- (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.
(2.) 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 as follows: "Notwithstanding anything 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 such termination". Clause 16 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.;