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Zainab Begum Alias Varalakshmi Vs. Khursheed Begum and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtAndhra Pradesh High Court
Decided On
Case NumberCivil Revn. Petn. No. 1705 of 1961
Judge
Reported inAIR1963AP370
ActsContract Act, 1872 - Sections 23, 39 and 75; Code of Civil Procedure (CPC) , 1908 - Sections 115 - Order 33, Rule 5
AppellantZainab Begum Alias Varalakshmi
RespondentKhursheed Begum and ors.
Appellant AdvocateD. Narasaraju, Adv. General for ;P. Ramachandra Reddy and ;K. Venkatramaiah, Advs.
Respondent AdvocateP. Babul Reddy, ;S. Sreerama Reddy, ;A. Ramaswami Ayyangar, ;D.V. Reddipantulu, ;D. Sriramasastry, ;Sada Siva Rao, ;Gulam Ahmed, ;Suryaprakasam, ;Sree Rama Reddy and ;Aftab Husain, Advs.
Disposition Revision dismissed
Excerpt:
.....his part of the agreement by providing the court-fee, he has not obtained any interest in the subject-matter of the suit. it is, therefore, plain that the petitioner herself took out summons for satyanarayana, that she actually obtained the permission of the court to examine him but for some reason, she did not produce the financier satyanarayana or examine the advocate sri suryanarayana, though it does not clearly appear what that reason was. it is well settled that when two transactions are separate, the repudiation of one cannot affect the other. in this view it may not be necessary to consider whether it is open to the petitioner to terminate the agreement unilaterally, but since the question has been raised and argued before us, we may as well deal with it. (3) it is agreed..........of the nawab, various persons began to assert claims to his properties. these claims were the subject-matter of civil suits instituted in the city civil court, hyderabad, which were later withdrawn to the high court. the several claimants eventually settled their claim by a compromise, which was duly embodied in a decree passed by this court on march 5, 1959. 5. on december 21, 1960, zainab begum alias varalakshmi, the present petitioner, filed an application, o. p. no. 2 of 1961, on the file of the city civil court, secunderabad, for leave to sue in forma pauperis containing the same particulars as a plaint, wherein she claimed that she is the legitimate daughter of the nawab and as such entitled to a 7/8th share in his estate. she impleaded as respondents all the parties to the.....
Judgment:

Satyanarayana Raju, J.

1. This is a petition, under Section 115 of the Code of Civil Procedure, to revise an order made by the Chief Judge, City Civil Court, Secunderabad, rejecting the petitioner's application for leave to sue in forma pauperis.

2. For a better appreciation of the background of this litigation, it is convenient to give a brief resume of the antecedent events.

Nawab Sir Salar Jung, a wellknown nobleman o Hyderabad, died intestate on March 2, 1949, leaving behind him besides extensive Jagir properties, a personal estate of considerable value. On May, 23. 1949, the Military Governor issued Regulation No. 34 of 1358 Fasli, constituting a Committee, known as the Salar June Estate Committee, to administer the assets of the Nawab within the territory of the erstwhile State of Hyderabad. A little later, H. E. H. the Nizam constituted a Commission consisting of two Judges of the High Court, to hold an enquiry regarding WIRASAT to the estate of the Nawab with regard to his Jagir and non-Jagir properties. Among jother matters, this commission was directed to enquire and report as to whether the Jagir property of the Nawab escheated to the Government by reason of his having died issueless. On November 12, 1949, the Governor-General of India promulgated Ordinance No. 29 of 1949 providing tor the administration of the assets, in India, of the late Nawab, pending determination of the question as to who was legally entitled to succeed to such assets. Under the Ordinance, all the assets in India of the Nawab were vested in the Committee constituted under the Regulation issued by the Military Governor, and it was provided that the Committee should administer those assets subject to the control of the Central Government. While so the Constitution of India came into force on January 26, 1950, and the erstwhile State of Hyderabad was integrated into the Indian Union. The Nawab Salar Jung Bahadur (Administration of Assets) Act (XXXVI of 1950), which became law on April 19, 1950, replaced Ordinance No. 29 of 1949. The Act substantially reproduced the provisions of the Ordinance.

3. While the work of the Commission constituted by H.E.H. the Nizam was in progress, a Full Bench of the High Court of Hyderabad issued a writ of certiorari quashing the proceedings before the Commission as also a writ of prohibition restraining the Commission from proceeding further with the enquiry.

4. After the death of the Nawab, various persons began to assert claims to his properties. These claims were the subject-matter of civil suits instituted in the City Civil Court, Hyderabad, which were later withdrawn to the High Court. The several claimants eventually settled their claim by a compromise, which was duly embodied in a decree passed by this Court on March 5, 1959.

