LAW CASES

LAW CASES

FOR

CORPORATE LEGAL ENVIRONMENT

Submitted by

Pranav Sood Roll No- 400907018

LMTSOM THAPAR UNIVERSITY

CONTENTS

1. Case 1 : State of Gujarat v. Memon Mahommed 2. Case 2: Subhas Chandra Das Mushib v. Ganga Prosad Das Mushib and Ors. 3. Case 3: Kuchwar Lime & Stone Co. v. Dehri Rohtas Light Railway Co. Ltd. & Anr. 4. Case 4: Addanki Narayanappa & Anr. v. Bhaskara Krishtappa & Ors. 5. Case 5: Kalka Prasad Ram Charan v. Harish Chandra 6. References

Case 1 : State of Gujarat v. Memon Mahomed 1967 SCR (3) 938 FACTS: Two trucks of the respondent were seized by the appellant state for alleged smuggling; they were kept outside in open where they were totally uncared for so much so that a greater part of their machinery was pilfered away leaving only the their skeletons. They were afterwards auctioned as unclaimed property under the orders of Magistrate. In the meantime, respondent, in appeal, obtained decree for return of the vehicles as against the order of confiscation of Customs Authority. However, when he was informed of such auction, he sued government for the return of the vehicles or in alternative value for them. CONTENTIONS: Respondent- On behalf of the respondent, the contention urged was that though the seizure might be lawful and under the authority of the Statute, the State Government was from the time that the said goods were seized until the decision of the appeal, in a position of a bailee and was, therefore, bound to take reasonable care of the said vehicles. Appellant- There was no bailment nor can such bailment be inferred as s. 148 of the Contract Act requires that a bailment can arise only under a contract between the parties. ISSUE: Whether the State was liable to compensate the respondent? HELD: As the seizure of trucks was carried out with jurisdiction and as they were sold pursuant to a judicial order, no liability can be attached on the State Government for their disposal by public auction.

But between their seizure and the auction there was a statutory duty implicit to take reasonable care of the property seized. This is so because the order of confiscation was not final and was subject to an appeal and a revision, with the State being aware of the same. The state was also aware that if the said order was set aside, the property would have to be returned to the owner thereof in the same state in which it was seized except as to normal depreciation. In spite of this clear position, while the appeal was still pending State allowed its police authorities to have trucks disposed of as unclaimed property. “There being thus a legal obligation to preserve the property intact and also the obligation to take reasonable care of it so as to enable the Government to return it in the same condition in which it was seized (let apart the natural depreciation), the position of the State Government until the order became final was that of a bailee.” The contention of the State that there can be no bailment without any contract is not well for “Bailment is dealt with by the Contract Act only in cases where it arises from a contract but it is not correct to say that there cannot be a bailment without an enforceable contract.” In fact, a finder of goods is also obliged by law to take reasonable care of the goods till the owner such that his rights and obligations are similar to that of bailee without any contract to that effect. Similarly, State was also obliged by the law in pari materia as bailee to take reasonable care of the trucks. Therefore, State would be liable to the value of the trucks.

Case 2: Subhas Chandra Das Mushib v. Ganga Prosad Das Mushib and Ors. 1967 SCR (1) 331 (Section 16 of Indian Contract Act, Undue influence, Burden of proof) FACTS: Plaintiff claimed that the will deed of his father conveying the entire property to defendant, plaintiff‟s nephew, was brought about by exercising undue influence over the donor. To the contrary, the deed details that the gift of the property was made out of natural love and affection between the donor and defendant. Further, after the conveyance of the property to defendant, when some suit arose on the independent settlement deeds executed upon the transferred property (before the death of the plaintiff’s father,i.e. donor), donor explicitly filed the statement that “he no longer holds any interest in the property”. Nevertheless, High Court assumed the presence of undue influence vitiating the deed on account of the relations between the donor and defendant being of a grandparent and grandchild. ISSUE: Whether the deed of gift was brought about by the undue influence? HELD: U/s 16 of Indian Contract Act (ICA), the first thing to prove so as to claim undue influence is the existence of such a relationship between the parties that one is in a position to dominate the will of the other. But mere relationship of such a nature will not raise any presumption of undue influence; for it must be further proved that the defendant had used such a relation to obtain an unfair advantage over the plaintiff. U/s 16(2)(a) the phrase “real or apparent authority” can be taken to mean “relations of the parties such that one naturally relied on the other for advise and the latter was in a position to

dominate the will of the first in giving it”. The Court observed that no presumption of undue influence arises in case of gift to a son, grandson, son-in-law, although made during the donor‟s illness or old age. Though, the relationship of solicitor-client, spiritual advisor and devotee, doctor-patient, parent and child are those in which such a presumption arises. The statement filed by donor that “he no longer holds any interest in the property” shows that he was fully conscious and consented the transfer of property to the defendant. Further, the fact that donor was actively involved in the management of his property clearly proves that no undue influence was exercised over him.

