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Anandrao Bhicaji Sabnis Vs. Napu Patramal - Court Judgment

LegalCrystal Citation
SubjectCivil;Contract
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 934 of 1916
Judge
Reported in(1926)28BOMLR386; 94Ind.Cas.153
AppellantAnandrao Bhicaji Sabnis
RespondentNapu Patramal
Excerpt:
.....7. it has been well said that equality is..........is a decree-holder against the first defendant in suit no. 1447 of 1914, he has attached the decree in favour of the first defendant against defendant no. 2 and claims to set off against his own decree the amount awarded to defendent no. 1 against him in the present suit, he has not attached the decree of defendant no. 1 against himself. the applicants claim priority against the plaintiff.2. this was a partnership action filed by the plaintiff against the defendants for dissolution of a partnership between them and for the usual partnership accounts. by a decretal order of reference dated april 13, 1917, the matter was referred to the commissioner of this court. on april 1, 1925, the commissioner made hia report whereby he found that a sum of rs. 3,627 9-4 was clue to the first.....
Judgment:

Mirza, J.

1. The applicants by this summons ask for a declaration that they are entitled to a charge to the extent of Rs. 3,600 on a sum of Rs. 1715-8-4 and on another sum of Rs. 2,226-6-0 which sums are directed to be paid to the first defendant by the second defendant and the plaintiff respectively by a decree of this Court, The applicants are attorneys of this Court and represented both defendants Nos. land 2 in the proceedings which terminated in an order in favour of their client defendant No. 1. The applicants estimate their costs against defendants Nos. 1 and 2 jointly to amount to Rs. 7000. They have already received from defendant No. 2 a sum ofRs. 3,400 by way of advances and are now seeking to secure themselves for the payment of the balance of costs due to them by obtaining a charging order on the amounts payable under the decree to the first defendant by defendant No. 2 and by the plaintiff respectively. The plaintiff is a decree-holder against the first defendant in Suit No. 1447 of 1914, He has attached the decree in favour of the first defendant against defendant No. 2 and claims to set off against his own decree the amount awarded to defendent No. 1 against him in the present suit, He has not attached the decree of defendant No. 1 against himself. The applicants claim priority against the plaintiff.

2. This was a partnership action filed by the plaintiff against the defendants for dissolution of a partnership between them and for the usual partnership accounts. By a decretal order of reference dated April 13, 1917, the matter was referred to the Commissioner of this Court. On April 1, 1925, the Commissioner made hia report whereby he found that a sum of Rs. 3,627 9-4 was clue to the first defendant in respect of hia one-third share in the said partnership. The Commissioner further found that a sum of Rs, 3,184-4-4 was due to the second defendant in respect of his one third share in the partnership. The Commissioner found also that the plaintiff had overdrawn his share and was liable to refund Rs. 2540-10-8. The Commissioner further found that the second defendant had in his hands on behalf of the partnership a sum of Rs. 4271-3-0. The plaintiff filed exceptions to the Commissioner's report. His exceptions were allowed in respect of two items thereby decreasing hia liability by a sum of about Rs. 900. The final decree was made on July 20, 1925, but as the decree drawn up was not in accordance with the judgment, the decree as drawn up and sealed was rectified by an order dated September 7, 1925. The decree as finally drawn up and rectified provided that the second defendant do receive out of Rs. 5214-1-6 then in his hands Rs. 3498-9-2 in payment of the balance of his one-third share and do pay the balance of Rs. 1715-8-4 to the first defendant on account of his one-third share. The decree further provided that the plaintiff' do pay to the first defendant Rs. 2225-5-0 for the balance of his share. The decree further directed that in the event of there being no assets of ihe partnership to pay the costs of the action, the plaintiff, the first and the second defendants do each pay a one-third equal share of the coats. The increased figures in the final decree are due to the addition of interest subsequent to the Commissioner's findings.

3. The usual order for costs in a partnership action is to make the costs of all parties come out of the partnership assets. It is common ground here that the partnership had no assets beyond the moneys in the hands of the defendant No. 2 and what the plaintiff owed to it in respect of his overdrawn share. The intention of the decree, in my opinion, was that costs should be paid out of the partnership assets but it has been cumbrously expressed. Instead of adopting the course of ordering the plaintiff to refund to the partnership the amount he had overdrawn and ordering the second defendant to refund to the partnership the amount in his hand so as to put all the partners on an equal footing, the decree provided that defendant No, 2 should pay over to the defendant No. 1 the balance of the fund in his hands after deducting therefrom what was due to himself . for his own share, and that the deficit duo to defendant No. 1 should be made good by the plaintiff paying over to him direct the amount which he owed to the partnership. Costs of all parties would then be pooled up and each partner would pay an equal one-third part of such costs. By adopting this method the result would be the same as if costs were originally paid out of the partnership assets and distribution had taken place afterwards, In the event of the assets being found insufficient to pay up all the costs, the partners would be personally liable for the balance in equal shares. Had the usual course been followed of ordering costs out of the partnership assets, defendant No. 1 would not receive the two sums mentioned under the decree but they would in the first instance be appropriated towards payment of the costs of the partnership action.

