Decided on March 07,1938


Referred Judgements :-



Kania - (1.)1. This case, which involves a sum of three thousand rupees only, has been contested as a test case to determine certain points in the diamond trade in Bombay. Plaintiffs, a firm dealing in diamonds, handed over to defendant No. 1 173 diamonds on or about November 8, 1934, on terms signed by him in the plaintiffs' book. That document runs in the following terms: To. Zaveri Amritlal Raichand, Bombay, 8-11-1934. Written by Shah Fatehchand Lallubhai. I have this day received from you the goods specified below, for the below-stated purposes and on the below-stated conditions. 1. The goods have been entrusted to me for the sole purpose of being: shown to the intending purchasers.
(2.)THE ownership of the goods is of you alone and I have no right to or interest in them.
I have no authority whatever to sell, mortgage the goods or to deal with them otherwise.

I am bound to return the goods whenever you make a demand for their return,

(3.)I am responsible for the return of the goods to you in the same condition in which I have received them. And so long as I do not return them to you, I am liable and responsible for them in all respects. Particulars of the goods: Diamond brilliants 173 in number, ratis 14, Rate up to Rs. 225/ The Signature of Shah Fatehchand Lallubhai in respect of the "jangad" (goods taken on approval) by the hand of Bhagwandas. Diamond Brilliants 58 in number, carat 5-5, Rate 15-3. 58 returned. The signature of Shah Fatehchand Lallubhai in respect of the "jangad" (goods taken on approval) by the hand of Bhagwandas. 2. Plaintiffs not having received back the diamonds for some time called upon defendants Nos. 1 and 2 to return the same, but they were put off. Defendants Nos. 1 and 2 are partners and do business as brokers in diamonds. Defendants Nos. 3 and 4 are stated to be brokers in jewellery. The plaint states that on making inquiries the plaintiffs learnt that the defendants had conspired together to deprive them of the diamonds. The plaintiffs thereupon moved the police and the police recovered the diamonds from defendant No. 4's possession. Plaintiffs then filed a complaint for criminal breach of trust and conspiracy. In this suit the plaintiffs claim recovery of the diamonds on the following grounds : (1) That the defendants had entered into a criminal conspiracy to deprive the plaintiffs of the diamonds. (2) That defendants Nos, 1 and 2 had committed criminal breach of trust in respect of the diamonds and defendant No. 4 had obtained possession of the diamonds with notice that an offence had been committed in respect thereof. (3) That the plaintiffs were the owners of the diamonds and as such were entitled to recover the same from the defendant who was in possession of them. Defendants knew that none of them had authority to deal with the diamonds of which plaintiffs were the owners. (4) That the defendants held the diamonds in trust for the plaintiffs and the plaintiffs sought to' follow the same in the hands of defendant No. 4. The prayers are for the return of the diamonds or recovery of their value. 3. Defendants Nos. 1 and 2 admitted in their written statement that they had received the diamonds from the plaintiffs as brokers on the terms mentioned in paragraph 3 of the plaint. According to them they had returned the diamonds to the plaintiffs, who sold the same directly to defendant No. 3. They, therefore, contended that they were not liable to the plaintiffs at all. 4. In his written statement defendant No. 3 alleged that he received those diamonds from defendants Nos. 1 and 2 jangad and in his turn delivered over the same to one Hiralal Jivabhai, in order that Hiralal may sell the same to his customer. In that written statement it was urged that defendant No. 3 having merely passed on the diamonds he was not liable to the plaintiffs. 5. Defendant No. 4 denied the charges of conspiracy made in the plaint and also denied that he had any knowledge of any offence having been committed in respect of the diamonds. Against the plaintiffs' claim to recover the diamonds as the owners thereof, defendant No. 4 stated in paragraph 9 of his written statement that defendants Nos. 1 and 2, who were mercantile agents, were, with the consent of the plaintiffs, in possession of the diamonds and the same were sold by them, when acting in the ordinary course of business, to defendant No, 3 and therefore that sale was valid and binding as if it was expressly authorised by the plaintiffs. Defendant No. 4 contended that he purchased the said diamonds from defendant No. 3 in good faith, and at the time when he purchased them, he had no notice of the fact that defendant No. 1, 2 or 3 had no authority to sell them. He, therefore, contended that the plaintiffs were not entitled to recover anything from him.
On these pleadings defendants Nos. 1 and 2 raised five issues. After the case proceeded for a short time those defendants withdrew and the case thereafter proceeded against them ex parte. Defendant No. 3 did not appear at the hearing to defend or support his written statement. On behalf of defendant No. 4 ten issues were raised. At the commencement of the trial Mr. Desai for the plaintiffs intimated that he did not propose to establish any criminal conspiracy or allegations contained in paragraph 5 of the plaint. Issues Nos. 1 and 2 were, therefore, given up and are found against the plaintiffs.


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