 (D), is confined to cases where the person seeking redress must be presumed'' to have known that he was doing an unlawful act.

It is submitted by the Plaintiffs Advocate that in (1899) 1 QB 816 (C), the plaintiif was only exposed to criminal action but in this case the Plaintiffs were in fact convicted, and that is why the law does not help the participant in crime. The true distinction to my mind "is not whether the person was convicted or was exposed lo criminal prosecution, but whether any fraudulent representation was made to the Plaintiff to induce horn to act on that representation in the belief that it was neither illegal nor immoral to be so or whether acted with the knowledge that lie would be exposed to criminal action.

In the Madras ease of All 1923 Mad 626 (B), the Plaintiff had knowledge of the existence of rules relating to the sale oi rice in the port on entry to a person not approved by the Collector of the District j and he purchased it knowingly that he was not one of the persons on the approved list. It appears prima facie that if a misrepresentation or fraud such as that made in (1899) ,1 QB 816 (C), was made and the Plaintiff was induced to act thereon innocently and was convicted for the offence for having so acted, a question of indemnity may arise, but that question does not arise in this case because both the courts had held that no such representation was made to the Plaintiffs.

The person who is supposed to -have made representation was not examined, nor does it avail the .Appellant to say that he was at one time in the employ of the Defendants and that therefore he could not summon him on his behalf. When the Plaintiffs set out to prove a particular representation, they should call all the persons who can substantiate it. There is only the evidence of the Plaintiff himself and even that does not specifically show that any representation as alleged has been made. P. W: 2 stated that Bapanayya gave Defendants'' licence number as 290 and that he also gave a company letterhead paper in which the above licence number was written.

In cross-examination he says that there was no signature of Bapanayya for the interest item, there was no arrangement with him for payment of god own rent nor did he intimate Defendants that he had engaged a lawyer, namely, Sri Srinivasa Rao, in the ''first two courts, and Jayaramayya in the High Court. He further states that when Bapanayya was asked about the licence number he gave Ex. P. 3 to him and that he did not ask for any more particulars, nor did Bapanayya give him any particulars.

It is a fact that the Defendants had a licence No. 290 which was for pulses and on the Plaintiff''s own evidence it appears that he asked merely for the number of the licence which he obtained. He did not ask Bapanayya as to what that licence permitted him to purchase nor did he take any further steps to ascertain that the Defendants-firm was authorised to purchase millets. There is also the Defendants'' evidence which goes to show that when "they came to know that Bapanayya had purchased these goods, they were angry with him and immediately applied to the Collector for permission to move them from that District.

They explained the matter to the Board of Revenue and consequently no proceedings were taken against him. Both tire courts had evidence before them upon which they could come to the conclusion that no representation as alleged has been proved or that Bapanayya was authorised by the Defendants to take any such representation. This being only a question of fact no interference in the judgments of the lower courts is called for. The appeal is, therefore, dismissed.