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HIGH COURT OF CALCUTTA
Ramendra Mohan Datta
NARAYANI DEVI - Appellant
Versus
TAGORE COMMERCIAL CORPORATION LTD. - Respondent
Liquidated Claim Suit 1002 Of 1966
Decided On : JUNE 27, 1972
CONTRACT - ENFORCEABILITY - PRIVITY OF CONTRACT - TRUST - EQUITABLE OBLIGATION - BENEFIT OF CONTRACT - THIRD PARTY RIGHTS - SALE OF SHARES - MONTHLY PAYMENTS - GUARANTEE - LIABILITY OF GUARANTOR - LIMITATION - ACKNOWLEDGMENT OF LIABILITY.
Fact of the Case:
Plaintiff's husband sold his shares to the defendant company in exchange for monthly payments to him during his lifetime and to the plaintiff after his death. The defendant company and the guarantor made payments under the agreement for some time but later defaulted. The plaintiff sued the defendant company and the guarantor for the outstanding payments.
Finding of the Court:
The court found that the defendant company and the guarantor were liable to the plaintiff under the agreement. The court held that the plaintiff was entitled to the benefit of the agreement even though she was not a party to it because the defendants had created an equitable obligation in her favor by their conduct and admissions. The court also held that the claim was not barred by limitation as the payments constituted a continuing cause of action and the suit was filed within the limitation period for the period immediately preceding the date of filing.
Issues: 1. Whether the defendant company failed to pay the monthly sums as alleged in the plaint? 2. Whether the plaintiff is entitled to any benefits under the agreement? 3. Whether the defendant No. 2 has any obligation or liability to make any payment to the plaintiff under the agreement? 4. Whether the plaintiff's claim is barred by limitation? 5. Whether the plaint discloses any cause of action?
Ratio Decidendi: 1. The court held that the defendant company failed to pay the monthly sums as alleged in the plaint based on the correspondence between the parties and the evidence on record. 2. The court held that the plaintiff was entitled to the benefits under the agreement even though she was not a party to it because the defendants had created an equitable obligation in her favor by their conduct and admissions. The court relied on the fact that the defendants had treated the plaintiff as a party to the agreement by making payments to her after her husband's death and by acknowledging their liability to her in writing. 3. The court held that the defendant No. 2, as the guarantor, was liable to the plaintiff for the outstanding payments under the agreement. The court found that the defendant No. 2 had acknowledged his liability to the plaintiff in writing and had made payments to her on behalf of the defendant company.
Final Decision: The court decreed in favor of the plaintiff for the outstanding payments, interest, and costs of the suit against both the defendant company and the guarantor.
( 1 ) THIS is a suit for the recovery of a sum of Rs. 14,000/- due on account of principal and Rs. 3915/- as damages in respect of interest due and for further damages. The defendant No. 1 Tagore Commercial Corporation Ltd. has virtually closed down its business and accordingly, the plaintiff seeks to claim relief mainly against the defendant No. 2, the guarantor who is Maharaja Prabinrendra Mohan Tagore Bahadur.
( 2 ) A formal agreement, between the plaintiff's husband one Nagendra Lal Saha, since deceased, and the defendant company as the principal debtor and the said Maharaja Prabirendra Mohan Tagore Bahadur as the guarantor, was entered into on or about October 5, 1951.
( 3 ) THE plaintiff's husband, the said Nagendra Lal Saha, held several shares of the face value of Rs. 40,500/- in Messrs. L. C. Saha Limited. By the said contract it was agreed, inter alia, that the plaintiff's husband will sell off his said shares in favour of the defendant No. 1 in consideration of the defendant No. 1 agreeing to pay him i. e. , to Nagendra Lal Saha during his lifetime the sum of Rs. 500/- per month and after his death to pay to the plaintiff the sum of Rs. 250/- per month, month by month and every month during her natural life if she would survive her husband. By that agreement if the defendant company would fail to make the said payment then the guarantor defendant No. 2 agreed to make due payments of the said sums as aforesaid. By the said agreement Nagendra Lal Saha also agreed to surrender, relinquish, and release all his right, title and interest, claim and demand whatsoever to receive the royalty @ 150/-per month from the said Messrs. L. C. Saha Limited and agreed to sign, execute and register the formal deed surrendering, relinquishing and releasing his said right, title and interest, claim and demand whatsoever and agreed to cause all necessary parties to join in the said deed when called upon by the purchaser company to do so at its costs.
( 4 ) IN terms of the said agreement since 1951 the defendant company and/or Maharaja Prabinrendra Mohan Tagore, the guarantor, paid the said sums to the said Nagendra Lal Saha during his lifetime and after his death from time to time to his wife, the plaintiff herein. Nagendra Lal Saha died on July 8, 1957.
( 5 ) THE plaintiff's case is that the defendant No. 2 from time to time paid several sums in part payment of the sums due under the said contract, firstly, to the plaintiff's husband and after his death to the plaintiff directly but since September 1, 1961 till April 30, 1966 he failed and neglected to pay the said sum of Rs. 250/- per month which was payable to the plaintiff.
( 6 ) THE defendant No. 1 has not entered appearance nor has filed any written statement herein. The defendant No. 2 has filed a written statement and has denied his liability in respect of the plaintiff's claim. He has challenged the agreement as void as invalid for want of consideration as a document which is not binding upon the defendants. It is also pleaded therein that the said agreement was not enforceable in law inasmuch as the same was not a concluded contract at all because the plaintiff failed and neglected to execute the formal deed of transfer and/or release and/or surrender and/or relinquishment in respect of the said shares and for the royalty thereof. Those averments have been made in paragraph 2 of the said written statement in which allegation was made against the plaintiff haying failed and neglected to execute and register the proper deed of transfer and/or release and/or surrender and/or relinquishment in respect of the said shares and in respect of the claim for the royalty as mentioned therein in terms of the said purported agreement. As already stated, the defendant No. 1 has not entered appearance herein. It is difficult to follow why the plaintiff should fail and neglect to execute and register the proper deed of transfer and why the plaintiff should be called
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