Case 3: Kuchwar Lime & Stone Co. v. Dehri Rohtas Light Railway Co. Ltd. & Anr. 1969 AIR 193 (Implied Agency) FACTS: A quantity of coal was booked by a Colliery to the appellant Company carriage to Banjari station on the respondent Railway‟s line and the freight on the consignment was to be paid by the appellant Company. The Company declined to take delivery of a part of the consignment which reached Banjari on November 12, 1954 on account of inferior quality of the coal. After some correspondence between the parties as well as with the Coal Controller, the Railway sold the coal by public auction on June 2, 1955, after serving a notice on the appellant. It thereafter filed a suit against the Company claiming outstanding amount of freight and demurrage charges for 202 days during which six wagons in which the coal was loaded were detained and „sought a decree for Rs. 17,625/14/- after giving credit for the amount realized from the sale of the coal. ISSUES: 1. Whether consignee liable to pay after refusing to accept consignment? 2. If railway entitled to demurrage for full period or obliged to unload and claim demurrage only for reasonable period? HELD: Trial court: The trial court granted a decree for about Rs. 1,620/- with interest, but in appeal the High Court decreed the Railway‟s claim in full. High Court: The High Court modified the decree passed by the Trial Court and decreed the claim of the Railway against the Company in full.

SUPREME COURT: Contentions Company (i) The Company being a consignee of the goods booked by the Colliery there was no privity of contract between the Company and the Railway and no claim for demurrage or freight lay at the instance of the Railway against the Company; (ii) In any event the Railway ought to be awarded demurrage for only 22 days out of the total period for which the wagons were detained. (iii) It is only in those cases where delivery of goods is taken by the consignee that the liability to pay demurrage may be imposed upon him. J.C. Shah, J. It is clear that the Colliery supplied coal in pursuance of the “sanction order” in favour of the Company and arranged to transport it in wagons which were allotted for that purpose by order of the Deputy Coal Commissioner. Under the forwarding notes the freight was made payable by the Company. In these circumstances, it would be reasonable to infer that the Colliery was acting as an agent of the Company in entering into the contract of consignment and the liability for payment of freight and of demurrage charges for failure to take delivery of the goods lay upon the Company. The High Court erred in holding that the Company was liable to pay demurrage for the full period of 202 days. Railway was entitled to demurrage for the detention of wagons for only one month and cannot claim the entire amount. The Railway was in the position of a bailee qua the Company and was bound to minimize the loss. It could have sold off the coal under s, 56 of the Railways Act. Even assuming that in view of the Colliery Control Order, the Railway could not sell the coal without the Coal Commissioner‟s sanction, it could have unloaded the coal from the wagons and put the wagons to use. Hence, the consignee could be liable only for wharfage.

(w.r.t 3rd contention of the company) There was no force in the contention that it is only in those cases where delivery of goods is taken by the consignee that the liability to pay demurrage may be imposed upon him. Even where the consignee does not ultimately take delivery, if the wagon is detained for his benefit, normally the Railway would be entitled to hold him liable for demurrage.

Case 4 :Addanki Narayanappa & Anr. v. Bhaskara Krishtappa & Ors. 1966 SCR (3) 400 (Movable-Immovable Property) FACTS: The members of two Joint Hindu families (Appellants and Respondents) entered into partnership for carrying on business. The members of one family filed a suit in 1949 for dissolution of the partnership and the taking of accounts. The members of the second family raised the defence that the partnership was dissolved way earlier in 1936 and that accounts were then settled between the two families. They relied upon an unregistered document, which showed that the partnership had come to an end. CONTENTIONS: Appellant-Plaintiff Since the partnership assets included immovable property and the document recorded the relinquishment by the members of AP‟s family of their interest in those assets, the document was compulsorily registerable under s. 17(1) (c) of the Registration Act, 1908; and as it was not registered, it was inadmissible as evidence to prove the dissolution as well as the settlement of accounts. Respondent-Defendant 1. There is no cause of action as the entire claim is in fructuous. 2. The suit was time barred. ISSUE

