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PETITIONER: HAJI MOHAMMED ISHAQ MD.  SK.  MOHAMMED & 3 OTHERS

       Vs.

RESPONDENT: MOHAMED IQBAL & MOHAMED ALI & ORS.

DATE OF JUDGMENT04/04/1978

BENCH: UNTWALIA, N.L. BENCH: UNTWALIA, N.L. SARKARIA, RANJIT SINGH KAILASAM, P.S.

CITATION:  1978 AIR  798            1978 SCR  (3) 571  1978 SCC  (2) 493

ACT: privity of Contract-Conduct of Parties-Plaintiffs  supplying goods on his own direct-Defendants also accepting the  goods and  making  payments as well-Whether there  is  an  implied contract and a privy. Pleadings-Amendment of Pleadings not permissible if it could completely change the original defence-civil Procedure  Code Order VI Rule 17 Additional evidence also not permissible in such cases-Order XLI Rule 27 Civil Procedure Code.

HEADNOTE: The  Plaintiff respondent is a registered  Partnership  firm carrying  on  business at Nipani. 630 bags of  tobacco  were despatched  by  the  plaintiff, between the  11th  and  21st January  1952,  to  the appellant-defendants  who  were  old customers  of  one Sri Abdul Rahim  Nabisaheb  Bhagwan,  who "prevailed  upon the plaintiff to supply the tobacco to  the defendants  and  also  said  that  he  would  see  that  the defendants duty paid (Sic) for the same".  The consignor  in all the Railway Receipts except one was one Sri G. K. Manavi and  in one railway receipt of 129 bags, the  consignor  was the plaintiff firm.  The consignees were self.  The  railway receipts were endorsed to defendants’ firm.  The goods  were ,accepted  by  the defendants.  On demands being  made  from time  to time for payment of the price, the defendants  paid Rs. 20,000/- by four cheques of Rs. 5000/- each.  Later they gave  ten  more cheques of Rs. 49000/- out  of  these,  five cheques of the amount of Rs. 25,000/- were honoured, but the rest of the cheques for Rs. 24,000/- were dishonored.  Small sums  were  further  paid by the defendants  in  cash.   The balance  of the price which remained due from them  was  Rs. 75,477-12-9.  Adding interest to the said amount, the  total amount came to Rs. 90,102-12-9.  Remitting Rs. 102-12-9  the plaintiff  filed a suit for the recovery of the  balance  of Rs. 90,000/-.  The pleas in the written statement were  that there  was  no  privity of contract  between  them  and  the plaintiff, the orders were placed for the supply of 630 bags of  tobacco  with  Sri Abdul Rahim Nabi  Saheb  Bhagwan  who handed  over  a  Bijak and not with the  Plaintiff  for  Rs. 1,21,154-12-9,  all  the cheques were drawn in the  name  of Rahim  and  were handed over to him and the payment  of  the

