Case: L. J. Leach And Company Ltd Vs. Jardine Skinner And Co

1. This appeal arises out of a suit instituted by the appellants in the High Court of Bombay for damages for conversion estimated at Rs. 4,71,670-15-0. The suit was decreed by Shah J., sitting on the Original Side, but his judgement was reversed on appeal by Chagla C. J., and Gajendragadkar J. Against this judgment, the plaintiffs have preferred the present appeal on a certificate under Art. 133 (1) (a) of the Constitution.Messrs, Maitland Craig Lubricants Ltd., is an American Company engaged in the manufacture and sale of lubricants. It carried on business in India with its head office at Calcutta and a branch office at Bombay. The second plaintiff, H. J. Leach, was employed during the years 1933 to 1935 in the Bombay branch of the said Company. Subsequent thereto, the Company closed its Bombay branch, and eventually wound up its Calcutta office as well, and thereafter its business was taken over firstly by Ewing and Company and then by the defendants. After he left the service of Maitland Craig Lubricants Ltd., Mr. Leach started business as seller of lubricants on his own account and was importing them through the defendants. On 6-6-1941, they entered into an agreement, Ex. A, under which Mr. Leach was given an exclusive right to sell lubricants of the make of Maitland Craig Lubricants Ltd., within the limits of Bombay Presidency, Central Provinces, Rajputana and such parts of Central India and Hyderabad as might be determined by the defendants. The agreement was to continue for a period of five years "unless sooner determined in the manner hereunder provide", Clause 14 of the agreement runs asanything herein before contained this agreement shall be terminable by either of the parties hereto upon giving to the other three calendar months previous notice in writing expiring at any time but without prejudice to the rights and liabilities of the parties respectively which shall have accrued prior to such16 provides that the agreement was personal to the selling agent, and that he was not to assign or attempt to assign his rights thereunder without the consent of the defendants in writing first obtained. It is common ground that the dealings between the parties continued on the basis of this agreement during the relevant period.3. On 18-3-1944, the first plaintiff which is a Joint Stock Company, was incorporated under the provisions of the Indian Companies Act, and on 30-3-1944 the second plaintiff assigned his business to it. On 13-6-1945, the defendants wrote to the second plaintiff that they were canceling the agency constituted under the agreement dated 6-6-1941, as he had assigned the same to the first plaintiff without obtaining their consent in writing as provided therein. Before that date, however, the defendants had placed orders for import from America of certain goods which the plaintiffs had required, but these goods were actually received by them after the cancellation of the contract. The plaintiffs called upon them to deliver those goods to them, but they refused to do so. Thereupon, the plaintiffs instituted the present suit for damages for conversion alleging that the goods in question were due to them under Government quotas comprised in Nos. P. L 1004 to 1007, and that the defendants who had ordered them on their behalf had themselves no title to them. The plaintiffs also averred that in importing those goods the defendants were acting as their agents. The defendants repudiated this claim. They contended that far from they being the agents of the plaintiffs, it was the second plaintiff who was their agent, and that the property in the goods was with the defendants and that the action for damages for conversion was not maintainable.4. The suit was tried by Shah J., who held that the plaintiffs were not the agents of the defendants that the goods in question had been imported by the latter on behalf of the former, and that in refusing to deliver the same to them, the defendants were guilty of conversion. He accordingly passed a decree referring the suit to the Commissioner for ascertaining the damages. On appeal Chagla C. J., and Gajendragadkar J. held that on the terms of the agreement dated 3-6-1941, on which the suit was based, the title to the goods imported by the defendants vested in them, and that it would pass to the plaintiffs only when the defendants endorsed the shipping documents in their favour, and that as that had not been done, the claim for damages on the basis of conversion was misconceived. They accordingly allowed the appeal, and dismissed the suit. Now the contention of the appellants before us is that on the facts proved, they were entitled to damages on the basis of conversion.5. There is no dispute as to the position in law. Before the plaintiffs can maintain an action introver, they must establish that they had title to the goods in question and that further they were entitled to possession thereof when they called upon the defendants to deliver them. If the parties stood in the relation of sellers and purchasers with reference to the transactions, then the plaintiffs must show that the property in the goods, which initially was with the defendants, passed to them in accordance with the provisions of the Sale of Goods Act. If, however, the defendants imported the goods as agents of the plaintiffs, then the title to them would undoubtedly be with the latter, and the only question then would be whether the former were entitled to retain possession, as they would be if they had paid the price of the goods on behalf of the principal, and had not been reimbursed that amount.This question, however, would not arise on the facts of this case, as the defendants denied the title of the plaintiffs to the goods, and there was no refusal by the latter to pay the price.

Court's reasoning:
4. The ground on which they repudiated the contract was that the second plaintiff had assigned his interests to the first plaintiff; but the record shows that subsequent to the assignment the defendants had business transactions with both the plaintiffs and therefore the ground for cancellation appears to have been a mere device to deprive the plaintiffs of the benefits of the orders which they had placed. We are of opinion that the justice of the case require that the amendment should be granted. The plaintiffs will accordingly be allowed to amend the plaint asin the alternative and without prejudice to the claim on the footing of conversion, the plaintiffs say that by reason of the facts aforesaid, there was a contract between the parties whereby the defendants undertook to supply and deliver to the plaintiffs (or either of them) the goods ordered out by Government on their (the plaintiffs) account and included in the quotas PL. 1004 -PL.The said goods arrived in Bombay, but the defendants failed and neglected to deliver the same though demanded and in fact repudiated their obligation to deliver. The plaintiffs say that they were always ready and willing to pay for and take delivery of the same.The defendants at all material times well knew that the plaintiffs had purchased the same for resale and for fulfilment of contracts of sale and supply. The plaintiffs claim damages as per particulars."