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Kannusami Chetti v. M. Rahimat Ammal And Another

Kannusami Chetti
v.
M. Rahimat Ammal And Another

(High Court Of Judicature At Madras)

Second Appeal No. 3 Of 1930 & Civil Miscellaneous Petition No. 2553 Of 1930 | 11-10-1932


Sundaram Chetty, J

[1] C.M.P. No. 2553 of 1930 - This second appeal was filed by the 7th defendant impleading the plaintiff alone as the respondent. The suit was filed by the plaintiff for the recovery of a certain amount by the sale of the hypothecated properties, and if, for any reason, the Court should hold that the plaintiff cannot proceed against the hypotheca, she prays that defendants 8 to 10 should be held liable to pay the suit amount jointly and severally.

[2] The facts of the case are briefly these. The plaintiff s father Mahomed Rowther became entitled at a family partition to the mortgage debt due under the original of Ex. B, dated 17th December, 1902 and executed by one Section N. Mahomed Rowther. The plaintiff was a young girl of 2 years when her father died. In 1911 the 8th defendant, who is the plaintiff s mother, thought of remarriage and fraudulently assigned the aforesaid mortgage bond on behalf of herself and the minor plaintiff in favour of the 9th defendant under Ex. G-1. The 9th defendant in his turn assigned it in favour of the 10th defendant. The aforesaid assignment by the 8th defendant is void and ineffectual so far as the plaintiff s share in the mortgage debt is concerned. On the strength of the aforesaid assignment, the 10th defendant filed O.S. No. 99 of 1913 on the file of the Additional District Munsif s Court of Madura impleading the present plaintiff and also defendants 8 and 9 as parties thereto. The plaintiff was then a minor and was not properly represented and the decree in that suit cannot therefore affect her interests. She has therefore filed the present suit for two kinds of relief in the alternative. The first Court dismissed the plaintiff s suit as against all the defendants except the 8th. On appeal by the plaintiff, the lower appellate Court gave a decree in plaintiff s favour for the amount found due to her as against the hypotheca, in the hands of the 7th defendant, dismissing the claim against the 10th defendant. As against that decree, the 7th defendant has filed this second appeal impleading the plaintiff alone as respondent. During the pendency of this appeal, an application was made by the plaintiff (respondent) to add the 10th defendant also as a co-respondent in the appeal. It is C.M.P. No. 2553 of 1930. The reasons for impleading the 10th defendant as a party respondent in this appeal are stated in the affidavit filed in support of that petition. On the 7th of August, 1930, the Master passed an order directing the 10th defendant to be made a party to the appeal. That order was passed without previous notice to the 10th defendant. It is now urged by the 10th defendant, that under the Appellate Side Rules the Master had no jurisdiction to direct the addition of a party as a co-respondent and therefore that order is ultra vires. It appears that such an order is not within the competence of the Master to pass, and accordingly, I allowed that petition to be treated as not disposed of in the eye of law and heard arguments on both sides at great length for the purpose of determining whether the 10th defendant can be added as a co-respondent in the circumstances of this case.

[3] Two contentions have been put forward on behalf of the 10th defendant to persuade the Court to dismiss this petition. One is that under Rule 20 of Order 41, Civil Procedure Code, which alone gives the power to an appellate Court to add a party as respondent, the 10th defendant cannot be added, as he cannot be deemed to be interested in the result of the appeal. The second is that the Court s discretion under Rule 33 of Order 41, Civil Procedure Code, should not be exercised in favour of the plaintiff (respondent) by interfering with the dismissal of her suit as against the 10th defendant by the Courts below, regardless of the fact that the 10th defendant has acquired a valuable right on account of the omission on the part of the plaintiff to file either an appeal or a memorandum of objections within the period of limitation.

[4] There is, no doubt, that the power vested in the appellate Court under Rule 33 can be exercised in favour of a party not on the record in the appeal, but certainly not against a person not actually a party on the record. The scope of the powers given to an appellate Court by Rule 33 has been fully considered and decided by a Full Bench of our High Court in the case reported in Subraniania Chettiar v. Sinnammal (1930) I.L.R. 53 Mad. 881 : 59 M.L.J. 634 (F.B.). It was held that those powers are very wide and can be exercised in a proper case even in favour of a respondent who has neither appealed nor filed a memorandum of cross-objections. But it is recognised that the exercise of such extraordinary powers is a matter of discretion with the appellate Court which must depend upon the peculiar circumstances of each case. The Illustration to Rule 33 which indicates the type of a case covered by the section is as follows:

A claims a sum of money as due to him from X or Y and in a suit against both, obtains a decree against X. X appeals and A and Y arc respondents. The appellate Court decides in favour of X. It has power to pass a decree against Y.

