082-NLR-NLR-V-55-HIRDARAMANI-LTD.-Appellant-and-T.-A.-K.-DE-SILVA-Respondent.pdf
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GRAT1AEN J.—Hirdaramani Ltd. v. JDe Silva
1953Present: Gratiaen J. and Gimasekara J.
TTTR.T) AR.AMANI LTD., Appellant, and T. A. K. 33E SILVA,
Respondent
S. C. 94—D. C. Colombo, 21,772M
Contract—Novation—Ingredients necessary.
P. T., who was carrying on a business, bound himself and his heirs, executorsand administrators to pay monthly a certain sum of money to the plaintiff.Subsequently a private limited liability company acquired the business. P. T.who was the managing director of the company, continued the monthly pay-ments notwithstanding the cessation of his private business. After he diedthe company made similar payments subject however to the express qualifi-cation that the payments were ex gratia. In an action instituted by theplaintiff for a declaration that the company was liable to continue to makesuch monthly payments—
Held, that the claim of the plaintiff was insupportable in law. A novation ofa debt cannot, in the absence of any express declaration by the parties, beheld to exist except by way of necessary inference from all the circumstancesof the case.
./^.PPEAL from a judgment of the District Court, Colombo.
H. W. Jayewardene, with D. R. P. Goonetillelce, for the defendantappellant.
Sir Vkwatte Jayasundera, Q.C., with L. G. Weeramantry and O. M. deAltuis, for the plaintiff respondent.
Cur. adv. vult.
March 3, 1953. Gkatiasx J.—
On 29th January, 1944, an agreement was entered into between threepersons named Paramanand Tourmal, T. A. K. de Silva (who is theplaintiff) and A. C. P. Wijeratne (who is the plaintiff’s brother-in-law).Paramanand Tourmal had for many years been carrying on business inColombo under the name style and firm of “ Hirdaramani ”. ' Heemployed the plaintiff as his “ leading Jeweller ”, and Wijeratne as“ assistant Jeweller ”.
The agreement arrived at between these three parties was, inter alia, tothe following effect :lr
“ (a) The said Silva shall retire as leading jewellery maker in the firmof Hirdaramani as from the 1st day of February, 1944, and shallin 6onsideration of the sum of Rs. 475, being the purchase price,deliver to Mr. Paramanand all machines tools and otherimplements that are now at Hirdaramani and owned by Silva.
GR ATIAEN J.—Uirdaramani Ltd. v. De Silva
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(6) The said Wijeratne shall as from 1st February, 1944, serve underMr. Paramanand as leading jewellery maker on such remunerationas miy be agreed upon from time to time and shall devote hiswhole time and attention to such work and shall not work forany other person or firm whomsoever without the consent firsthad and obtained from Mr. Paramanand.
•(c) In consideration of the services rendered as aforesaid by Silva andas long as Wijeratne is employed under Mr. Paramanand he Mr.Paramanand shall as from 1st February, 1944, pay to Silvamonthly at the end of each and every month a sum of Rs. 150during the lifetime of Silva..
Towards the payment of the aforesaid monthly sum of Rs. 150 byMr. Paramanand he the said Wijeratne shall contribute a sumof Rs. 75 monthly from his remuneration.
{/) In the event of the said Wijeratne dying or being dismissed fromservice or being incapacitated by illness or otherwise or leavingthe service of Hirdaramani at any time or in the event of thedeath of Silva then the payment to Silva of the said sum ofRs. 150 shall immediately cease, anything herein contained tothe contrary notwithstanding. ”
"The term “ Paramanand Tourmal ” was expressed to include his heirs,executors and administrators, but no provision was made for the even-tuality of an assignment of the business by the proprietor during hislifetime.
Paramanand Tourmal ceased to carry on the business of “ Hirdaramani ”in his own right in 1946, and a private limited liability company, knownas Hirdaramani Ltd., and incorporated on 27th June, 1946, acquired thebusiness. In fact he was the Managing Director of the new Company untilhe died in March, 1948.
It is common ground that, notwithstanding the cessation of his privatebusiness in 1946, Paramanand Tourmal continued the monthly payments•of Rs. 150 to the plaintiff until the date of his death. The learnedDistrict Judge has held as a fact that he did so as the Managing Directorof the Company. After he died, the Company continued to make similarpayments until May, 1949, subject however to the express qualificationthat the payments were ex gratia.-
The plaintiff sued the Company on 27th October, 1949, (a) for the re-covery of a sum of Rs. 2,250 alleged to be due to him in respect of monthlypayments since the month of June, 1948, under the agreement dated29th January, 1944, and (6) for a declaration that the Company was liable•to continue to make such monthly payments to him “ in terms of the saidagreement ”. After trial the learned District Judge entered judgment infavour of the plaintiff as prayed for. The present appeal is from thisjudgment.
It is conceded that the Company could not be held liable under the!•original agreement, to which it was not a party, by reason only of thelassignment in its favour of the business which had previously been carried!