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cheques were stopped on account of the slack season. The  Trial  Court decreed the suit on its finding  that  the goods  were sold to the defendants by the Plaintiff  through Rahim  who acted as the defendants’ agents, and  thus  there was a privity of contract established between the  plaintiff and  the defendants.  The defendants took up the  matter  in appeal  to the High Court and after three years, they  filed applications  seeking amendment of their  written  statement and  permission of the Appellate Court to adduce  additional evidence  under Order 41 Rule 27 Civil Procedure Code.   The High  Court by its order dated 10-10-58 allowed the  appeal, set  aside  the judgment and remitted back the case  to  the trial  Court to retry it after giving opportunities  to  the plaintiff to adduce further evidence and left the matter  of amendment  of  the  written  statement  and  the  additional evidence  to that Court.  In appeal to this Court and  by  a consent order made on the 29th March 1963, the order of  the High Court was set aside and it was asked to dispose of  the applications of the defendants for permission to amend their written  statement  and to adduce  additional  evidence  and thereafter  to decide the appeal on the evidence adduced  in the  trial  court.  The High Court by its  present  judgment under  appeal  dt. 18-9-1964, declined the  prayers  of  the defendants  for  amendment of their  written  statement  and adducing additional evidence.  The High Court did not  agree with the finding of the Trial Court that Rahim acted as the agent of the defendants but held that the defendants 572 had  originally  placed their orders for supply  of  tobacco with  Rahim, but a new implied contract came into  existence by  conduct  of  the  parties inasmuch  as  the  goods  were actually supplied by the plaintiff on its own account;  were accepted as such by the defendants who became liable to  pay the price of the goods to them. Dismissing the appeals by certificate the Court HELD  : 1. The appellants’ appeal was completely  devoid  of substance. [574 H. 574 A] (a)  In  view of the pleadings between the parties  and  the evidence  adduced the finding of the Trial Court that  Rahim acted  as the agent of the defendants was  not  sustainable. [575 D-E] (b)  The me pleaded was as it is called in law,  an  implied contract brought about by the conduct of the parties namely, the  supply  of  the  goods  by  the  plaintiff  and   their acceptance  by the defendants.  It was a pleading of  direct contract  of sale between the plaintiff and  the  defendants brought about by their conduct.  A contract of sale means an agreement to sell or sale. [576 C-D] (e)  Initially the express contract for supply of the  goods was  between  the defendants-and Rahim.   The  fact  whether Rahim  acted as the plaintiff’s agent or the defendants’  is immaterial.   What is clear is that the orders  placed  with Rahim  were in fact executed by the plaintiff by  supply  of goods  to the defendants.  It was so done on account of  the plaintiff  from its own warehouse as well as  from  Manavi’s warehouse,  Defendants by their clear conduct  of  accepting the goods and never repudiating any of the numerous  letters and telegrams of the plaintiff demanding the money from them on  the  assertion  that the goods were  despatched  by  the plaintiff  and the defendants should pay the money,  clearly showed  that  a direct contract which in law  is  called  an implied contract by conduct was brought about between  them. Whatever may be the jural relationship between the plaintiff and  Rahim, Rahim and the defendants and in whatever  manner

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he  acted as a go-between-man, between the  plaintiff    and the defendants, what is clear is that eventually and finally the  supply  of  the  goods by  the  plaintiff  was  to  the defendants  on its own account and not on account of  Rahim. The defendants clearly and unerringly accepted the goods  as such  and  became  liable  to pay the  whole  of  the  price directly  to  the  plaintiff.   A  part  was  paid  and  the liability  to  pay the balance was  definitely  incurred  by them. [577 D-G] 2.  The  High Court has rightly refused the prayers  of  the appellants.   The amendment of the written statement  sought was  on such facts which, if permitted to be  introduced  by way  of amendment, would have completely changed the  nature of  their original defence.  It would have brought about  an entirely  new  plea which was never taken up either  at  the time of the dealings between the parties or in the  original pleadings.  The additional evidence sought to be adduced was in  respect of the facts stated in the  amendment  petition. The High Court rightly rejected all those petitions. [575 B- D]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  2468  of 1968. From  the Judgment and Decree dated 18-9-1964 of the  Mysore High Court in Regular Appeal No. (B) of 1956. Dr.  Y. S. Chitale, Haji Sheikh, A. H. Safi, K. J. John  and D. IV. Mishra for the appellants. R.B. Datar and Farhat (Miss) Qadri for the Respondent. The Judgment of the Court was delivered by UNTWALIA J. This is a defendant’s appeal by certificate.  It arises  out of a suit filed by the  plaintiff-respondent  in the Court of the Civil 573 Judge, Belgaum in the State of Karnataka for recovery of Rs. 90,000/the  balance  of  the price of 630  bags  of  tobacco supplied  by it to the defendants.  The suit was decreed  by the Trial Court and finally the decree has been affirmed by the Karnataka High Court. The  plaintiff is a Registered Partnership firm carrying  on business at Nipani, District Belgaum.  Defendant No.1 is the father  of  defendants  2  to  4.  They  also  carry  on   a partnership  business  under  the name  and  style  of  Haji Mohammed Ishaq Mohammed Gulam Saheb.  They manufacture  Bidi in  their factory known as the Modern Bidi Factory and  have their  Head Office in Katni in the State of Madhya  Pradesh. The  case of the plaintiff in the plaint was a  simple  one. It  despatched  by Railway 630 bags of tobacco  between  the 11th  and  21st  January, 1952 from Nipani  to  Katni.   The consignor  in  all the Railway Receipts except one  was  one Shri  G. K. Manavi and in one.  Railway Receipt of 129  bags the  consignor was the plaintiff firm.  The consignees  were self.    The   Railway  Receipts  were   endorsed   to   the defendants’.  firm by the consignors.  Shri Babalal, one  of the  partners  of  the plaintiff firm,  went  personally  to Katni, with the Bijak No. 12 dated 12-11952 and handed  over two Railway Receipts and the, Bijak for the total amount  of Rs.  1,21,154.12.9  to the defendants.   The  other  Railway Receipts  were  sent by the plaintiff to the  defendants  by Registered post.  The goods were accepted by the defendants. On  demands  being  made from them from  time  to  time  for payment  of the price, the defendants paid Rs.  20,000/-  by four cheques of Rs. 5,000/- each.  Later they gave ten  more

