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Monghibai Vs. Cooverji Umersey - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Judge
Reported in(1939)41BOMLR1127
AppellantMonghibai
RespondentCooverji Umersey
DispositionAppeal dismissed
Excerpt:
.....assigned to the remaining two partners, the plaintiffs!, the whole of their interest: in the partnership property. in 1927,, the plaintiffs sued the defendants for realising the mortgaged security, which included their interest as mortgagees in two immoveable properties. the defendants contended that the transfer of 1926 was ineffective as it was not effected by a registered document and therefore the mortgaged property had not passed to the plaintiffs alone and had still vested in all the nine partners of the firm ; and that the other seven partners not being joined as parties, the suit was not maintainable. on that on the application of the plaintiffs, the court allowed the plaint to be amended by making the seven retiring partners as co-defendants in the suit. thereafter, during..........could and would logically have been properly constituted if it had bean amended by making the nine partners plaintiffs. but the same result could be achieved by making the seven retiring partners defendants since in that case all the parties would be before the court. technically the respondent's name should be substituted for that of the firm, inasmuch as the father was dead and the respondent was the sole owner of the partnership property, but such a change constituted only a formal amendment, and once it was made judgment could be entered for the respondent since he alone was beneficially entitled and the defendant partners disclaimed any interest.19. the appeal court accordingly ordered the plaint to be amended by inserting the name of cooverji umersey in place of cooverji umersey &.....
Judgment:

Porter, J.

1. This case raises a short point for the decision of the Board. It is an appeal from a judgment and decree of the High Court at Bombay in its appellate jurisdiction dated March 16, 1937. By its judgment the Appeal Court affirmed a decree of. the High Court in its ordinary original civil jurisdiction dated July 30, 1936.

2. Up to and after the year 1925, a firm of Cooverji Umersey & Co. were carrying on business in partnership in Bombay. In 1925 it consisted of nine partners, Cooverji Umersey, the respondent, his father Umersey Katchra, and seven others who were defendants Nos. 4 to 10 below.

3. On September 30, 1925, one Mawji Waghji and his wife, the appellant, borrowed Rs. 1,20,000 from the firm and gave a promissory note for that sum in favour of the firm. The advance was secured by certain bales of cotton, and at the same time the title-deeds of two houses belonging to the appellant and to her husband and situated at King Lane and Borah Bazar Street were deposited with the firm by way of equitable security and as further cover for the loan. In case of default the firm was to have recourse) to the bales of cotton in the first instance and against the house property for any deficiency.

4. In pursuance of this arrangement the firm sold the bales of cotton, leaving, however, a large portion of the debt unpaid.

5. In November, 1926, seven members of the firm retired, leaving the respondent and his father the only remaining members.

6. Of those seven the tenth defendant, Bhulabhai Devi, pursuant to an oral agreement made on November 6, 1926, with the respondent and his father, retired from the firm, paid to them the sum of Rs. 17,000 for his share of the losses of the business, released all his share, right, title and interest in the assets, outstandings, property and good will of the partnership business in favour of the respondent and his father, and agreed to execute in their favour all such transfers as might become necessary for better and more effectively assigning and transferring his share, right, title and interests.

7. On November 17, 1926, the other six defendants-Nos. 4 to 9-executed a document purporting to assign their interest in the partnership property to the respondent and his father.

8. This document was not registered in accordance with the terms of Section 17(1)(b) of the Indian Registration Act, 1908, and it was contended by the appellant, and was not disputed by the respondent, that neither the tenth defendant's oral agreement nor the written document of November 17 were effective to transfer an interest in immoveable property. The mortgage rights in the house property therefore remained in all the original partners. After November, 1926, the respondent and his father continued to carry on business in the firm name. On January 21, 1927, the firm as then constituted brought the present suit in the High Court of Bombay against the appellant and her husband for a declaration that the plaintiffs were equitable mortgagees of the two houses, for an order that the defendants pay them the sum of Rs. 1,33,500 with interest on Rs. 1,20,1000 at nine per cent, per annum from January 1, 1927, until judgment, and that in default of payment the mortgaged properties might be sold and the proceeds applied in and towards payment of the plaintiffs' claim. In this action the defendants raised a counter-claim. No question now arises with regard to the cotton, the promissory note or the counter-claim, but it was and is contended on behalf of the appellant that the suit in respect of the equitable mortgage of the houses was not maintainable1 inasmuch as the proper parties to the suit had not been joined. In her submission, the houses not having passed under the unregistered assignment of November 17, 1926, still remained vested in the original partners and could only be recovered in an action in which they were plaintiffs or, at least, were parties.

