1957 (1) TMI 37 - SC - Indian Laws

Supreme Court affirms conversion ruling, clarifies principal-principal relationship. Amends allowed for breach of contract.

The Supreme Court upheld the appellate court's decision in a case involving damages for conversion, determining that the plaintiffs did not have title to ... - Issues Involved:1. Damages for conversion2. Relationship between the parties (seller-purchaser vs. agent-principal)3. Impact of the licence system and 'Lease and Lend' scheme4. Amendment of the plaint to include a claim for breach of contractDetailed Analysis:1. Damages for Conversion:The appellants sought damages for conversion, claiming that the goods were due to them under Government quotas and that the defendants, who ordered the goods on their behalf, had no title to them. The trial court initially ruled in favor of the plaintiffs, holding that the defendants were guilty of conversion for refusing to deliver the goods. However, the appellate court reversed this decision, determining that the title to the goods vested in the defendants and would only pass to the plaintiffs upon endorsement of the shipping documents, which had not occurred. The Supreme Court upheld the appellate court's decision, agreeing that the claim for damages on the basis of conversion was misconceived since the plaintiffs did not have title to the goods.2. Relationship Between the Parties:The main question was the nature of the relationship between the parties. The agreement dated June 6, 1941 (Ex. A), constituted the second plaintiff as the selling agent of the defendants in specified areas. The agreement specified that the second plaintiff was not to sell the goods below a certain price and that they were to be sold with the mark of Maitland Craig Lubricants Ltd. The court found that the relationship was one of principal and principal, not agent and principal, as stated in Clause 13 of the agreement. The plaintiffs were considered purchasers of the goods from the defendants, and the title to the goods would pass to the plaintiffs only when the defendants endorsed the shipping documents, which had not been done.3. Impact of the Licence System and 'Lease and Lend' Scheme:The appellants argued that the relationship of seller and purchaser under Ex. A was modified when the Government introduced the licence system during the war to regulate imports. The second plaintiff obtained a licence to import goods, but continued to import through the defendants. The court found that this did not alter the relationship established under Ex. A. The licence system ended in March-April 1942 and was replaced by the 'Lease and Lend' scheme, under which the Government of India imported the goods and endorsed the shipping documents to the importers. The court determined that the plaintiffs had no title to the goods under this scheme as the shipping documents were not endorsed to them by the defendants.4. Amendment of the Plaint to Include a Claim for Breach of Contract:The plaintiffs applied to amend the plaint to include a claim for damages for breach of contract for non-delivery of goods. The defendants resisted the application, arguing that it introduced a new cause of action that would be barred by limitation. The court allowed the amendment, noting that the suit was founded on Ex. A and that a claim based on Clause 14 of the agreement was not foreign to the scope of the suit. The court directed that the suit be remanded for rehearing to the trial court, allowing the defendants to file their written statement to the amended claim.Conclusion:The appeal was allowed, the decree under appeal was set aside, and the suit was remanded for rehearing to the trial court. The plaintiffs were ordered to pay the costs of the defendants both in the suit and in the appeal to the Bombay High Court, while the parties were directed to bear their own costs in the Supreme Court.