[5] The view taken by the Calcutta High Court in the decisions reported in Gangadhar v. Banabashil (1914) 22 C.L.J. 390 and Abjal Majhi v. Intu Bepari (1915) 22 C.L.J. 394 is, that though the rule is widely expressed, ordinarily the exercise of the power conferred thereby should be limited to those cases where as a result of the appellate Court s interference with the decree in favour of the appellant, further interference is required in order to adjust the rights of the parties in accordance with justice, equity and good conscience. This is exactly a case covered, by the illustration. But in the Full Bench decision of this High Court referred to above, it has been held that the appellate Court has jurisdiction to interfere in a proper case and pass any decree and make any order which ought to have been passed or made in the suit and that the view taken in the aforesaid Calcutta decisions would be a limitation of the Court s powers which is not warranted by reason of the very wide terms of the rule. But in the present case, it is unnecessary to go farther than the limits placed by the Calcutta High Court in the said two decisions, because this case is exactly covered by the illustration to Rule 33. The plaintiff seeks to recover the suit amount by the sale of the hypotheca in the first instance. That is the primary relief claimed by her. If that relief is denied to her, then she asks for a decree against the 10th defendant who sued on the mortgage and recovered the full amount. She cannot and does not ask for a cumulative relief against the hypotheca and the 10th defendant. A decree for the recovery of the money by sale of the hypotheca precludes her from asking for a personal decree against the 10th defendant. In the present appeal, the 7th defendant, who stands in the shoes of the auction-purchaser, in execution of the mortgage decree obtained by the 1th defendant, attacks the correctness of the decree against the hypotheca and wants the plaintiff s suit to be dismissed as against the hypotheca. If in this appeal the decree against the hypotheca is set aside, then the question of further interference with the decree of the lower appellate Court dismissing the claim against the 10th defendant arises for consideration and in order to do complete justice to the parties in exercise of the powers under Rule 33, a decree may be passed in favour of the plaintiff (respondent) as against the 10th defendant, though the plaintiff (respondent) has not filed any appeal or memo of cross-objections.

[6] Relying on the Privy Council decision in V.P.R.V. Chokalingam Chetty v. Seethai Acha (1927) L.R. 55 I.A. 7 : I.L.R. 6 R. 29 : 54 M.L.J. 88 (P.C.) and the decisions in Ma Than May v. Mohamed Eusoof (1931) I.L.R. 9 Rang. 624, Saktiprasanna Bhattacharya v. Naliniranjan Bhattacharya (1930) I.L.R. 58 Cal. 923 and Rukia v. Mewa Lal (1928) I.L.R. 51 All. 63 the learned advocate for the 10th defendant strenuously contended that the Court should not exercise its discretion to add the 10th defendant as a party respondent for the purpose of passing a decree in pursuance of the powers given to it under Rule 33. In Chokalingam Chetty v. Seethai Acha (1927) L.R. 55 I.A. 7 : I.L.R. 6 R. 29 : 54 M.L.J. 88 (P.C.) and Ma Than May v. Mohamed Ensoof (1931) I.L.R. 9 Rang. 624 the main ground for refusing to add a person as a party respondent to the appeal is the fact that the person has acquired a valuable right under that decree, inasmuch as an appeal against him was then barred by limitation. In those cases, the person sought to be added as a party was a necessary party to the appeal, in the sense that the appeal could not proceed in the absence of that person, and as the appellant could have very well filed an appeal against that person also in time, it was thought that he should not be deprived of a valuable right acquired by him, by means of a discretionary power vested in the appellate Court. As I have already pointed out, the facts of the present case are quite different. In the face of the lower appellate Court s decree granting relief to the plaintiff against the hypotheca, she cannot file an appeal against the dismissal of her claim against the 10th defendant. She cannot therefore be blamed for not filing an appeal against that portion of the decree dismissing the suit against the 10th defendant, or for not filing a memorandum of objections for the same relief, so long as the decree against the hypotheca given to her is not set aside. In case the decree against the hypotheca cannot be upheld, this is eminently a not case for the exercise of the powers of the appellate Court under Rule 33, in order to see whether she can at least be given a decree against the 10th defendant or not. The view taken in Saktiprasanna Bhattacharya v. Naliniranjan Bhattacharya (1930) I.L.R. 58 Cal. 923 is not quite in accordance with the decision of a Division Bench of this High Court reported in Ponnuswami Asari v. Palaniandi Mudali (1919) 11 W. 602. The somewhat narrow view taken by the Calcutta High Court as to the scope of Rule 22 of Order 41, Civil Procedure Code, has not been adopted by our High Court in the Full Bench decision in Munisami Mudaly v. Abbu Reddy (1912) I.L.R. 38 Mad. 705 : 27 M.L.J. 740 (F.B.). According to this Full Bench decision, it is open to a respondent under Rule 22 to file a memo of cross-objection against any other respondent, whether the appellant was interested in it or not. In Ponnuswami Asari v. Palaniandi Mudali (1919) 11 L.W. 602 the learned Judges held that the appellate Court has jurisdiction under Order 41, Rule 20 to add a person as a co-respondent, in order to enable the respondent already on record in the appeal to file a memo of cross-objections against him. The treat the person sought to be added as one interested in the result of the appeal within the meaning of Rule 20, because the expression "the appeal" should be understood in the broad sense so as to include all the proceedings in the appellate Court whether those involved in the disposal of the appeal proper or also those involved by the memo of objections. If the appellate Court has jurisdiction under Rule 20 to add a person as a co-respondent in order to sustain the memo of cross-objections to be filed against him, according to the decision in Ponnuswami Asari v. Palaniandi Mudali (1919) 11 L.W. 602 there is no difficulty in holding that the appellate Court has jurisdiction under Rule 20 to add a person as a party respondent for the purpose of exercising the powers vested in it under Rule 33, though no appeal or memo of cross-objection has been filed. In the present case, if the 10th defendant was originally made a respondent in the appeal itself, there can be no question that under Rule 33 the dismissal of the suit as against him can be interfered with by the appellate Court if the decree against the hypotheca has to be set aside. The relief that could be obtained against him by way of cross-appeal may be obtained under Rule 33, even without filing the memo of objections. That being so, the principle of the decision in Ponnuswami Asari v. Palaniandi Mudali (1919) 11 L.W. 602 can well-nigh be extended to the present case also. The decision in Saktiprasanna Bhaitacharya v. Naliniranjan Bhattacharya (1930) I.L.R. 58 Cal. 923 proceeds on the narrow view of the scope of Rule 22 of Order 41, Civil Procedure Code, adopted by the Calcutta High Court in some of its decisions. That is why it was held that a memo of cross-objections filed against one who was not already a party respondent was liable to rejection. It may be reasonably urged that the 10th defendant in this case is one interested in the result of the appeal, because the relief which the plaintiff (respondent) may ask the Court to give her as against the 10th defendant in exercise of the powers under Rule 33 is one contingent on the result of the appeal. Even if Rule 20 is deemed to be strictly not applicable to the present case, the appellate Court has power to add parties under Order 1, Rule 10, Civil Procedure Code, read with Section 107. In Ponnuswami Asari v. Palaniandi Mudali (1919) 11 L.W. 602 this view has been expressed by Krishnan, J., who points out that Rule 20 does not exhaust the appellate Court s power to add parties. The decision of the Patna High Court of Sir Dawson Miller, C.J., and Mr. Justice Foster reported in Padarath Mahton v. Hitan Singh (1924) 82 I.C. 600 deals with a case exactly on all fours with the present case. Following the decision in Girish Chander Lahiri v. Sasi Sekhareswar Roy (1905) I.L.R. 33 Cal. 329 Miller, C.J., observes that in a case of this description the ordinary rules of limitation relating to appeals ought not to apply, where in the course of an appeal the Court finds that in order to do justice between the parties it is necessary to bring one of them who was a party to the suit upon the record in the appeal. It has further held that the Court in second appeal has power under Rule 20 to bring parties upon the record in order to carry out the powers granted to the Court under Rule 33 of Order 41. The principle of this decision is in consonance with the view taken by this High Court in Ponnuswami Asari v. Palaniandi Mudali (1919) 11 L.W. 602. I am clearly of opinion that there are adequate grounds for exercising the powers given under Rule 33 in the present case, and on the authority of the two decisions above mentioned, the 10th defendant could be added as a party respondent now under Rule 20, Order 41, Civil Procedure Code. This may be done even under Order 1, Rule 10 read with Section 107, Civil Procedure Code.