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cheques  of Rs. 49,000/-, out of which, five cheques of  the amount  of  Rs. 25,000/- were honoured but the rest  of  the cheques  for Rs. 24,000/- were dishonored.  Small sums  were paid  by the defendants in cash.  The balance of the  price which  remained  due from them was Rs.  75,477.12.9.  Adding interest  to the said amount, the total amount came  to  Rs. 90,102.12.9. The claim in the suit was for the round  figure of  Rs. 90,000/- remitting Rs. 102-12.9. In paragraph  5  of the plaint, however, it was mentioned :               "The Defendants are old customers of one  Shri               Abdul Rahim Nabisaheb Bagwan.               He prevailed upon the plaintiff to supply  the               tobacco  to the Defendants and also said  that               he would see that the Defendants duly paid for               the  same.  To some extent he has  helped  the               plaintiff  in the recovery of their dues  from               Defendants." In  the  main, the pleas set up by the defendants  in  their written statement were that there was no privity of contract between  them and the plaintiffs they had placed orders  for the  supply  of 630 bags of tobacco with  Shri  Abdul  Rahim Nabisaheb Bagwan and he had banded over a Bijak, and not the plaintiff  for the amount of Rs. 1,21,154.12.9. The  cheques numbering 14 in all were drawn in the name of Rahim and were handed over to him.  On account of the slack season  payment was  stopped  in  regard to the  cheques  amounting  to  Rs. 25,000/The  plaintiffs allegation that Babalal, one  of  its partners had come to 574 Katni  and  banded  over certain Railway  Receipts  and  the Bijak, was denied.  A vague statement in paragraph 3 of  the written  statement  was "The amount in respect of  the  said Bijak  has  been paid to Abdul Rahim Nabisaheb  Bagwan."  No details  as to the dates, manner or amounts of  payments  of the  balance  of the amount to Rahim were mentioned  in  the written statement. The  Trial  Court decreed the suit on its finding  that  the goods  were sold to the defendants by the plaintiff  through Rahim who acted as the defendants’ agent and thus there  was a privity of contract established between the plaintiff  and the  defendants.   The  judgment  of  the  Trial  Court  was delivered  on the 31st of October, 1955 The defendants  took up  the  matter in appeal to the High  Court.   After  about three  years, they filed applications in the High  Court  in the months of September and October, 1958 seeking  amendment of  their written statement and permission of the  Appellate Court  to adduce additional evidence under Order 41 Rule  27 of the Code of Civil Procedure.  The High Court in the first instance  disposed of the appeal by its judgment  and  order dated the 10th of October, 1958.  It set aside the  judgment of the Trial Court, remitted back the case to it to retry it after  giving  opportunities  to  the  plaintiff  to  adduce further  evidence, and left the matter of amendment  of  the written statement and the additional evidence to that Court. Plaintiff came up to this Court and by a consent order  made on the 29th March, 1963 the order of the High Court was  set aside and it was asked to dispose of the applications of the defendants  for permission to amend their written  statement and  to adduce additional evidence and thereafter to  decide the  appeal on the evidence as adduced in the  Trial  Court. The present judgment under appeal was delivered by the  High Court  on  the  18th of September, 1964.   It  declined  the prayers  of  the defendants for amendment of  their  written statement and adducing additional evidence.  The High  Court has  upheld  the decree of the Trial Court but  on  somewhat

