Y S VENKATA SUBBIAH CHETTY Vs. ASUBBA NAIDU

JUDGEMENT

(1.) This was an action brought by a merchant in Cuddapah, called Venkata Subbiah Chetty, against two persons, who may for brevity be called the "Naidus," the South Indian Export Company and Heinrich Brandt. The facts giving rise to the action are as follows: The Naidus were the owners of some mica mines in Nellore. On the 17th of February 1906, they entered into an agreement, Exhibit I, with the South Indian Export Company regarding the working of the mines and disposal of the produce. The general nature of the agreement was that the Company should receive the produce of the mines and sell it, should receive a commission on the gross amounts realized by sale and certain specified disbursements incurred in connection therewith. They were further to give the owners a standing advance of Rs. 55,000, and were to receive on that sum and on any further sums they might advance, interest at 6 per cent. (Clause 5). It was provided by Clause 11 that the Company should first, pay the commission, interest and disbursements due to themselves out of the realized proceeds of the mica sales, then pay various creditors of the Naidus in certain proportions and hand the balance, if any, to the Naidus. Clause 12 provided that the Company should, subject to Clause 11, have a lien on all cash and mica in their hands as security for the repayment of all sums which might fall due under the agreement. The agreement was to continue to be in force for five years from 1st of March 1906, and all moneys due to the Company, including the standing advance of Rs. 55,000, were to be paid off and discharged not later than two months before the expiration of the agreement, i.e., by the 1st of January 1911.

(2.) The agreement duly came into force, and under it quantities of mica were sold and payments "made by the Company to the various creditors of the Naidus, including the plaintiff. Meanwhile the Naidus were being pressed by the plaintiff for further security and a further share of the proceeds of the mines. He had apparently obtained decrees against them to an amount exceeding a lakh of rupees. In these circumstances the Naidus entered into an arrangement with the plaintiff, which is set out in a letter dated the 20th of November 1908 (Exhibit E). The material part of that letter is a follows: We undertake that all the mica produced in our mines at Kalichedu and Tellabodu will be delivered only through the South Indian Export Company; and that the net sale-proceeds after deducting their commission will be paid to you only by the said Company. In confirmation of this our undertaking, we have this day caused the Manager, South Indian Export Company, to give you an undertaking that the sale- proceeds will be paid to you by him as aforesaid. We hereby agree and give you a lien on the mica now in our hands and future mica from the above said mines till the above said amounts are fully repaid.

(3.) On the same date the Naidus wrote to the South Indian Export Company a letter (Exhibit A1) which contains the following passage: We request you to give an undertaking to Venkata Subbiah Chetty that you will pay him from time to time the net sale-proceeds, after deducting your commission of all the mica produced in our names at Kalichedu and Tellabodu that we shall deliver through you as per agreement between ourselves.