5. On December 21, 1960, Zainab Begum alias Varalakshmi, the present petitioner, filed an application, O. P. No. 2 of 1961, on the file of the City Civil Court, Secunderabad, for leave to sue in forma pauperis containing the same particulars as a plaint, wherein she claimed that she is the legitimate daughter of the Nawab and as such entitled to a 7/8th share in his estate. She impleaded as respondents all the parties to the compromise decree. Four schedules were annexed to the application showing the movable and immovable properties left by the Nawab, and the total value of the estate was mentioned as Rs. 1,32,56,824/-. The claim of the petitioner was/ for a partition 'and possession of her 7/8th share in the properties specified in the schedules, on the footing that the Nawab had contracted a MUTTA marriage with her mother, Khaneez Fatima; that she is the offspring of that marriage; that the Nawab had a lawfully wedded wife, Khursheed Begum; and that she and the said Khursheed Begum have become entitled to the estate of the Nawab as his heirs under the Shia Law of inheritance. She averred that the compromise decree, under which the respondents had obtained divers shares in the estate, was vitiated by 'fraud and, therefore, null and void.

6. The respondents opposed the grant of leave to sue in forma pauperis on a number of grounds. The principal ground on which they contested the application was that the petitioner had entered into an agreement with a financier with reference to the subject-matter of the proposed suit and that, therefore, she was not entitled to sue in forma pauperis.

7. The learned Judge found that the petitioner was not possessed of sufficient means to pay the Court-fee. He, however, found that by reason of the agreement entered into by the petitioner with the financier, the latter had obtained an interest in the subject-matter of the suit within the meaning of Clause (e) of Rule 5 of Order XXXTII, C. P. C. On the basis of this finding, he rejected the petitioner's application for permission to sue as a pauper. Aggrieved by the said order, the petitioner has filed the present revision petition.

8. The arguments of the learned Advocate-General appearing for the petitioner, have covered a wide ground. A brief outline of his contentions is as follows;

Order XXXIII, Rule 5(e), C. P. C. cannot be invoked unless there is an agreement subsisting on the date of the application. It is for the respondents to prove that the agreement is subsisting, which they have made no attempt to prove- The petitioner having cancelled the power of attorney, there is an automatic cancellation of the agreement. It is open to the petitioner to terminals the agreement unilaterally. Thereafter, the remedy of the financier is only to sue for damages. By reason of the financier's failure to perform his part of the agreement by providing the Court-fee, he has not obtained any interest in the subject-matter of the suit.

9. Before considering these contentions, the material facts, which are more or less beyond the pale of controversy, may be stated.

The agreement for finance, Ex. A-1, is a registered instrument, dated 26th March, 1960. In it the petitioner states her title to succeed to the estate, the impossibility of recovering possession' without a suit and her own inability to sue owing to want of necessary means. The agreement provides that the financier should bear all the expenses of the case till its final determination and in return therefor, should get a half share in the properties recovered. We shall presently refer to the material terms of the agreement in greater detail.

10. Contemporaneously with the agreement, the petitioner executed a power of attorney, Ex. A-2, in favour of the financier. It recites that he should engage advocates and conduct the proposed suit. It is stated that on October 25, 1960, the petitioner gave notice to the financier cancelling the power of attorney, and shortly thereafter, made a publication to the same effect in a local newspaper. On December 21, 1960, the petitioner filed the application for leave to sue as a pauper.

11. At the outset, it may be mentioned that we are not now called upon to decide the legality and the binding nature of the agreement on the ground of its being champertous and opposed to public policy- Though in the memorandum of revision, a ground was taken that the agreement was ab inilio void, it was not pressed during the course of the arguments before us. There is a long line of authority that the English law in regard to champerty and maintenance does not apply in India. A fair agreement to supply funds to carry on a suit in consideration of having a share in the property, if recovered, is not per se opposed to public policy and is not illegal.

12. Now, the short question for consideration is whether the facts of this case attract the provisions of Order XXXIII, Rule 5(e) of the Code of Civil Procedure.

13. The clause in question reads:

'The Court shall reject an application for per-mission to sue as a papuer.

(e) where he has entered into any agreement with reference to the subject-matter of the proposed suit under which any other person has obtained an interest in such subject-matter.'

(13A) The principle underlying the provision is that a person ought not to be allowed to sue in forma pauperis after transferring to a third party his or her interest in the property involved in the suit.

(13B) It is initially argued by the learned Advocate-General on behalf of the petitioner that the agreement, Ex. A-1, entered into by the petitioner with Satyanarayana, the financier, is not subsisting.

