CALCUTTA HIGH COURT
Sale, J.
Jaffer Meher Ali - Appellant
Versus
Budge-Budge Jute Mills Co. - Respondent
Decided On : 08-05-1906
Assignment - Contract - Insolvency - Transfer of Property Act, 1882 - Section 6 - Contract Act, 1872 - Section 23 - [Section 6, Section 23] - The court held that an assignment of property made in fraudulent circumstances to defeat the provisions of the Insolvency Act is void and inoperative under Section 6 of the Transfer of Property Act, 1882. The court interpreted Section 23 of the Contract Act, 1872, to mean that an agreement with an unlawful object, such as defeating the provisions of the Insolvency Act, is void. The court also considered the implications of the dismissal of the insolvency petition and the Official Assignee's failure to take steps to enforce his rights under the contract.
Fact of the Case:
The plaintiff, claiming to be the assignee of the original purchaser, sued the defendant company for non-delivery of goods under a contract. The defendant company argued that the assignment was fraudulent and made to defeat the provisions of the Insolvency Act.
Finding of the Court:
The court found that the assignment was made in fraudulent circumstances to defeat the provisions of the Insolvency Act. The court held that the assignment was void and inoperative under Section 6 of the Transfer of Property Act, 1882, and that the plaintiff's claim was barred.
Issues: Whether the contract was assignable, whether the assignment was valid, and whether the plaintiff was entitled to damages for non-delivery of the goods.
Ratio Decidendi: An assignment of property made in fraudulent circumstances to defeat the provisions of the Insolvency Act is void and inoperative under Section 6 of the Transfer of Property Act, 1882. An agreement with an unlawful object, such as defeating the provisions of the Insolvency Act, is void under Section 23 of the Contract Act, 1872.
Final Decision: The court dismissed the plaintiff's suit with costs.
JUDGMENT
Sale, J. - The plaintiff in this suit claims to recover a sum of Rs. 3,000 as damages from the defendant Company for non-delivery of the January instalment of gunny-bags, which under a contract dated the 27th July 1905 the defendant Company agreed to sell and deliver to one Cassim Karim. The plaintiff claims to enforce the contract as the assignee of Cassim Karim, the original purchaser. The deed of assignment is dated the 16th August 1905 and purports in consideration of the sum of Rs. 100 paid by the assignee to the assignor to transfer and assign over to the assignee the contracts in the schedule thereto set forth as also the benefits and advantages thereunder as also the right, title, interest, estate, claim and demand whatsoever of the assignor into or upon the said contracts. The schedule to the assignment sets out nine different contracts entered into by the Delta Jute Mills Company, Ld., and by the Budge-Budge Jute Mills Company, Ld., and also by the Bombay Company, Ld., by Messrs. Kahn and Kahn, Messrs. D. Sassoon & Co. and other sellers. The contract in suit is marked 3 in the schedule annexed to the deed of assignment. In pursuance of the deed of assignment the plaintiff gave notice of the assignment to the Budge-Budge Jute Mills Co. and subsequently called upon the defendant Company to carry out the contract. The defendant Company by their answer declined to recognise the plaintiff as having any right under his assignment to enforce the contract as against the defendant Company. The defendant Company also alleged that the original purchaser Cassim Karim was an insolvent and offered to fulfil the contract, if the plaintiff obtained the consent of the Official Assignee to the plaintiff's claim. The plaintiff alleges in the plaint that he was always ready and willing to pay for and take delivery of the goods covered by the said contract, but the defendant Company had neglected, failed and refused to deliver the goods and in consequence the plaintiff had suffered loss and damage in respect of the January portion to the extent of Its. 3,000, being the difference between the market rate and the contract rate of the said goods on the 31st of January. The defence taken by the defendant Company is in the main twofold. In the first place they say that the contract was not assignable and that they were not found to recognise the plaintiff as the assignee of the original purchaser Cassim Karim. They further take exceptions to the assignment on the ground that it was not a bond fide or genuine assignment, being made at a time when Cassim Karim was insolvent and with the object of defeating and delaying the creditors of the assignor and was therefore void and of no effect as against the defendant Company. The defendant Company further alleged that the plaintiff was not ready and willing to carry out the contract. Now I am inclined to think that the plaintiff has succeeded in showing that the rule as regards the assignability of contracts in this country is that the benefit of a contract for the purchaser of goods as distinguished from the liability thereunder may be assigned, understanding by the term benefit the beneficial right or interest of a party under the contract and the right to sue to recover the benefits created thereby. This rule is however subject to two qualifications: first, that the benefit sought to be assigned is not coupled with any liability or obligation that the assignor is bound to fulfil, and next that the contract is not one which has been induced by personal qualifications or considerations as regards the parties to it. Neither of these exceptions I think apply to the present contract. There is nothing on the face of the contracts to suggest that any credit was given by the defendant Company to the original purchaser or that any circumstance of an especial or personal character existed, which led to the making of the contract between the parties thereto, nor looking at the terms of the contract
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