Lord Radcliffe.:-

These are consolidated appeals from two decrees of the High Court of Judicature at Bombay dated 8th November 1943. The first of these decrees reversed a judgment against the respondent the State of Gondal in favour of the present appellants which had been given on 15th January 1943, by the High Court in its ordinary original civil jurisdiction : the second decree dismissed an appeal by these appellants from the same judgment in so far as it rejected their claim in the suit against respondents 2 and 3.

2. The facts out of which the litigation arises are simple and they have produced no material divergence of view in the Courts in India. The real question is how the law should be applied to those facts. All that it is necessary to notice may be briefly set out as follows. On 1st October 1926, a limited company called The Currimbhoy Mills Co. Ltd., executed a debenture trust deed mortgaging two mills known as the Currimbhoy Mill and the Mahomedbhoy Mill together with certain plant thereon to trustees for debenture holders to secure an issue of debentures. Respondents 2 and 3 (whom it will be convenient to refer to as "the Trustees") were two of the trustees acting under the trust deed and were the only trustees who were made parties to the suit : respondent 1, the State of Gondal, acting through His Highness the Maharajah (hereinafter referred to as "the Maharajah"), was at all material times the owner of all the debentures secured by the trust deed. By October 1933, the Trustees, in exercise of their powers under the deed, had entered into possession of the mills which, it seems, lay within the municipal limits of the City of Bombay, and remained in possession until 9th September 1937, when the mills were handed over to Mr. Seksaria whose legal personal representatives are the first appellants. At that date Mr. Seksaria had just become the purchaser of the mills for a sum of Rs. 12,50,000 under a contract between the Maharajah and himself, one of the terms of which was that possession should be given on payment of the full purchase price and before formal transfer. The full price Rs. 12,50,000, was in fact paid into the Maharaja's bank account on 7th September 1937, the contract in question having been effected by and contained in (i) a letter which Mr. Seksaria wrote to the Maharajah dated 1st September 1937, (ii) a telegram and confirming letter dated 4th September 1937, from the Dewan of the State of Gondal to Mr. Seksaria, (iii) a telegram from Mr. Seksaria to the Dewan dated 5th September 1937, a telegram in reply of the following day and a final telegram in reply to that on the same day.

3. What happened after the conclusion of the sale contract was this. On 29th November 1937, Mr. Seksaria entered into an agreement by way of sub-sale with the appellant company under which he agreed to sell the mills to the Company for the same price of Rs. 12,50,000. It is impossible to ascertain from the evidence in the suit at what date, if any, prior to the formal transfer from the trustees the appellant Company entered into possession of the mills in place of Mr. Seksaria. During the hearing of the appeals before the High Court, that Court heard and refused an application on behalf of the appellants for leave to adduce further evidence on this point. In these circumstances their Lordships are unable to treat the appellant company as having entered into possession at any date before transfer. But before the sub-sale of 29th November a new and disturbing fact had come to light. On 7th October the Assessor and Collector of Municipal taxes, Bombay, addressed a letter to Mr. Seksaria informing him that bills amounting to Rs. 1,24,092-1-0 were outstanding in respect of municipal taxes on the mills, and that, as such taxes were a first charge on the properties, subject always to Government land revenue, payment "at a very early date" was requested. Statements enclosed with the letter showed unpaid taxes to the amount stated go