9. Pending the trial of the action the respondent's father Umersey Katchra died on or about October 21, 1928, leaving the respondent solely entitled beneficially to all the assets, outgoings, property and good will of the partnership business, to the sum of Rs. 1,20,000 and to the benefit of the mortgage securing it.

10. The case came on for hearing before B. J. Wadia J. on June 28, and August 9, 1934, and the appellant thereupon raised the contention that the transfer was ineffective as it had not been registered, and that the property had never passed from the original partners to the present respondent and his father. With this contention the learned Judge agreed, but he allowed the suit to proceed and oral evidence to be given in case the respondent could prove Feme oral terms of dissolution which should be) admissible.

11. To meet the objection that all the necessary parties had not been joined, the plaintiffs applied that the seven retiring partners should be placed on the record as co-plaintiffs or as co-defendants. Upon this application the learned Judge granted leave to amend the title of the suit by adding the retiring partners as defendants and by making the necessary consequent amendments in the plaint. Following this order the seven retiring partners were added as defendants, and the appropriate amendments made.

12. Defendants Nos. 4 to 10 put in a joint written statement referring to the document of November 17, 1926, and stating that they had transferred all their interest in the assets of the firm and had no further interest in the amount due from their co-defendants.

13. It appears that, after the hearing before the learned Judge and before the making of the written statement, all the seven retiring partners had executed a fresh deed dated August 22, 1934, transferring the assets of the firm to the respondent as sole owner of the business. This deed was duly registered and was relied upon by the respondent and defendants Nos. 4 to 10.

14. The case came on for hearing before the learned Judge for the second time on December 11, 1934, when two of the retiring partners, one of whom had, and the other of whom had not, executed the document of November 17, 1926, gave evidence and stated that they made no claim to any of the assets of the firm. The respondent also attempted to put in evidence the documents of November 17, 1926, and of August 22, 1934, but this evidence was rejected.

15. After hearing the evidence the learned Judge delivered judgment, holding that the only proof of the respondent's title was to be found in the document of November 17, 1926, and that as it required to be registered it could not transfer the property and was inadmissible in evidence. He also rejected the contention based on the second document since it had been executed sub sequently to the institution of the suit. He accordingly held that the suit was not maintainable.

16. From this judgment the respondent appealed on the ground that the learned Judge should have allowed defendants Nos. 4 to 10 to be made co-plaintiffs, but that in any case, once they had been made defendants, all parties interested were before the Court and appropriate relief could have been given.

17. The Appeal Court allowed the appeal on the ground that, as soon as the application to join the other seven partners was granted by the learned Judge and the amendment made, the Court had before it all persons interested in the equitable mortgage the creation of which was not in dispute.

18. The learned Chief Justice stated that the respondent was clearly before the Court as plaintiff, although, in his view, inaccurately described as Cooverji Umersey & Co. Moreover the Court had all the other persons interested in the equitable mortgage before it as defendants, and in those circumstances why the Court could not grant a decree enforcing the equitable mortgage he had great difficulty in understanding. In his view, with which Rangnekar J. agreed, the action in which the plaintiffs were described as Cooverji Umersey & Co. must in the circumstances be considered to have been brought by the respondent and his father. At that time, however, the right to recover had not passed from the original nine partners since the oral and written but unregistered transfers were ineffective to bring about that result. The suit, however, could and would logically have been properly constituted if it had bean amended by making the nine partners plaintiffs. But the same result could be achieved by making the seven retiring partners defendants since in that case all the parties would be before the Court. Technically the respondent's name should be substituted for that of the firm, inasmuch as the father was dead and the respondent was the sole owner of the partnership property, but such a change constituted only a formal amendment, and once it was made judgment could be entered for the respondent since he alone was beneficially entitled and the defendant partners disclaimed any interest.

19. The Appeal Court accordingly ordered the plaint to be amended by inserting the name of Cooverji Umersey in place of Cooverji Umersey & Co., and the suit was remitted to the lower Court for the trial of the issue raised by the counter-claim.

20. After hearing issues the learned Judge on July 30, 1936, passed the usual preliminary mortgage decree for payment of a sum of Rs. 1,37,287-2-8 with interest and, in default of payment, that the respondent should be entitled to apply for a decree absolute for the sale of the mortgage security. The second defendant appealed against the preliminary mortgage decree, and this appeal was dismissed with costs, and the decree passed accordingly, on March 16, 1937. It is from this decree that the present appeal is brought.

