1. This is a claim for Rs. 55, 783-9-4 on cotton contracts. There are also third party proceedings under an order of the 5th October 1917 which provides 'that the third party be at liberty to appear at the trial of this action and take such part therein as he may be advised and be bound by the result of the trial and...that the question of the liability of the third party to indemnify the defendant be tried at the trial of this action, but subsequent thereto.'
2. I am now, in the first instance, trying the Lotion, which involves the question of the direct liability of the defendant to the plaintiffs. The defendant did not dispute hit liability to the plaintiffs for the amount claimed. Counsel for the third party, as I understood him, said he could not dispute the account, Exhibit E to the plaint, as between the plaintiffs and the defendant, but he was not prepared to say he would not dispute it at all. I did not altogether follow the precise effect of this destination, and I, therefore, thought it best to let the plaintiff prove his case, and then to allow any question to be asked in cross-examination which either Counsel should think proper, subject to the issues and the pleadings.
3. That, accordingly, has been done. The result is that, so far as the account itself is concerned, which is Exhibit E to plaint, and is shown in the ledger, Exhibit G, there is no dispute on the evidence that these transactions took place between the plaintiffs and the defendant and resulted in a loss of Rs. 55,783 for which the defendant was liable to the plaintiffs.
4. It is, however, admitted by the plaintiffs that Rs. 28,000 have, since the filing of the plaint, been paid by the defendant and that, accordingly, that sum must be taken into account in arriving at the decree to be passed in this suit. The third party called no evidence, but he put in an agreement of compromise entered into between the plaintiffs and the defendant on the 2nd of February 1917. I should say the plaint was admitted on the 30th of October 1916. He (the third party) says that this document was fraudulent and collusive and against public policy and that, accordingly, I ought not to pass any decree against the defendant, more especially as the sum of Rs. 28,000 has been paid there under. He says the effect of this agreement was that the defendant was to pay Rs. 28,000 of the Rs. 55,783 and that, as regards the balance of the claim, be, the defendant, was to bring a third party notice against the third party and that, thereafter, the plaintiffs and defendant were to chare the balance equally, and that the defendant got this concession in consideration of his agreeing to give evidence against the third party.
5. The defendant says the agreement speaks for itself, and that no other evidence of fraud is necessary. In the first place, I hold, that the account, Exhibit G, has been proved, and that these transactions did take place between the plaintiffs and the defendant, and that they resulted in a loss of Rs. 55,000, odd, for which the defendant was liable.
6. Next, after considering the compromise agreement of 2nd February 1917 and the arguments of the learned Counsel, I hold that this agreement furnishes no sufficient reason why I should decline to pass judgment for the plaintiffs in respect of those bona fide transactions which took place between them and the defendant, allowing, of course, for the Rs. 28,000 that has been paid. When it comes to the issue of indemnity between the third party and the defendant, other questions as to the effect of this compromise may arise. I, however decline to hold that this agreement, by itself and on the very face of it, is a fraudulent agreement on the part of the plaintiffs.
7. Mr. Kemp has cited two cases, or a of Bulli Coal Mining Company v. Osborne (1899) A.C. 351, 88 L.J.P.C. 49 : 80 L.T. 430 : 47 W.R. 546 : 15 T.L.E. 257 and another in Tarachand v. Sukhlal 12 B, 559 : 6 I. D. 856. He has drawn my attention, particularly, to the passage on page 353 in the Privy Council case, where the Chief Judge of New South Wales said in his judgment: 'We are of opinion that the agreement in question is in no sense champertous, as it appears to us to be obvious that both the Messrs. Osborne and the Bellambi Coal Mining Company have 'an interest in the thing at variance,' in which car?, as pointed out in 1st Hawking Pleas of the Crown, 456, the parties are justified in entering into an agreement respecting a matter in which they have legally or equitably a common interest'.
8. Then, or page 359, Lord James, in delivering their Lordships' judgment said, 'The leading Counsel for the appellants intimated that he felt he could not rely upon this defense of champerty, and virtually withdrew it. Their Lordships are, therefore, relieved from delivering any judgment upon the subject, beyond saying that they see no ground for differing from the judgment delivered or this head by the Full Court.'
9. In that case, the common 'interest in the thing at variance' was of a landlord and tenant in relation to coal which had been abstracted by another party. It may, therefore, be said that it was rather easier in that case than in this to say that the two parties had a common interest in the thing at variance. Here, I suppose, the thing at variance' would be the incidence of the loss on the cotton contracts, but the plaintiffs could hardly have a common interest in making the third party bear the loss unless the defendant was financially weak.
10. The other case, in 12 Bombay, goes to show that champerty is not void in India unless the transaction was not a 'bona fide one for the acquisition of an interest in the subject of litigation, but an illegitimate transaction got up for the purpose merely of spoil, or of litigation, disturbing the peace of families and carried on from a corrupt and improper motive.'
11. Taking that test, I think this agreement does not fall within the description of an illegitimate transaction referred to in that decision.
12. But, even if the compromise agreement was invalid, I heard no adequate argument from Counsel for the third party why the plaintiffs could not recover from the defendant on their original claim. Further, in considering the effect of the compromise agreement, it would seem that the Rs. 55,783 claimed by the plaintiffs is not the total loss but the balance of a larger loss after allowing for margin and other moneys paid by the defendant as appears by the contracts Exhibit A and the ledger Exhibit E. It may be, therefore, that, even if the defendant retains Rs. 13,891 under the compromise agreement, viz., half of the balance of Rs. 27,783 to be recovered from the third party, he will still be out of pocket, unless he recovers the above margin and other moneys as well. In that event, it could not be said that he obtained any benefit at the expense of his principal.
13. In the result, I pass a decree against the defendant for the amount of Exhibit G, but in that decree credit must be given for the Rs. 28,000 already paid and the precise amount must be mentioned to me.