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different  grounds.  The High Court did not agree  with  the finding of the Trial Court that Rahim acted as the agent  of the defendants.  It held that the defendants had  originally placed  their orders for supply of tobacco with Rahim but  a new  implied contract came into existence by conduct of  the parties inasmuch as the goods were actually supplied by  the plaintiff  on its own account; were accepted as such by  the defendants  who became liable to pay the price of the  goods to  them.   The vague case of the defendants that  they  had paid the price to Rahim remained unsubstantiated and further there  was  neither any case nor any evidence to  show  that Rahim  in his turn had paid to the plaintiff the balance  of the price of the goods. Mr.  Y. S. Chitale, learned counsel for the appellants  took us  through  the  relevant pieces of  documentary  and  oral evidence;  the  pleadings of the parties and  pressed  their applications  for  amendment of the  written  statement  and adducing of additional evidence.  He further submitted  that the High Court has found a new case for the plaintiff  which was  never pleaded and the judgment of the High Court as  it is,  fit to be interfered with on that account too.  In  our opinion the appellants’ 575 appeal was completely devoid of substance.  We did not think it  necessary even to call upon the respondents to reply  to the appellants’ argument. Rahim was examined as a witness on behalf of the  defendants in the Trial Court as DW 1 on the 12th of October, 1955  and after  examining  a few more witnesses the evidence  of  the parties  was  closed  on that very date.   Rahim  made  some strange and peculiar statements in his deposition in support of  the  defendants and introduced some entirely  new  facts which  were never disclosed to the plaintiff in any  of  the letters  written  during the course of the  business  or  in reply to the lawyer’s notice or in their written  statement. He  introduced a story of some kind of  partnership  between him  and  one of the partners of the plaintiff  and  Manavi. Even then no prayer was made by the appellants in the  Trial Court for amending their written statement or for permission to adduce any further evidence.  About three years later, as stated  above,  they filed their applications  in  the  High Court for the purposes aforesaid.  In our judgment the  High Court  has  rightly refused the prayers of  the  appellants. The  amendment of the written statement sought was  on  such facts  which,  if  permitted  to be  introduced  by  way  of amendment, would have completely changed the nature of their original  defence.  It would have brought about an  entirely new plea which was never taken up either at the time of  the dealings  between the parties or in the original  pleadings. The additional evidence sought to be adduced was in  respect of  the  facts stated in the amendment petition.   The  High Court  rightly rejected all those petitions and we need  not mention in any detail the reasons thereof. We  agree with the High Court that in view of the  pleadings between the parties and the evidence adduced, the finding of the  Trial  Court  that  Rahim acted as  the  agent  of  the defendants  was not sustainable.  We further agree that  the contemporaneous letters and telegrams exchanged between  the defendants and Rahim in the months of November and December, 1951  did  show that the defendants  bad  originally  placed orders  for the supply of tobacco with Rahim.  But even  so, the stand of the defendants that the plaintiff had  supplied the goods to them on Rahim’s account and not on its own  was rightly  rejected  by  the  High  Court.   While   generally agreeing with it in its approach to the real points at issue

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in the case, we will very briefly indicate our difference of approach in regard to a few minor matters. The  learned  Judge  of the High  Court  who  delivered  the leading  judgment  in  the appeal is not  quite  correct  in saying  that  the  plaint  averments do  not  show  bow  the contract  between  the  plaintiff  and  the  defendants  was formed; whether there was any express contract oran implied contract to be inferred from the conduct of the parties.It is also not quite accurate to say that what was required  to be foundwas  whether  an implied contract to pay  for  the goods supplied couldbe  inferred from the facts  proved in  the  case.  It seems to us that it is  because  of  this reason  that the other learned Judge constituting the  Bench finally  hearing the, appeal concurred in the order  in  the following terms : 576               "I agree with the Order proposed by my learned               brother.   On  the facts found  by  him,  with               which  I  agree, the inference of  an  implied               contract is obvious." As  already stated the simple case of the plaintiff is  that it  had  supplied  630 bags of tobacco  to  the  defendants; received  only a part of its price and the balance of  about Rs.  90,000/-  remained  due.  It is true  that  no  express contract,  as understood in law, was pleaded in the  plaint. But  what  was clearly pleaded was supply of  goods  by  the plaintiff  on  its own account; acceptance of  them  by  the defendants  as such; part payment to the plaintiff  and  the balance  remaining due to it. The case  pleaded,  therefore, was,  as it is called in- law, an implied  contract  brought about  by the conduct of the parties, namely, the supply  of the  goods  by  the plaintiff and their  acceptance  by  the defendants.   In the 5th paragraph of the plaint,  extracted above, what was stated was that the transaction of supply of goods  by the plaintiff to the defendants was brought  about through the instrumentality of Rahim as the defendants  were his old customers and Rahim prevailed upon the plaintiff  to supply  the  goods  (on  credit) to  them.   He  helped  the plaintiff in the recovery of their dues from the  defendants to some extent.  The plaintiff was entitled for the recovery of  the balance.  It was thus a pleading of direct  contract of  sale  between the plaintiff and the  defendants  brought about  by  their  conduct.   A contract  of  sale  means  an agreement to ’sell or sale. It   is  not  necessary  to  encumber  this  judgment   with unnecessary citations of the case law on the point.  We  may with   advantage  only  quote  a  passage  from  Chitty   on Contracts, twenty-third edition, pages 9-10, para 12 :               "Express and implied contracts.  Contracts may               be either express or implied.  The  difference               is  not one of legal effect but simply of  the               way  in  which the consent of the  parties  is               manifested.  Contracts are express when  their               terms  are  stated in words  by  the  parties.               They  are often said to be implied when  their               terms are not so stated, as, for example, when               a passenger is, permitted to board a bus; from               the  conduct of the parties the law implies  a               promise by the passenger to pay the fare,  and               a promise by the operator of the bus to  carry               him safely to his destination.  There may also               be  an implied contract when the parties  make               an express contract to last for a fixed  term,               and  continue  to act as though  the  contract               still bound them after the term has expired. In

