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Jhaverchand Dalichand Vs. Achaldas Chimnaji - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 478 of 1931
Judge
Reported inAIR1932Bom352; (1932)34BOMLR721; 140Ind.Cas.809
AppellantJhaverchand Dalichand
RespondentAchaldas Chimnaji
Excerpt:
solicitor-lien-costs-compromise by parties-lien dots not prevail against bona fide compromise-notice of lien-payment under compromise after notice received.;the court does not interfere for the purpose of preserving the solicitor's lien after a bona fide compromise between the parties has been arrived at, though the result of such compromise may be to deprive the solicitor of his costs. the solicitor's lien never precludes a fair and honest arrangement between the parties.;if, however, the parties arrive at a settlement with the intention of depriving a solicitor of his lien for his costs, the opposite party may be ordered to pay such costs. but in such a case the collusion must be clearly established; it may even he inferred from the facts.;cullianjee v. raghawjee : lakshmibai v...........for their costs the defendants ought not to be ordered to pay the plaintiffs' taxed costs. in that suit an action was commenced for recovering a sum alleged to be due to two seamen for wages earned on board the ship hope. both the seamen who were the plaintiffs, and the defendants who were the owners of the hope, had employedsolicitors. five days after the action was commenced the plaintiffs came to the defendants' office, and the parties settled the action by the plaintiffs each taking 5 in settlement of their claim and costs, and thereafter they left the country without paying the costs of their solicitors. it was held that there was no evidence that the parties had arrived at the settlement with the intention to defraud their solicitors, and the appeal court held that the defendants.....
Judgment:

Wadia, J.

1. This is a summons taken out by the applicants who are a firm of attorneys for the purpose of enforcing the lien which they claim in respect of the costs, charges and expenses incurred by them on behalf of the plaintiff in this suit and/or another suit also filed by the plaintiff, being suit No. 1638 of 1928. The plaintiff is the paternal uncle's son of one Shivlal Motichand who died in 1924, and he filed suit No. 1638 of 1928 against the present defendants Nos. 1, 2 and 3 and against the mother of the deceased Shivlal, alleging that he was a coparcener with Shivlal and that the adoption of defendant No. 2 by the widow of Shivlal was invalid and inoperative. The plaintiff 's former solicitors were Messrs.Khandwala and Chhotalal, but before the suit reached hearing he changed his attorneys and engaged the applicants who took over the conduct of the suit. The suit was heard before Rangnekar, J. on January 29, 1931, and it was dismissed with costs. The costs payable by the plaintiff in that case have been taxed at Rs. 7,729-7-4. Thereafter the plaintiff again approached the applicants, and engaged them to file the present suit against defendants Nos. 1, 2 and 3 and also defendants Nos. 4 and 5 who are the daughters of Shivlal, on the basis of his being a separated member of the family, and claiming as a present reversioner of Shivlal to the exclusion of his daughters according to a custom of the Jains of the Sirohi State. The plaintiff has alleged that the will of Shivlal is not genuine and that the testator's signature was forged, and he has also challenged the adoption of defendant No. 2. This suit was filed on March 11, 1931, and the defendants put in their respective written statements. The plaintiff's affidavit of documents was sent to him for being affirmed, but it was actually not affirmed.

2. On June 27, 1931, plaintiff wrote to his solicitors not to take any further proceedings in the suit, but the applicants still continued to correspond with their client, assuring him that they would do their best in the prosecution of the suit. It appears, however, that on July 9, 1931, the plaintiff arrived at a settlement of the suit direct with the defendants at Rohira in the Sirohi State, and the terms of settlement were written out on a stamp-paper. It was evidently because of this settlement that the plaintiff did not affirm his affidavit of documents. Under the settlement the plaintiff accepted the validity of the will of Shivlal and of the adoption of defendant No. 2. He abandoned all his claims against the estate of Shivlal, and undertook to withdraw this suit as well as another suit filed by him in the Chief Court of the Sirohi State. On July 17, 1931, the defendants' attorneys informed the applicants that the plaintiff had agreed to withdraw this suit unconditionally. On the same day the applicants wrote back to the defendants' attorneys that a large sum was payable to them for their costs, and any payment to the plaintiff in respect of his claim or in satisfaction thereof would deprive them of their lien. As the applicants wanted to go on with the suit, the plaintiff changed his attorneys and signed a warrant for change of attorneys in favour of Mr. Kantilal Thanawala, a solicitor of this Court, on July 21, 1931, appointing him as solicitor in place of the applicants. On July 22, 1931, the defendants' attorneys sent a copy of the allocatur of the taxed bill of costs to the applicants and called upon their client, the plaintiff, to pay the same immediately. On July 24, 1931, the applicants asked for a copy of the consent terms of settlement arrived at between the parties, and it was sent by the defendants' attorneys on the same day. The consent terms are Exhibit B to the affidavit in support of the summons, and under Clause 8 thereof defendants Nos. 1, 2 and 3 release the plaintiff from his liability to pay the costs of suit No. 1638 of 1928 which were ordered to be paid by the plaintiff and which, as I have said before, were taxed at Rs. 7,729-7-4.