[7] I accordingly direct the addition of the 10th defendant as 2nd respondent in this appeal. The appeal will be heard on the merits.

[8] This second appeal coming on again for hearing the Court delivered the following

JUDGMENT

[9] The facts of this appeal have been set forth in the order passed on C.M.P. No. 2553 of 1930 in this appeal which will form part of this judgment. The plaintiff and her mother (8th defendant) may be taken to be co-heirs of the late Mahomed Rowther and have inherited his estate which they held as tenants-in-common. The lower appellate Court has rightly held that the assignment of the mortgage bond Ex. B in favour of the 9th defendant whose assignee is the 10th defendant is void as against the plaintiff s interest in that mortgage bond, as her mother who effected the assignment on behalf of herself and the minor plaintiff was not the plaintiff s legal guardian according to Mahomedan Law. On the strength of that assignment, the 10th defendant sued on the mortgage bond in O.S. No. 99 of 1913 on the file of the Additional District Munsif s Court, Madura, impleading the present plaintiff (who was then a minor) as one of the defendants and obtained a decree. In execution of that decree he brought the mortgaged properties to sale. The 6th defendant was a bona fide purchaser of those properties in Court-auction from whom the 7th defendant subsequently purchased under Ex. X. In passing the decree in the present suit in favour of the plaintiff for her share of the mortgage amount against the hypotheca, the learned Subordinate Judge appears to have entirely overlooked the principles of law governing the title acquired by a bona fide Court auction-purchaser. This serious omission has led to a wrong decree being passed. It is contended on behalf of the appellant that when a decree for sale of the hypotheca was passed in favour of the present 10th defendant in the former suit to which the present plaintiff and her mother were also parties and when the Court had jurisdiction to sell the hypotheca in execution of the decree, the title acquired by a bona fide auction-purchaser (who is a third party) cannot be impeached by the present plaintiff and she is debarred from claiming any relief against the hypotheca in the hands of the 7th defendant. The ground on which the present plaintiff attacks the former decree is, that inasmuch as her mother was not competent to assign her interest in the mortgage bond to the 10th defendant, the decree passed in his favour for the whole of the mortgage amount is not binding on her and therefore she must be given once again a decree for her share of the amount against the hypotheca. That a bona fide auction-purchaser is immune from such attacks by those who were actually parties to the suit in which the decree against the hypotheca was passed, has been held in a series of decisions not only of the Privy Council but also of the High Courts. In Zain-ul-abdin Khan v. Muhammad (1887) L.R. 15 I.A. 12 : I.L.R. 10 All. 166 (P.C.) Asghar All Khani their Lordships of the Privy Council have recognised the distinction between the cases of bona fide purchasers in Court-auction who are no parties to the decree and the cases of the decree-holders themselves being the Court auction-purchasers. It was held that a sale which had taken place in execution of a decree in force at the time could not afterwards be set aside as against a bona fide purchaser not a party to the decree, because on further proceedings that decree was subsequently reversed by an appellate Court. In another case, the Privy Council held that where property was sold in execution of a valid decree and purchased bona fide by a third party, the existence of a cross-decree for a higher amount in favour of the judgment-debtor would not support a suit by the latter against the purchaser to set aside the sale. Vide Rewa Mahton v. Ram Kishen Singh (1886) L.R. 13 I.A. 106 : I.L.R. 14 Cal. 18 (P.C.). At page 25 their Lordships observe as follows:

To hold that a purchaser at a sale in execution is bound to inquire into such matters would throw a great impediment in the way of purchases under executions. If the Court has jurisdiction, a purchaser is no more bound to inquire into the correctness of an order for execution than he is as to the correctness of the judgment upon which the execution issues.

[10] This principle has been applied and followed in the decision of the Allahabad High Court reported in Kaunsilla v. Chander Sen (1900) I.L.R. 22 All. 377. In another case, Malkarjun v. Narhari (1900) I.L.R. 22 All. 377, where the sale in execution of a mortgage decree was effected after service of notice upon a person who was not the legal representative of the judgment-debtor s estate but who Was erroneously treated by the executing Court as such representative, the judicial sale was held by the Privy Council not to be a nullity, though the irregularity was a material one. The purchase in that case was by a third party and it was held that the Court had jurisdiction to sell. The observation at page 347 is important, namely:

Their Lordships agree with the view of the learned Chief Justice that a purchaser cannot possibly judge of such matters, even if he knows the fact; and that if he is to be held bound to inquire into the accuracy of the Court s conduct of its own business no purchaser at a Court-sale would be safe. Strangers to a suit are justified in believing that the Court has done that which by the directions of the Code it ought to do.

[11] In a Full Bench decision of the Bombay High Court reported in Shivlal Bhagvan v. Shambhu Prasad (1905) I.L.R. 29 Bom. 435 (F.B.) the sale in execution of a mortgage decree in favour of a third party was upheld, even though that decree was subsequently varied in appeal by deciding that the mortgage was not enforceable against the minors and their property. That the title of a bona fide auction-purchaser who is not a party to the suit cannot be impugned on such grounds is also laid down by the Lahore High Court in Indar Sain v. Prabhu Lal (1921) I.L.R. 3 Lah.

88. The same view has been held by our High Court in the decision reported in Rhodes v. Padmanabha Chettiar (1914) 1 L.W. 1033. It is only where the Court has no jurisdiction to sell, for instance, the property of persons who were not parties to the suit, the decree and the sale would be void and the auction-purchaser would not be protected from the claims of such persons. If it is found that a minor though his name was on the record, was still not represented at all, it would be a case of his being no party to that proceeding. Vide the observations of the Privy Council in Khiarajmal v. Daim (1904) L.R. 32 I.A. 23 : I.L.R. 32 Cal. 296 (P.C.).

[12] The ratio decidendi of all these cases is in favour of the appellant s contention and the present plaintiff cannot attack the validity of the sale in Court-auction in execution of the former decree, by simply showing that the assignment of the mortgage bond by her mother (8th defendant) on the strength of which the previous suit was filed by the present 10th defendant is not valid, so far as her share in the mortgage money is concerned. The purchaser in Court-auction was not bound to enquire into the correctness of the former decree and was justified in believing that the Court had done what it ought to do.

