# • • • • v. MOHAMED IQBAL & MOHAMED ALI & ORS

- **Citation:** [1978] 3 S.C.R. 571
- **Court:** Supreme Court of India
- **Decided:** 1978-04-04
- **Case number:** Civil Appeal No. 2468 of 1968
- **Bench:** R. S. Sarkaria, N. L. Untwalia, P. S. Kailasam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/v-mohamed-iqbal-mohamed-ali-ors-7363
- **Pages:** 7

## Headnote

Privily of Contract-Conduct of Parties-Plaintiffs supplyi11g 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 17Additional evidence also not permissible in such cases.--Order XL!
Rul~ 27
Civil Procedure Code.
The PlaintifI 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 duly paid (Sic) for the same". The consignor in all
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the Railway Receipts except oner was one Sri G. K. Manavi and in one railway
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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 re.st
1)f the cheques for Rs. 24,000/- were dishonoured. Small sums were further
paid ID' 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
E
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 cheques were
"Stopped on account of the slack season.
F
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 plain-
, tiff 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 orcler dated 10-10-58 allowed the appeal, set aside the judgment
and remitted back the case to the trial Court to re-try 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 1nade 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
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SUPREME COURT REPORTS
[1978) 3 S.C.R.
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

## Text

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5 71
'
HAJI MOHAMMED ISHAQ MD. SK. MOHAMMED & 3 OTHERS
A
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v.
MOHAMED IQBAL & MOHAMED ALI & ORS.
April 4, 1978
[R. S. SARKARIA, N. L. UNTWALIA AND P. S. KAILASAM, JJ.]
Privily of Contract-Conduct of Parties-Plaintiffs supplyi11g 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 17Additional evidence also not permissible in such cases.--Order XL!
Rul~ 27
Civil Procedure Code.
The PlaintifI 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 duly paid (Sic) for the same". The consignor in all
B
c
the Railway Receipts except oner was one Sri G. K. Manavi and in one railway
D
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 re.st
1)f the cheques for Rs. 24,000/- were dishonoured. Small sums were further
paid ID' 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
E
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 cheques were
"Stopped on account of the slack season.
F
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 plain-
, tiff 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 orcler dated 10-10-58 allowed the appeal, set aside the judgment
and remitted back the case to the trial Court to re-try 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 1nade 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
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SUPREME COURT REPORTS
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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 : !. The appellants' appeal was completely devoid of substance.
[574 H, 574 Al
•
(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
f'
was not sustainable. [575 D·E.]
•
(b) The C&M" pleaded was as it is called in law, an implied contract brought
about by the conduct of the parties namely, th~ 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-DJ
(c) 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 gocxls 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 numerons
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 'vhich in law is called an implied
contract by conduct was brought about between them. Whatever may be the
jural relationship betwoon the plaintiff and Rahim, Rahim and the defendants
and in whatever manner he acted as a go-between-man, between the plaintiff
and the defendants, what is clear is that eiventua11y 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·DJ
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2468 of 1968.
From the Judgment and Decree dated 18-9-1964 of lhe My;ore
High Court in Regular Appeal No. (B) of 1956.
Dr. Y. S. Chitale, Haji Sheikh, A. H. Safi, K. J. John and D. N.
Mishra for the appellants.
R.B. Datar and Farhat (Miss) Qadri for the Respondent.
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The Jndgment 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 Civdl
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MOHAMMAD JSHAQ v. MD. IQBAL (Untwalia l.)
573
A
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 t.:> the
defendents. The suit was decreed by the Trial Court and finaily 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 d.ofendants 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 R.i;lway
Receipts except one was one Shri G. K. Manavi and in one Railway
; Receipt of 129 bags the consignor was the plaintiff firm. The c0nsignees 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 Ra;Jway
Receipts were sent by the plaintiff to the· defendants by Repislered
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 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 dishonoured. Small sums were paid by the
defendants in cash. The bafance 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. fo paragraph
5 of the plaint, however, it was mentioned :
"The Defendants are old customers of one Shri Abdul
Rahim Nabisabeb 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 bas
helped the plaintiff in the recovery of their dues from Defendants.''
Jn 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
plaintiff; they had placed orders for the supply of 630 bags of tobacco
with Sbri Abdul Rahim Nabisaheb Bagwan and he had handed over a
B:jak, 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 aecount of the slack season payment
was stopped in regard to the cheques amounting to Rs. 25,000/·.
The plaintiff's allegation that Babalal, one of its partners had come to
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Katni and banded over certain Railway Receipts and the Bijak, was
denied. A vague statement jn paragraph 3 of the written statement was
"The amount in respect of the said Bijak bas 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.
Ti1c 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
C
yeats, they filed applications in the High Conrt in the months of September and October, 1958 seeking amendment of their written state- .
ment 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 re-try it after giving
D
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
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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 ou somewhat 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
F
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 plaintilI 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
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Rahim in his turn had paid to the plaintiff the balance of the price of
the goods.
Mr. Y. S. Ch!tale, 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
H 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, is fit to be
interfered with on that account too. In our opinion the appellants'
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MOHAMMAD JSHAQ v. MD. IQBAL (Untwalia ].)
575
appeal was completely devoid of substance. We did not think it necesA
sary 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 Tira! 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 octween 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 petitious and we need not
mention in any detail the reasons thereof.
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We agree with the High Court that in view of the pleadings between the parties and the evidence adduced, the finding of the Trial E
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 had 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 F
on Rahim's account and not on its own was rightly rejected by the
High Court. While generally agreeing with it in its arproach to the
real points at issue in the case, we will very briefly indicate our difference of approach in regard tq a few minor matters.
The learned Judge of the High Court who delivered the leading
judgment i'n the appeal is not quite correct in saying that the plaint G
averments do not show how the contract between the plaintiff and the
defendants was formed; whether there was any express contract or an
implied contract to be inforred from the conduct of the parties.
It is
also not quite accurate to say that what was required to be found was
whether an implied contract to pay for the goods supplied could
be
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
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"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 m law, was plcsded 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 Jaw, an implied conlrl)ct brought about by the conduct of the parties, namely, the
supply of the goods by the plaintiff and their acceptance by the defenC' dants.
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
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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 abont 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 put 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 such a case the court may infer that the parties
have agreed to renew the express contract for another term.
Express and implied 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."
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MOHAMMAD ISHAQ v. MD. IQBAL ( Untwalia !.)
577
We found absolutely no substance in the argumeut of the appellants to assail the finding of the High Court that the plaintiff had
supplied the goods 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 place 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 suppli~d from the warehouse of Manavi who became the
consignor in the several Railway Receipts, Manavi supplied the goods
-On plaintiff's 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 is clear
fa 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 werehouse 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 he acted as a go-between-man, between the plaintiff and
the defandants, 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 substance in
this appeal.
It is accordingly dismissed with costs.
'S.R.
Appeal dismissed.
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