3. The applicants contend that the compromise between the plaintiff and the defendants was arrived at behind their backs with the intention to defraud them of their costs, and they took out this chamber summons praying for an order that the costs. charges and expenses incurred by them for the plaintiff in this suit and/or suit No. 1638 of 1928 be ordered to be paid to them by the plaintiff and the defendants or such of them as to the Court may seem just and proper, or in the alternative for an order that plaintiff and defendants or such of them as to the Court may seem just and proper be ordered to pay to them their aforesaid costs charges and expenses but not exceeding the sum of Rs. 7,729-7-4, being the amount of the taxed costs payable by the plaintiff to the defendants in the first suit, which sum, the applicants allege, was intended to be set off against the plaintiff's claim in this suit by the proposed settlement. The summons also prays for an order allowing the applicants to continue and prosecute this suit for the recovery of their aforesaid costs, charges and expenses or any part thereof from the defendants and/or from the estate of Shivlal Motichand.

4. The applicants allege that the defendants knew that the plaintiff was a man of straw and had no means of his own to carry on the litigation, that plaintiff could not put through the proposed settlement through the applicants, and therefore engaged another solicitor merely for the purpose of recording the settlement. In order, however, to succeed they must show that there was a fraudulent intention on the part of the plaintiff and the defendants to cheat them of the costs payable to them by the plaintiff in this as well as in the first suit. It has been held in Cullianjee v. Raghawaji: Lakshmibai v.Cullianjee (1904) 6 Bom. L.R. 879 that there must be clear evidence of collusion and conspiracy between the parties to deprive a solicitor of his costs, and the same proposition has been laid down in numerous English cases. It was held in The Hope(1883) 8 P.D. 144 that unless it was proved that the parties had made the settlement with the intention of depriving the plaintiffs' solicitors of their lien for their costs the defendants ought not to be ordered to pay the plaintiffs' taxed costs. In that suit an action was commenced for recovering a sum alleged to be due to two seamen for wages earned on board the ship Hope. Both the seamen who were the plaintiffs, and the defendants who were the owners of The Hope, had employedsolicitors. Five days after the action was commenced the plaintiffs came to the defendants' office, and the parties settled the action by the plaintiffs each taking 5 in settlement of their claim and costs, and thereafter they left the country without paying the costs of their solicitors. It was held that there was no evidence that the parties had arrived at the settlement with the intention to defraud their solicitors, and the Appeal Court held that the defendants were not liable to pay the taxed costs of the plaintiffs' solicitors. In Price v. Crouch (1891) 60 L.J.Q.B. 767 Denman J. held that if the plaintiff and defendant compromised an action with the knowledge that they were so acting to deprive the plaintiff's solicitor of his costs, such solicitor is entitled to an order for payment of his taxed costs as against the defendant or for continuing the action in order to recover his costs. The learned Judge held that there must be collusion between the parties, and he defined collusion in reference to a case like this to mean an agreement between the parties arrived at with the knowledge that they were doing an unfair thing in depriving a third party of his right. In that particular case it was held that the plaintiff's bargain with the defendant was deliberately made with the object of depriving the solicitor of his costs and getting better terms from the other side. Similarly, in Margetson and Jones, In re[1897] 2 Ch. 314 it was held that parties to an action can compromise without the intervention of their solicitors, provided they act honestly and without any intention to cheat the solicitors of their costs. See also Dunthorne v Bunbury (1888) 24 Ir.R. 6 It has also been held that if the Court is satisfied that the compromise was made with the intention to deprive the plaintiffs' solicitor of his costs, the Court has jurisdiction to give the solicitor liberty to continue the action on behalf of the plaintiff to recover his costs. If, however, the solicitor proceeds with an action after notice of the compromise, circumstances may arise in which he may have to personally pay the further costs of the suit. See Jordan v. Hunt (1855) 3 Dowl. P.C. 666. At p. 667 Parke B. observes as follows:-

It is quite competent to parties to settle the actions behind the backs of the attornies, for it is the client's action, and not the attorney's. It must be shewn affirmatively that the settlement was effected with the view of cheating the attorney of his costs. Nothing would be got by letting the case go trial, for the settlement after action brought may be pleaded in bar to the further maintenance of the action, and would be a good answer to it.

