Judgement

Appeal from a judgment and decree of the Chief Court (March 26, 1914) reversing a judgment and decree of Robinson J.

The suit was instituted by the appellants against L. A. R. L. Lutchumanan Chetty, since deceased and represented by the respondents, to recover Rs. 63,122, the balance of a cash credit account and interest due from one Hashim Ebrahim.

The deceased defendant carried on business as a chetty banker and money-lender in Rangoon under the style of A. R. L. Chetty, but resided in the Presidency of Madras. The business at Rangoon was conducted by his agent Chockalingam Chetty under a power of attorney dated October 24, 1904. The material provisions of the power of attorney are set out in the judgment of their Lordships.

On May 23, 1908, the appellants opened a cash credit account with Hashim Ebrahim, taking as security a promissory note of that date payable on demand for Rs. 50;000 and interest, made by Hassum Ebrahim in favour of A. R. L. Chockalingam Chetty or order, and indorsed by Chockalingam Chetty to the appellants. On the same date Chockalingam Chetty executed in the name of A. K. L. Chockalingam Chetty an agreement guaranteeing to the appellants all sums which might from time to time be due to them from Hassum Ebrahim upon the cash credit account. Prior to these transactions the power of attorney had been produced to and registered by the appellants.

The defendant by his written statement pleaded, inter alia, that the plaintiffs (appellants) had ful1 knowledge of the power of attorney, and that, as they well knew, Chockalingam Chetty had no authority thereunder, or otherwise, to indorse accommodation bills or notes, or to give guarantees for third persons, so as to bind the defendant; they also denied all the alleged facts. The plaintiffs, by leave, pleaded in reply that even if not authorized the transaction was ratified by the defendant.

The suit was tried by Ormond J. At the trial evidence was given on behalf of the plaintiffs (appellants) as to previous transactions between themselves and Chockalingam Chetty, in which he, purporting to act on behalf of the defendant, had guaranteed advances made to other persons, of whom some were and some were not chetties. There was also evidence that it was part of the business of a chetty banker and money-lender to guarantee loans and overdrafts. The defendant did not produce his books of account, although notice to produce was given.

Robinson J. gave judgment in favour of the appellants. He held that Chockalingam Chetty had no authority under the power of attorney to guarantee the cash credit in question, but that the defendant had held out his agent as having authority to enter into guarantees and had ratified the transaction.

This decision was reversed upon appeal. The Court (Ormond and Parlett JJ.) was of opinion that under the power of attorney the agent had a general authority to carry on the business of a chetty banker and money-lender on behalf of the defendant and an express power to borrow money for the purpose of that business. They held that the express power did not authorize the agent to borrow money for another, or to make his principal surety for anothers loan. Upon the evidence they found that it was not made out that it was part of the business of a chetty to become guarantor for others who were not chetties. It was agreed in argument that there was no question of ratification. The suit was accordingly dismissed.

1915. Nov. 16, 17. Sir Erie Richards, K.C., and F. J. Coltman, for the appellants. The case is of importance as the power of attorney is in a form commonly used by chetties. The transaction was within the authority conferred by the power of attorney. The instrument gave to the agent the entire management of the business and authorized him to borrow for the purpose of making loans with power to make or indorse notes ; the transaction was in substance a borrowing for the purpose of lending. The evidence showed that the particular metho