[13] It is however contended on behalf of the plaintiff (respondent) that inasmuch as her mother was appointed as guardian ad litem for her in that suit, it must be taken that the interests of the guardian were adverse to her and therefore she was not properly represented in that suit. Order 32, Rule 3, Civil Procedure Code, shows that a person whose interest is adverse to that of the minor should not be appointed as guardian. The mere fact that her mother was the executant of the assignment deed in question would not be enough to hold, as a pure question of law, that the interests of the mother were really adverse to her in that suit. It has been so held by a Full Bench of this High Court in Venkatasomeswara Rao v. Lakshmanaswami (1928) I.L.R. 52 Mad. 275 : 56 M.L.J. 175 (F.B.). The learned Judges have held that "there is nothing either in the Civil Procedure Code or in any of the authorities to lay down not merely that such a person should not as a rule be appointed but cannot in any circumstances be validly appointed". In view of this pronouncement by a Full Bench of this Court, I think it unnecessary to refer to the earlier decisions of this Court as regards this question. Kuppuswami Aiyangar v. Kamalammal (1920) I.L.R. 43 Mad. 842 : 39 M.L.J. 375 and Sellappa Goundan v. Masa Naicken (1923) I.L.R. 47 Mad. 79 : 45 M.L.J. 675. In this case Ex. VI shows that a written statement was actually filed in the former suit on behalf of the plaintiff s mother and the plaintiff (who were defendants 6 and 7 respectively). The District Munsif says that that written statement is not available. It would appear from Ex. P-2 that one of the contentions of defendants 1 to 4 in that suit was about the validity of the assignment of the mortgage bond by the plaintiff s mother. But that question was not tried and decided as the defendants failed to appear at the time of the trial. Despite the fact that the plaintiff s mother was the executant of the assignment deed, it was open to her to plead in that case that the assignment was invalid so far as the minor s share in the mortgage bond was concerned. She might have set up that plea in the written statement filed. But in the absence of that written statement, we cannot be certain about it. In the circumstances of this case and upon the evidence on record, it is not possible to hold that as a matter of fact the interests of the plaintiff s mother were really adverse to those of the plaintiff in the former suit. So1 far as the auction-purchaser was concerned, he would be perfectly justified in believing that the Court would have considered this question of adverse interest when it chose to appoint the mother as the guardian for the plaintiff and that the appointment was made in a regular and proper way. In the absence of clear proof, I am not prepared to hold that the interests of the plaintiff s guardian in the former suit were really adverse to her and therefore she was not represented at all in that suit. That being so, the principle laid down in a uniform course of decisions as regards the title of the auction-purchaser (third party) must apply to the present case, because the plaintiff should be taken to have been a party to the former suit and as such she is precluded from disputing the validity of the Court-auction sale in favour of a third party in execution of that decree. That decree, if at all, is only voidable at her instance, and she has not chosen to ask for the setting aside of that decree in her present plaint.

[14] For all the foregoing reasons, I hold that1 the plaintiff cannot be given a decree against the hypotheca in the hands of the 7th defendant.

[15] Now, the question arises whether the plaintiff can at least be given the alternative remedy sought for against the 10th defendant, who has been added as the 2nd respondent, for the reasons already mentioned in the order passed in this appeal on 27th September, 1932. In the circumstances of this case, which have been already adverted to, I have no hesitation in stating that this is eminently a fit case for the exercise of the discretionary power vested in the appellate Court under Order 41, Rule 33, Civil Procedure Code. If the plaintiff s share of the mortgage debt legitimalely due to her cannot be recovered from the hypotheca in the hands of a bona fide auction-purchaser, is she not also entitled to any decree against the 10th defendant, who realised the mortgage debt including her share, by filing a suit on the mortgage bond and obtaining a decree thereon by virtue of the assignment deed, Ex. G-1, which was executed during the minority of the plaintiff by her mother Rahimat Animal on behalf of herself and as the guardian of the plaintiff The illustration to Rule 33 of Order 41, Civil Procedure Code, exactly covers the present case.

[16] The next point for consideration is, whether the plaintiff has a cause of action against the 10th defendant for claiming a refund of her share of the mortgage debt which he had collected and realised in the execution of the decree obtained in O.S. No. 99 of 1913 on the file of the Additional District Munsif s Court, Madura. The plaintiff and her mother Rahimat Ammal (the present 8th defendant) were entitled to the mortgage debt due under Ex. B as co-owners, they having inherited the property from the deceased Mahomed Rowther as his co-heirs under Mahomedan Law. This mortgage debt was one of the properties assigned by the 8th defendant under Ex. G-1 on 2nd March, 1911, in favour of the present 9th defendant, expressly reciting that she executed this deed of assignment on her own behalf and also as the guardian of the minor plaintiff. The 10th defendant is a subsequent assignee of the same rights from the 9th defendant under Ex. L. Specific mention of the assignment deed, Ex. G-1, is made in Ex. L, and there is no doubt whatever that the 10th defendant, when he got Ex. L, was perfectly aware of the fact of the execution of Ex. G-1 by Rahimat Ammal on her own behalf and on behalf of her minor daughter. He admits in his evidence as D.W. 5 that at the time of the execution of Ex. 1 in his favour the originals of Exs. B and G-1 were handed over to him. Even in his plaint in the former suit (vide Ex. O) he has referred to the above facts in paragraph 7. It is thus perfectly clear that the present 10th defendant was fully conscious of the fact of the execution of the original assignment deed (Ex. G-1) by Rahimat Ammal and her minor daughter when he got the assignment Ex. 1 from the 9th defendant. There is no scope for contending that when he took the assignment, Ex. L, he was under the belief that the mortgage debt in question was assigned by Rahimat Ammal (8th defendant) alone as the sole owner thereof.