5. It is clear from the cases which I have referred to above that the Court never interferes for the purpose of preserving the solicitor's lien after a bona fide compromise between the parties has been arrived at, though the result of such compromise may be to deprive the solicitor of his costs. The solicitor's lien never precludes a fair and honest arrangement between the parties. The question, therefore, for me to consider in this case is whether the existence of fraud and collusion between the plaintiff and the defendants is clear and manifest, and whether there is such evidance before me as satisfied the Court in the case of Price v. Crouch, referred to above. The collusion must be clearly established, and it may even be inferred from the facts. In my opinion, however, there is nothing improper in the compromise arrived at between the plaintiff and the defendants. Admittedly, the plaintiff was and is still impecunious. He had lost one suit; he was ordered to pay the costs of that suit which came to over Rs. 7,000; and there were two other suits pending, the present suit in Bombay, and the other suit in the Chief Court in the Sirohi State. He knew that he had to prove forgery and custom which in all probability meant a long inquiry. He knew the risk he was running, and he thought it safer to arrive at a compromise without any intention to defraud his solicitor. Defendants on their part also thought that if they insisted on the payment of the costs of the first suit and on proceeding with their defence in the two suits that were pending, they would have to incur a large amount of costs which in the event of their being successful they would not be able to recover from the plaintiff, and they, therefore, thought it better not to throw away good money after bad. The compromise was, in my opinion, arrived at bona fide and honestly.

6. The applicants further allege that defendants bad notice of their lien, and their counsel relied on a portion in the judgment of Lindley L.J.in The Hope(1883) 8 P.D. 144 in which the learned Judge has quoted from Chitty's Arehbold's Practice, (13th ed.), p. 143. That passage corresponds with the passage in the 14th edition of the same work at pp. 164-65. The passage runs as follows:-

So the Court will exercise it,' that is, its equitable interference to enable the solicitor to proceed in the action for his costs, ' though no such notice', that is, of his lien, ' has been given, in cases where it is clearly made out that there has been some collusion or fraudulent conspiracy between the parties to cheat the solicitor of his costs. Butunless such notice has been given, or there has been such collusion or fraudulent conspiracy, the client, although he sues in forma pauperis, may compromise with the other party and give him a release without the intervention of his solicitor, and the solicitor insuch a case can afterwards look to his client only for payment, and cannot proceed in the action.

7. It was pointed out by Stirling J. in the case of Ross v. Buxton (1889) 42 Ch. D. 190 that there is a sentence more in the passage from Chitty's Arehbold's Practice which has not been quoted by Lord Justice Lindley, and that sentence runs as follows :-' Even after such notice, the parties may, it seems, compromise before verdict or judgment without regard to the solicitor's claim for costs.' According to Stirling J. the law, as he reads the whole passage, is (p.201)-

that a bona fide compromise entered into before verdict or judgment, and even after notice of the solicitor's claim for costs, is good, and will not beset aside or affected at the instance of the solicitor unless collusion or fraudulentconspirary exists between the parties.

There is nothing, therefore, to prevent parties from arriving at an honest compromise even after notice of the solicitor's lien, It is different if in pursuance of the compromise a sum of money is paid to one of the parties, It was held in Welsh v Hole (1779) 1 Doug. 237 that if a valid compromise is made, and after the compromise the solicitor gives notice that he has a lien for costs, it is at the defendant's peril if in face of that notice he pays over the money which has been agreed to be paid to the plaintiff by way of compromise. See Read v. Dupper (1795) 6 T.R. 361 and White v. Pearce (1849) 7 Hare 276. If, therefore, a solicitor gives notice of his lien to the party liable to his client, that party thereupon becomes liable to the solicitor if he subsequently pays a sum of money without regard to the solicitor's lien. See also Ormerod v. Tate (1801) 1 East 464. It was held also in the case of Ross v. Buxton (1889) 42 Ch. D. 190 to which I have referred above, that where a valid compromise of an action involves the payment of a sum of money to the plaintiff, the defendant, if he has received express notice from the plaintiff's solicitor of his lien for costs, must not disregard the notice and make payment to the plaintiff. The law on the subject has been summarised in Halsbury, Vol. XXVI, paras. 1344-1345, at pages 822 and 823. In the case before me the compromise was arrived at between the parties on July 9, 1931, and the consent terms arrived at on July 24 were substantially the same with the addition of Clause 8, as on July 9 the costa of the first suit payable by the plaintiff had not been taxed. If the defendants had not given up the costs, the plaintiff would have to pay the same, so that under the compromise nothing was payable to the plaintiff, and the applicants wrongly assume that defendants agreed to pay to the plaintiff the said sum of Rs. 7,729 7-4, and that that sum was to be set off against the costs payable by the plaintiff. There is no evidence before me of any payment having been agreed to be made to the plaintiff, nor does it follow that because there was an offer to pay the plaintiff a certain sum of money in order to settle the first suit before it was heard and decided, that therefore there was an offer to pay to the plaintiff a certain sum of money also in this suit. As a matter of fact the notice of the applicants' lien was given to the defendants on July 17, 1931. That notice was, therefore, given after the compromise had been arrived at, and no payment was agreed to be made or actually made to the plaintiff in pursuance of the compromise.

8. In my opinion the summons must, therefore, be discharged, but taking all the circumstances of the case into consideration I am not inclined to make any order on the costs of the summons. interim injunction dissolved, Counsel certified.


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