21. The only question argued before their Lordships was whether this suit was maintainable by the present respondent.

22. By Order I, Rule 10, of the Code of Civil Procedure :

(1) the Court may at any stage of the suit, if satisfied that the suit has been instituted through a bona fide mistake and that it is necessary for the determination of the real matter in dispute so to do, order any other person to be substituted or added as plaintiff upon such terms as the Court thinks just.

(2) The Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the Court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the Court may be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit, be added.

23. It was not disputed that the bringing of the action in the names of the two remaining partners as plaintiffs was due to a genuine mistake, and in any case this order gives the Court full power to amend the parties at any time. If, as was admitted in argument and as their Lordships think, the mortgagee's interest in the two houses did not pass to the respondent and his father by reason of the unregistered document of November 17, 1926, and the oral agreement made by defendant No. 10, that property remained in the nine original partners, In those circumstances their Lordships agree with the Appeal Court in thinking that it would have been more satisfactory that the seven retiring partners should have been made co-plaintiffs instead of co-defendants, but it may be that they objected to being so joined, or there may be other reasons which do not appear on the record for joining them as co-defendants. In any case they were so joined, the record was amended, and no appeal from the learned Judge's order was made. The whole of the necessary parties were therefore before the Court, and there seems no reason why the appropriate relief should not have been given.

24. It has long been recognised that one or more of several persons jointly interested can bring an action in respect of joint property, and, if their right to sue is challenged, can amend by joining their co-contractors as plaintiffs if they will consent or as co-defendants if they will not. Such cases as Luke v. South Kensington Hotel Company (1879) 11 Ch. D. 121 and Cullen v. Knowles (1898) 2 Q.B. 380 are examples of this principle. Nor indeed would it matter that a wrong person had originally sueld though he had no cause of action : see Hughes v. Pump House Hotel Company (No. 2) (1902) 2 K.B. 485. Once all the parties are before the Court, the Court can make the appropriate order, and should give judgment in favour of all the persons interested whether they be joined as plaintiffs or defendants. Prima facie, therefore, the trial Court in the present case should have given judgment in favour of the eight of the original partners who survived, though some of them had been made defendants. See Cullen v. Knowles (w.s.) at p. 382.

25. But it was argued that, even if this view be true, seven of the original partners had, by the transfer of August 22, 1934, made pendmte lite, assigned all their rights and interest in the mortgaged houses and could not thereafter maintain an action for sale in respect of them. No doubt it is true that parties who have assigned the whole of their interest pendmte lite cannot ask for judgment in respect of an interest which is no longer theirs. But it does not follow that their assignees are thereby precluded from recovering. If it were so, no assignments of property during the course of a] trial would be possible. Such a contention is, on the face of it, improbable, and it is now dealt with by Order XVII, Rule 1, of the Rules of the Supreme Court, which states :

A cause or matter shall not become defective by the assignment of any estate or title pendente lite.

26. But apart from that rule the principle has long been established in English law, and examples will be found in such cases as Seear v. Lawson (1880) 15 Ch. D. 426 and Campbell v. Holyland (1877) 7 Ch. D. 166. The same principle is applied in India and is now embodied in Order XXII, Rules 10(1) and 11, which provides :

In other cases of an assignment, creation or devolution of any interest during the pendency of a suit, the suit may, by leave of the Court, be continued by or against the person to or upon whom such interest has come or devolved.

27. In the application of this Order to appeals, so far as may be, the word ' plaintiff ' shall be held to include an appellant, the word ' defendant' a respondent, and the word ' suit' an appeal.

28. Therefore, though at the beginning of the suit the appropriate persons to recover were the nine original partners, once the transfer of August 22, 1934, was made, the party entitled to sue was the present respondent. As their Lordships have indicated, apart from the assignment of August 22, 1934, a decree should prima facie have been passed for the eight survivors of the original partnership, but all eight were before the Court, the respondent after amendment in fact alone was plaintiff, and the retired partners expressly disclaimed any interest.

29. In these circumstances, their Lordships think that the Appeal Court were right in looking at the substance of the matter and ordering the decree to be passed in favour of the respondent alone. But in any case once the assignment of August 22, 1934, was executed, the respondent alone was entitled to recover, and the decree was rightly passed in his favour.

30. One further argument urged on behalf of the appellant was that to grant the relief asked for would be to make the registration law of India of no effect.

31. In their Lordships' view, having regard to the grounds which they have given for affirming the judgment of the Court of Appeal, no such objection can be sustained.

32. They will humbly advise His Majesty that the appeal be dismissed and the order of the Appeal Court affirmed. The appellant must pay the costs of this appeal.


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