4. The plaintiff contends that defendant No. 2 is a substantial party and that the applicants can recover from him all the costs due to them jointly from defendants Nos, 1 and 2. It is common ground that defendant No. 1 has no moneys beyond the sums ordered to be paid to him under the decree. The plaintiff further contends that the applicants are not acting bonafide but have adopted these proceedings at the instance of defendant No, 2 in order tominimize the liability of defendant No. 2 to them in respect of costs. The applicants took out this summons after they were apprised of the plaintiff's intention to attach these moneys in the hands of the second defendant by the plaintiff's attorney's letter dated September 17, 1925, annexed to the affidavit of Doraswami Naidu in support of the summons. The attachment was levied on September 30, 1925, and the summons was obtained on October 2, 1925,

5. The two sums of money sought to be charged in favour of the applicants were obtained by the applicants' exertions and ordinarily they would be entitled to a lien or charge on these moneys in preference to other creditors. The order giving such a charge no doubt is not ex debitq justitiae but purely discretionary. Such discretion, however, is usually exercised by the Courts in favour of attorneys, The attorney's right to a lien for his costs is ancillary to the right he has of recovering his costs against his client, Where the attorney is unable to show that he cannot get payment from his client where others beside the client are interested in the fund, the Court would not exercise its discretion in favour of the attorney against the other parties so interested In the case of Harrison v. Cornwall Minerals Rail Co., (1884) 53 L.J. Ch. 596 the Court disallowed the attorney's application for a charge on a fund where the clients were able to pay their costs as between attorney and client but had desired the attorney to obtain them out of a fund in which others were interested in order to minimise their own liability. Under the circumstances the Court considered the attorney's application not to be bona fide and therefore disallowed it. In the present case it would appear that the first defendant is unable to pay any part of the costs due to the applicants. He has so far paid them nothing by way of advances. All the costs so far paid to the applicants are paid to them by the second defendant. There is no evidence before me that the present application is instigated by the second defendant, In paragraph 2 of his affidavit Mr. Paruck states:- ' After this notice was served the summons has been taken out by the plaintiff's attorneys to thwart the execution proceedings.' In paragraph 3 Mr. Paruck states:-'The second defendant...is able to pay the full amount of the costs of the applicants.' No affidavit in rejoinder is filed and these statements are not controverted.

6. On the materials before me, if the plaintiff were an outsider who had attached the decree in favour of defendant No. 1 bona fide, I would be inclined to refuse a charging order giving priority to the applicants to his detriment. The applicants have not satisfied me that they would be unable to recover the balance of their costs from the second defendant and that unless I made the order they are seeking, those costs would be irretrievably lost to them, The plaintiff is interested in the fund inasmuch as he is a decree-holder in another suit and has the right to attach the amount. But I cannot overlook the fact that the plaintiff is a party to the present decree which is binding upon him, The terms of the decree to my mind are clear that the costs of the suit should be paid in equal shares by each of the three partners. The plaintiff cannot seek indirectly to throw the burden of coats coming to the share of the first defendant upon the second defendant. The defendants are jointly and severally liable for costs to the applicants. If the applicants are seeking to divide the burden equally between the two, that, in my opinion, would not be a sufficient reason, in the circumstances of the present case, to induce the Court to refuse them a charging order in priority to the plaintiff's attachment on a decree in favour of their client obtained through their exertion.

7. It has been well said that equality is equity. I see nothing mala fide or wrong in the conduct of the attorneys in asking for the order, The summons, in my opinion, asks for too wide an order in favour of the applicants. If there are other attaching creditors of the first defendant against the decree their claims will not be affected by the order which I propose to pass. Under the decree the plaintiff would probably be entitled to some contribution towards the costs of his attorneys from defendant No. 1. Were he to ask for a charging order in respect of those costs it will be open to him to apply that the applicants lien should not be allowed to prevail against that claim.

8. The summons will be made absolute as against the plaintiff in respect of his subsisting attachment and also in respect of the decree in favour of defendant No. 1 against the plaintiff. Parties to tack on their costs to their respective claims. Counsel certified.


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