[17] A mortgage debt creates an interest in immovable property. Under Mahomedan Law, the mother is neither the natural nor the legal guardian of her minor daughter. As held by the Privy Council in the decision in Imawibandi v. Mutsaddi (1918) L.R. 45 I.A. 73 : I.L.R. 45 Cal. 878 : 35 M.L.J. 422 (P.C.) the mother even as a de facto guardian has no power to convey to another her minor daughter s interest in immovable property which the transferee could enforce against the minor. Such a transfer is unauthorised and void. As observed by the lower appellate Court in paragraph 14 of its judgment, the transfer under Ex. G-1 is not proved to have been made either for the benefit or for any legal necessity of the minor. It must be held that this assignment is void and not binding on the minor to the extent of her share in the mortgage debt. What then is the position of law as between the plaintiff and the 10th defendant Under the assignment deed, Ex. G-1, what was conveyed was the interest of both the co-heirs. So far as the interest of the minor plaintiff (one of the co-heirs) is concerned, that transfer is void and ineffectual. On the strength of that void assignment, the 10th defendant has recovered the plaintiff s share of the mortgage money which justly belongs to her. Can the plaintiff get relief on the footing that this is an action for money had and received by the 10th defendant for the plaintiff s use (Vide Article 62 of the Indian Limitation Act.) To maintain an action of this kind, it is not absolutely necessary to show the existence of a privity of contract between the plaintiff and the 10th defendant. This is not a case of express agency. Is the 10th defendant an utter stranger to whom the law would impute no sort of obligation to refund the money to the plaintiff Would the law impute a sort of agency by fiction to the 10th defendant to give effect to the principles of justice and equity Is this case covered by Section 90 of the Indian Trusts Act which deals with the obligation of a co-owner gaining unfair advantage over another co-owner by availing of his position as such In short, can we predicate some kind of privity of a legally recognisable nature so as to entitle the plaintiff to claim refund of her share of the mortgage debt unlawfully collected by the 10th defendant Strenuous arguments have been advanced on both sides with much ability. If the facts of this case are clearly understood, the application of law does not create much difficulty.

[18] The principle of law has been well stated in the case in Mahomed Wahib v. Mahomed Ameer (1905) I.L.R. 32 Cal. 527. In that case the suit was by one of the co-sharers for the recovery of his share of the money due under two deeds of mortgage which was collected by the other co-sharer. The general principle applicable to an action for money had and received by the defendant to the plaintiff s use as laid down in Blackstone s Commentaries was applied in that case. In referring to Article 62 of the Limitation Act, Mookerji, J. observes at page 533 that the Article ought to apply wherever the defendant has received money which in justice and equity belongs to the plaintiff under circumstances which in law render the receipt of it the receipt by the defendant to the use of the plaintiff. It is further observed that this form of action would be maintainable in cases in which the defendant at the time of the receipt, in fact or by presumption or fiction of law receives the money to the use of the plaintiff. The learned Judges have also held in that case that in order to maintain an action of this kind it is not necessary to show that at the time of the receipt, the defendant really intended to receive it to the plaintiff s use. These principles have been adopted fully in the decision of our High Court reported in Baiznath Lala v. Ramadoss (1914) I.L.R. 39 Mad. 62 : 27 M.L.J. 640. That was a suit brought by one decree holder against another for the refund of an amount which the latter is alleged to have received by way of rateable distribution, while that sum was in fact due to the former. : The learned Judges applied Article 62 of the Limitation Act to such a suit, treating it as an action for money had and received by the defendant for the plaintiff s use. In that case, there was certainly no privity of contract nor was there any agency express or implied. It is not easy to bring that case under the category of some privity of a legally recognisable nature. But what seems tome on a careful perusal of that decision is that they regarded the action as maintainable because the defendant had received money which in justice and equity belonged to the plaintiff in circumstances which in law render the receipt of it by the defendant a receipt for the use of the plaintiff. The decision of another Division Bench of this High Court reported in Sankunni v. Govinda (1912) I.L.R. 37 Mad. 381 : 22 M.L.J. 485 is in conformity with the principles laid down in Mahomed Wahib v. Mahomed Ameer (1905) I.L.R. 32 Cal. 527. In the present case, having regard to the facts mentioned above, the 10th defendant by reason of the assignments under Exs. G-1 and 1 really stepped into the shoes of Rahimat Ammal, one of the co-owners of the mortgage debt. The assignment of the other co-owner s share (the plaintiff s share) being void and ineffectual, the 10th defendant must be deemed in the eye of law to have become a co-sharer with the plaintiff in respect of the mortgage debt. That was his real position when he realised the whole of the mortgage debt in execution of the decree in O.S. No. 99 of 1913. That being so, his liability to the other co-owner certainly arises under Section 90 of the Indian Trusts Act, and in no case was it decided that an action for money had and received by the defendant for the plaintiff s use would not be maintainable, if the fiduciary relationship could come under Section 90 of the Indian Trusts Act. This is one aspect of the present case. In the other aspect, this would be a case of the 10th defendant realising the plaintiff s share of the mortgage debt on the strength, of a void assignment in his favour made by the plaintiff s mother as her guardian. In an exactly similar case, the action for the recovery of money has been held to be one for money had and received, within the, meaning of Article 62 of the Limitation Act. Vide Shanmuga Pillai v. Minor Govindasami (1907) I.L.R. 30 Mad. 459 : 17 M.L.J. 452. This decision is a clear authority for* the maintainability of the action against the 10th defendant in the second aspect.