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             such  a  case  the court may  infer  that  the               parties have agreedto   renew  the   express               contract for another term. Express andimplied               contracts are both contracts in the true sense               of  the  term, for they both  arise  from  the               agreement  of the parties, though in one  case               the  agreement is manifested in words  and  in               the other case by conduct.  Since, as we  have               seen,  agreement is not a mental state but  an               act,  an  inference from conduct,  it  follows               that  the  distinction  between  express   and               implied contracts has every little importance,               even if it can be said to exist at all." 577 We found absolutely no substance in the argument of the  ap- pellants  to assail the finding of the High Court  that  the plaintiff  bad supplied the good- on its own account to  the defendants  and that plaintiff’s partner Babalal had  handed over  the Patti No. 12 (Bijak) Ext. 85 to the defendants  at their  ace  of business at Katni alongwith the  two  Railway Receipts.   The  High  Court  has  further  found  that  the subsequent Railway Receipts were sent by registered post  by the  plaintiff  and  in several letters  and  telegrams  the plaintiff  demanded  the payment of the price of  the  goods supplied   from   the  defendants.   No  where   Rahim   was justifiably  in  the picture.  The High  Court  has  further pointed  out the reason as to why about 501 bags of  tobacco were  supplied from the warehouse of Manavi who  became  the consignor  in the several Railway Receipts, Manavi  supplied the goods on plaintiffs account.  It has further been  found that  the  cheques drawn by the defendants in  the  name  of Rahim  were all endorsed by him in favour of  the  plaintiff and  ultimately  to  the knowledge  of  the  defendants  the payment  of the part of the price was by the  defendants  to the plaintiff.  No goods were supplied on account of  Rahim. No part payment was really and actually made to him and  the defendants  were liable to pay the balance of price  to  the plaintiff. On  the facts found, there, is no difficulty in assuming  or even  inferring  that  initially the  express  contract  for supply  of the goods was between the defendants  and  Rahim. The fact whether Rahim acted as the plaintiff’s agent or the defendants’ is immaterial.  What isclear  is  that  the orders  placed  with  Rahim were in  fact  executed  by  the plaintiff  by  supply of goods to the defendants.It  was  so doneon  account of the plaintiff from its own warehouse  as well asfrom  Manavi’s  warehouse.   Defendants  by  their clear  conduct of accepting the goods and never  repudiating any  of the numerous letters and telegrams of the  plaintiff demanding  the  money from them on the  assertion  that  the goods  were despatched by the plaintiff and  the  defendants should pay the money, clearly showed that a direct  contract which  in law is called an implied contract by  conduct  was brought  about  between  them.  Whatever may  be  the  jural relationship between the plaintiff and Rabim, Rahim and  the defendants and in whatever manner be acted as a  go-between- man, between the plaintiff and the defendants, what is clear is  that eventually and finally the supply of the  goods  by the  plaintiff was to the defendants on its own account  and not  on  account  of  Rahim.   The  defendants  clearly  and unerringly  accepted the goods as such and became liable  to pay  the  whole of the price directly to the  plaintiff.   A part  was  paid  and the liability to pay  the  balance  was definitely incurred by them. For  the  reasons  stated above, we hold that  there  is  no

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substance in this appeal.  It is accordingly dismissed  with costs. S.R.                              Appeal dismissed. 578