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GRATIAEN J.—Sirdaramani Ltd. v. De Silva
on by Paramamand Tourmal personally. The contractual liability was-primarily his alone, and was limited in point of time to the continuationof the contract of service between himself and Wijeratne, although I agree,as a matter of interpretation, that if his executors or aa m mistrators hadcarried on the business of “ Hirdaramani ” after his death, they too mighthave been obliged in law to pay the plaintiff’s allow;, me so long asWijeratne continued to serve them.
The basis of the plaintiff’s cause of action is, as alleged in paragraph 6of the annexed plaint, that the Company “ undertook the liability ofParamanand Tourmal”. In support of this allegation the plaintiffstated as follows in the course of his evidence at the trial: “ After I cameto know that the business had been converted into a limited liabilitycompany I spoke to Mr. Tourmal. I spoke to him about the paymentsthat were being made to me. I asked him whether there would be anychange in the payments made to me according to the agreement after the-business was incorporated into a limited liability company. He said hewas the Managing Director and Chairman of the Board of Directors, andthat there would be no change, and that the Company would pay. ” Thisevidence has been accepted by the learned District Judge as a truthfulaccount of the conversation which took place between the plaintiff andParamanand Tourmal shortly after the Company was incorporated. Hedecided that the Company was therefore liable by novation to dischargeParamanand Tourmal’s obligations under the original contract.
If the averment that the Company “ undertook the liability of Parama-nand Tourmal ” was intended to plead a novation, it is, to say the least,lacking in precision as to the terms of the agreement whereby Parama-nand Tourmal is alleged to have agreed to the extinction, by a contractof novation of his personal obligation and the imposition of a substitutedobligation on a different debtor, namely, the- Company. I shall assume-for the purposes of the present appeal that the plaint sufficiently eomplies-with the wholesome rule that novation must be specially and preciselypleaded.•
In the facts of the present case, the form of novatidn relied is a trans-action described by the Roman-Dutch jurists ns delegation, ie., a contract ■between the debtor and the creditor of an obligation and a third party,by which the third party, with his own consent and the consent of thecreditor, is substituted for the original debtor in such a way that the-obligation between the original creditor and the original debtor isextinguished and a new obligation established between the original creditorand the third party ”— Wess els on Contrast, Vol. 1, p. 728, para. 2438(citing Voet "46.2.11).
The plaintiff could not succeed by pleading and proving that the Com-pany had undertaken only the original obligation of Paramanand Tour-mal under the agreement dated 29th January, 1944, for even upon aninterpretation most favourable to the plaintiff, that particular obligationwas no longer subsisting after the date of Paramanand Tourmal’s death -Indeed, the action could not be maintained except upon the basis of afresh contract whereby the Company undertook an obligation not
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measured by the limits of Paramanand Tourmal’s extinguished liabilitybut continuing for a period of time extending far beyond that which, had beencontemplated in the terms of the original contract, namely, so long asWijeratne served “ Hirdaramani Ltd. ” as its “ leading jeweller Nosuch contract hr$ been pleaded or proved by the plaintiff.
“ A novation cannot, in the absence of any express declaration by theparties, be hej 1 to exist except by way of necessary inference from all thecircumstances of the case ”. Darling v. Registrar of Deeds (1912) S. A. A.
28 at 35. To my mind the correspondence between the plaintiff andthe Company after the death of Paramanand Tourmal rules out theinference (and far less the necessary inference) that the Company hadunequivocally undertaken an obligation of the kind which has now beensuggested. For three successive months the Company sent him acheque for Rs. 150 stating expressly that this was being done “ withoutany obligation on our part ”. On the first two occasions the plaintiffaccepted the money without registering any protest against the conditionsattaching to it. On the third occasion, nearly a month after he hadrealised the cheque, he wrote to say that he felt “ that the Company or inthe alternative the estate of the late Mr. Paramanand Tourmal is liable tocontinue the payment throughout my lifetime ”. That suggestion wasadmittedly made after he had obtained legal advice. As far as the Companywas concerned, it was promptly repudiated by its new Managing Director.
The learned District Judge has also held that the Company wasestopped by its conduct from denying its obligation to continue the pay-ments after the death of the original debtor. While I accept unreservedly-the principle of estoppel by representation enunciated in Hailsham, Vol. 1,p. 479, para. 547, I do not see how it can be applied to the facts of thepresent case. There is no evidence to support the view that the plaintiffwas misled into the belief that the Company would continue the payments“ throughout (his) lifetime ”. On the contrary, the letter dated 28thJune, 1949, negatives the theory that he entertained such an unqualifiedbelief.
In the view which I have taken, it is unnecessary to decide (1) whethera novation could have taken place without the concurrence of Wijeratne,who himself had undertaken certain obligations under the previousagreement, and (2) whether Wijeratne was in fact a party to the newagreement whereby, presumably, the scope of his liability was substantiallyenlarged.
It is indeed unfortunate for the plaintiff that he rejected the Company’soffer to continue the payments upon the clear understanding that theywould be made on an ex gratia basis. The plaintiff has chosen instead toobtain an adjudication of his legal rights, and I find myself constrained todecide that his claim is insupportable in law. I would therefore aEowthe Company’s appeal and dismiss the plaintiff’s action with costs bothhere and in the Court below.
Gunasekara J.—I agree.
Appeal allowed^