[19] On the side of the 2nd respondent (10th defendant) reliance was placed on the decision in Ramasami Naidu v. Muthusami Filiai (1918) I.L.R. 41 Mad. 923 : 35 M.L.J. 581 as an authority for showing that the plaintiff has no cause of action against the 10th defendant. There is an elaborate discussion of the English and Indian case-law in that decision. However, the previous decision of a Division Bench of this High Court in Baiznath Lala v. Ramadoss (1914) I.L.R. 39 Mad. 62 : 27 M.L.J. 640 was not noticed in it. The rule laid down in Blackstone s Commentaries seems to have been regarded as too wide and general, and stress was laid on the confinement of that principle to some privity of a legally recognisable nature or to other particular kinds of cases held by judicial decisions to be properly actions for money had and received. But as I have held that the principle of Section 90 of the Trusts Act is applicable to the present case, the action of the plaintiff against the 10th defendant for refund of the money would be maintainable, even according to the decision in Ramasami Naidu v. Muthusami Pillai (1918) I.L.R. 41 Mad. 923 : 35 M.L.J. 581. But as Mr. Varadachari, the learned Counsel for the plaintiff, has pointed out in his careful argument, the facts of the case in Ramasami Naidu v. Muthusami Piliai (1918) I.L.R. 41 Mad. 923 : 35 M.L.J. 581 are clearly distinguishable from the facts of the present case. In that case, the 1st defendant, the purchaser at the auction held by the Official Receiver, bona fide believed that the debts put up for sale in auction belonged exclusively to Rajappa Mudali. The debts were not put up for sale as those belonging to Rajappa Mudali and his other partners and therefore the purchaser was under the bona fide belief that he was purchasing the debts which exclusively belonged to Rajappa. That is why Sadasiva Aiyar, J. has observed at page 938 as follows:

A co-sharer may, by a stretch of language, be treated as standing in a position of confidence towards his co-sharers, but a person who ignorantly purchases from a co-sharer the whole of the claim of all the co-sharers cannot be said to be in such a position. I therefore agree that the plaintiff has no cause of action against the 1st defendant.

[20] But in the present case, it is perfectly clear that the 10th defendant was aware of the fact of assignment of the mortgage debt by two co-sharers and he did not take the assignment under the belief that the mortgage debt belonged only to the plaintiff s mother. After a careful reading of the decision in Ramasami Naidu v. Muthusami Pillai (1918) I.L.R. 41 Mad. 923 : 35 M.L.J. 581 I find it extremely difficult to bring the present case within the scope of the facts on which that decision was based. The Courts below are in error in holding that the decision in Ramasami Naidu v. Muthusami Pillai (1918) I.L.R. 41 Mad. 923 : 35 M.L.J. 581 governs the present case. In my opinion, that case is clearly distinguishable. On the authority of the other decisions referred to above, I hold that the plaintiff has a cause of action against the 10th defendant for the refund of her share of the mortgage money which the 10th defendant had collected on the principle of money had and received.

[21] There remains the question of res judicata. It is contended on behalf of the 10th defendant, that the plaintiff s claim as against him is barred as res judicaia by reason of the decision in O.S. No. 99 of 1913. Ex. I is the copy of the judgment in that suit. The present plaintiff was the 7th defendant in that suit, represented by her mother and guardian, the 6th defendant. Though a written statement was filed by 6th and 7th defendants in that suit, it seems that they did not appear on the date of the hearing. What is now urged on behalf of the 10th defendant is, that the present plea as regards the invalidity of the assignment under Ex. G-1 to the extent of the plaintiff s share might and ought to have been made a ground of defence in that suit, and therefore that decision operates as res judicata in the present suit. As I have already pointed out, it was certainly open to the plaintiff s mother (6th defendant therein) to have pleaded on behalf of the minor plaintiff that the assignment of the mortgage debt was invalid and not binding on the minor to the extent of her share. The omission to raise such a plea by the guardian or the omission to support that contention by adducing the necessary evidence would be an act of gross negligence on the part of the guardian. We find that the 6th defendant put in no appearance in the former suit during its trial and practically allowed the Court to proceed to decide that, suit ex parte. Such conduct on the part of the guardian is undoubtedly gross negligence. The decision in Dada Sahib v. Gajaraj Singh is a direct authority for holding that the decision in O.S. No. 99 of 1913 would not operate against the plaintiff as res judicata in the present suit. The same principle has been laid down by Mr. Justice Madhavan Nair in a recent decision reported in Subratnania Iyer v. Vaithilinga Pandara Sannadhi (1930) 60 M.L.J. 590. If the decree passed in a prior suit is the result of gross negligence on the part of a guardian of the minor, it will not operate as res judicata so as to bar the later suit by the minor. Vide also Punnayyah v. Viranna (1921) I.L.R. 45 Mad. 425 : 42 M.L.J. 429. It is contended on behalf of the 2nd respondent, that the omission to set up the plea that the assignment deed Ex. G-1 was void to the extent of the minor plaintiff s share, would not amount to gross negligence on the part of the guardian, because such an assignment was not understood to be void according to the then state of the law and it was only in Imambandi v. Mutsaddi (1918) L.R. 45 I.A. 73 : I.L.R. 45 Cal. 878 : 35 M.L.J. 422 (P.C.) the Privy Council clearly laid down that the transfer by one who is not a legal guardian under Mahomedan Law would be void and ineffectual. As it is found in the present suit, even treating the assignment as one made by a de facto guardian, neither benefit nor necessity is shown to exist so as to bind the minor and the guardian must have pleaded the invalidity of the assignment on this ground at least. Gross negligence on the part of the guardian having been shown beyond the pale of doubt, the former decision would not operate as res judicata in the present suit.