Whether, the interest of a partner in partnership assets comprising of movable as well as immovable property should be treated as movable or immovable property for the purposes of s. 17(1) of the Registration „Act, 1908? JUDGEMENT: Supreme Court (MUDHOLKAR, J) 1. The document only records the fact that the partnership had come to an end. It cannot be said to convey any immovable property by a partner to another, expressly or by necessary implication, nor is there any express reference to any immovable property, except a recital of a fact which had taken place earlier. Therefore, the unregistered deed of release by one family of its share in the partnership was admissible in evidence, even though the partnership owned immovable property. 2. (w.r.t 2nd contention of respondent)SC didn‟t deal with this argument since the case was adjudged within the first argument itself. The SC stated that limitation would arise only if the cause of action would exist. Law Points 

The interest of a partner in partnership assets comprising of movable as well as immovable property should be treated only as movable property. His right during the insistence of the partnership is to get his share of the profits from time to time, as may be agreed upon among the partners, and his right after the dissolution of the partnership, or with his retirement from, the partnership, is only to receive the money value of his share in the net partnership assets as on the date of dissolution or retirement, after a deduction of Liabilities and prior charges.



Property of the firm, under S.14 of the Act means that the partners are the joint owners and there is no individual ownership over the partner.“Whatever at the commencement of the partnership is thrown at the common stock and in the course of time has been owned by the partnership belongs to the firm unless contrary has been proven.”



If the partners buy their own property and then convert it as a common property of the partnership then it can only happen when the partners agree in a contract to hold the

property as a common property. This conversion takes place by means of intention. Unless and until the intention of the parties to bring the property as a common stock in trade is present the partner cannot give up his identifiable share in the property. 

If there is an immovable property then that property has to be liquidated in the form of money and then the partners‟ share has to be settled in accordance to section 48 of the Partnership Act.

Case 5: Kalka Prasad Ram Charan v. Harish Chandra AIR 1957 All 25 (Section 54(2) of Sale of Goods Act, Right of an unpaid seller, Right to lien) FACTS: Harish (H) entered into a contract for sale of 67 thans of silk with Kalka Prasad (K) (a partnership firm). 10 thans were delivered immediately. Delivery of the remaining, were not accepted by K. H sold off the remaining thans and then notified the K about the sale. But due to a government control order the sale fetched a price considerably less than what had been agreed between the two. H brought a claim to recover the damages after deducting the price from the sale. HELD Trial Court: There was a contract. Case awarded to H without considering the question whether notice of the intended sale was given to K. HIGH COURT:

CONTENTIONS: H 1. Breach of contract, as delivery of the 57 thans not accepted and no payment made. 2. Two notices had been sent to K, one stating that if they did not accept the 57 thans they would have to pay damages and second stating that the 57 thans had already been sold. 3. S.54 (2) of SOGA not applicable as a seller‟s exercise of the right of lien begins when a demand for delivery is made from him by the buyer and is followed by a refusal by him.

But since this did not happen so it was not an exercise of lien, as per section 47 of SOGA. 4. Buyer (K) falsely denied the formation of contract, so cannot claim relief under section 54(2). K 1. Completely denied the existence of any such contract. 2. Claimed they were agents for H for the sale of the silk. 3. Since, no notice of the sale had been given to K therefore he was not liable to pay any damages. (section 54 (2) of SOGA) DECISIONS: 1. No notice was sent to K. H‟s own munim contradicted him in his deposition, claiming that only an oral statement was made, further H was unable to produce any secondary statement proving his statement. 2. If lien would arise only when demand for the said goods is made then the interpretation of section 47 would be very narrow. H had sold the thans in exercise of lien as per S.47 and that S.54 (2) would be applicable. The mere fact that K made a false claim about not entering into a contract is not sufficient to take the case out of the purview of section 54(2). Therefore seller cannot claim any damages from buyer. 3. As 67 thans were determined by both parties, the goods were ascertained and were in a deliverable state. Under Section 20, Sale of Goods Act the property in the goods passed to the buyer as soon as the contract was made, so the seller was merely a bailee. 4. H should have sued under S.55, claiming the full amount, but now the court cannot award him damages as that would give Harish a decree for an amount larger than what he had claimed. No damages can be claimed for the 57 thans. For the remaining 10 thans, K is liable to pay with interest.

References:  http://indiancaselaws.wordpress.com  www.chddistrictcourts.gov.in  http://www.indianlawcases.com/