[22] Let me next consider the question of res judicata in some other aspects. Following the decision in Rukhmini v. Dhondo Mahadu (1911) I.L.R. 36 Bom. 207 at 208 and other cases, the lower appellate Court held that the question whether the plaintiff alone in O.S. No. 99 of 1913 was entitled to the amount of the mortgage money or whether the minor 7th defendant was also entitled to a portion of it, did not necessarily arise for determination in that suit. That was because the dispute between the plaintiff and the 7th defendant in that suit was not one in which the mortgagor-defendants were interested. It may however be contended that though the mortgagors in that suit had no concern with this dispute, still the 7th defendant having been made a party to that suit should have set up her interest in a portion of the mortgage debt, as a ground of attack against the claim of the plaintiff therein to the entire mortgage money. Vide the decision in Sethurama Aiyar v. Ramachandra Aiyar (1916) 5 L.W. 659. But, as I have held that the omission to set up such a plea was due to the gross negligence of the guardian, there is no res judicata as against the present plaintiff.

[23] The alternative remedy sought for by the plaintiff as against the 10th defendant must therefore be given in this suit. Out of the amount realised by the 10th defendant in execution of the decree in O.S. No. 99 of 1913 (after deducting the costs incurred by him in connection with that suit) he should refund to the plaintiff her 119-216th share of the balance. The mortgaged property was sold in Court-auction for Rs. 1,960 on 1st November, 1915 and the sale was confirmed on 2nd December, 19

15. The extract from the suit register (Ex. U) shows that the present 10th defendant drew by cheque a sum of Rs. 1,902-13-0 on 7th December, 19

15. Deducting the costs of suit and execution therefrom, the plaintiff should get 119-216th share of the balance Rs. 903. As this sum was utilised by the 10th defendant and withheld from the plaintiff to whom it was legitimately due, it is but equitable that the 10th defendant should repay the same with interest at 6 per cent, per annum from 7th December, 1915, till the date of this suit, viz., Rs. 577.

[24] In the result, the second appeal is allowed, and the decree passed by the Lower Appellate Court against the mortgaged properties is set aside, and a decree is passed in plaintiff s favour for the recovery of Rs. 1,480 from the 10th defendant with simple interest thereon at 6 per cent, per annum from this date. The plaintiff (1st respondent) should pay the 7th defendant s (appellant s) costs in this Court and in the Lower Appellate Court. The 2nd respondent will pay the 1st respondent, her costs in this second appeal. As regards the plaintiff and 10th defendant, there will be no order as to costs payable by one to the other, in the Courts below, and the Lower Appellate Court s decree directing the plaintiff to pay 10th defendant s costs is set aside.

Advocates List

For the Appellant Messrs. K. Rajah Ayyar, V. Ramaswami Ayyar, Advocates. For the Respondent R1, S. Varadachariar, K.S. Champakesa Ayyangar, R2, A.V. Narayanaswami Ayyar, Advocates.

For Petitioner
  • Shekhar Naphade
  • Mahesh Agrawal
  • Tarun Dua
For Respondent
  • S. Vani
  • B. Sunita Rao
  • Sushil Kumar Pathak

Bench List

HON'BLE MR. JUSTICE SUNDARAM CHETTY

Eq Citation

(1933) 65 MLJ 548

AIR 1933 MAD 806

LQ/MadHC/1932/250

HeadNote

Income Tax Act, 1961 — Non-residents — Tax Deducted at Source (TDS) — Question of limitation if survived — TDS held to be deductible on foreign salary as a component of total salary paid in India, in Eli case, (2009) 15 SCC 1 — Hence, held, question whether orders under Ss. 201(1) & (1-A) were beyond limitation purely academic in these circumstances as question would still be whether assessee(s) could be declared as assessee(s) in default under S. 192 read with S. 201 of the Income Tax Act, 1961.\nQuestion of limitation has become academic in these cases because, even assuming that the Department is right on the issue of limitation still the question would arise whether on such debatable points, the assessee(s) could be declared as assessee(s) in default under Section 192 read with Section 201 of the Income Tax Act, 1961.\nFurther, we are informed that the assessee(s) have paid the differential tax. They have paid the interest and they further undertake not to claim refund for the amounts paid. Before concluding, we may also state that, in Eli Lilly & Co. (India) (P) Ltd.1 vide para 21, this Court has clarified that the law laid down in the said case was only applicable to the provisions of Section 192 of the Income Tax Act, 1961.\nLeaving the question of law open on limitation, these civil appeals filed by the Department are disposed of with no order as to costs. (Paras 3 and 5)