14. Here, it is necessary to notice an extreme contention raised by Sri Ramaswami Ayyangar on behalf of the contesting respondents. According to him, 'Is there any agreement or not with reference to the subject-matter of the proposed suit?' that is the only question, and there is no warrant for holding that the agreement should be subsisting. This contention is totally opposed to and frustrates the intention of the rule. 'A Division Bench of the Madras High Court held in Viswanatham v. Satyanandarn, AIR 1937 Mad 161, that the question for decision undef Clause (e) of Rule 5 would be whether on th' date of the institution of the suit, there was a subsisting agreement falling within the provision. This was the view taken by a Division Bench of the Bombay High Court in Ebrahim Sherkhan v. Hajratkhan Mohiddinkhan, AIR 1940 Bom 49, where it was pointed out that the agreement contemplated by the clause in question must be an agreement under which any other person 'has obtained an interest in such subject-matter'; in other words, the interest acquired must be subsisting and the agreement operative and not rescinded. The same view was taken by a Division Bench of the Calcutta High Court in Bhanu-pati v. New Asiatic Life Insurance Co., 44 Cal WN 470. We are, therefore, unable to agree with the construction sought to be placed by the learned counsel for the respondents on Rule 5(e).

15. The question then is: whether the agree ment, Ex. A-1, was subsisting on the date when the application for leave to sue in forma pauperis was filed? It is fairly conceded by the learned Advocate-General that the petitioner herself adduced no proof that she had cancelled the agreement. But he has contended that the onus is on the contesting respondents to establish that the financier still regards the agreement as subsisting and that he is prepared to abide by the terms of the agreement, and that it is no part of the duty of the petitioner to prove these facts.

16. Now, it is to be mentioned that the application filed by the petitioner for leave to sue as a pauper did not disclose the fact that she had entered into a financing agreement with Satyanarayana. It was, in fact, on an objection raised by the respondents that the petitioner produced a copy of the agreement. In her evidence as P. W. 1, the petitioner stated:

'There was no quarrel between me and Satyanarayana subsequently. I cancelled the power of attorney as he was unable to finance me. I came to know that he was not in a position to finance......

I have not asked him to return the original agreement, as Satyanarayana was out of station for about 2 or 3 months after the agreement was executed...... I have not written any registered letter asking him to return the agreement......... Therewere no disputes between me and Satyanarayana.'

17. Assuming that her statement is a truthful account of what took place, we find that nowhere did the petitioner say that she had called upon Satyanarayana to implement the terms of the agreement. It is also relevant to note that the petitioner herself took out summons for Satyanarayana. As appears from the order-sheet maintained by the lower Court, after the petitioner gave evidence, her advocate made a request for permission to examine Satyanarayana and also to file certain documents. Permission was accordingly granted with liberty to the respondents to adduce further evidence after the examination of Satyanarayana. On the adjourned date, the advocate for the petitioner represented to the Court that he was unable to produce Satyanarayana for examination and that instead he proposed to examine Sri Y. Suryanarayana, Advocate. The petitioner filed I. A. No. 741 of i961 for permission to adduce the evidence of the advocate. That application was opposed by the respondents but the lower Court allowed it without prejudice to the contentions raised by the respondents. The petitioner, however, did not examine the advocate, Sri Y. Surya-narayana. It is, therefore, plain that the petitioner herself took out summons for Satyanarayana, that she actually obtained the permission of the Court to examine him but for some reason, she did not produce the financier Satyanarayana or examine the advocate Sri Suryanarayana, though it does not clearly appear what that reason was. From these facts, it is reasonable to infer that the financier was available for examination, and what is more, that the petitioner wanted to examine him. It follows from what has been said that the respondents could not have adduced the evidence of Satyanarayana for the simple reason that the petitioner herself took steps to examine him on her side.

18. It is then argued that the petitioner had cancelled the power of attorney executed by her in favour of the financier, that the agreement and the power of attorney constituted an integral part of the same transaction and that, therefore, there, is an implied cancellation of the agreement. The agreement provides that the financier shall have a specified share in the fruits of the decree in the event of the petitioner succeeding in an action at law, whereas the power of attorney empowered the financier to launch the litigation and conduct the further proceedings. The two documents are distinct and separate in their scope and effect. It is well settled that when two transactions are separate, the repudiation of one cannot affect the other. Vide Madholal Sindhu v. Official Assignee of Bombay, AIR 1950 FC 21. It is, no 'doubt true that the financing agreement and the power of attorney, were executed on the same date and it might be that the object of the execution of the power of attorney was to enable the financier to retain sufficient or effective control over the litigation which he was to finance. That does not, however, mean that in law Exs. A-1 and A-2 constitute one and the same transaction or that the cancellation of the power of attorney, even if true, amounts to a cancellation of the financing agreement.

19. The learned Advocate-General has contended that it is open to the petitioner to terminate the financing agreement unilaterally and that a contract to lend money cannot be specifically enforced. We have found as a fact that there is no proof that the petitioner has terminated the agreement. In this view it may not be necessary to consider whether it is open to the petitioner to terminate the agreement unilaterally, but since the question has been raised and argued before us, we may as well deal with it.

20. The law relating to the repudiation of contracts is summed up in Halsbury's Laws of England, Third Edition, Volume VIII, Paragraph 344, at pages 203 and 204 thus:

'The repudiation of the contract by one party docs not of itself discharge the contract, but the other party has the option of treating the contract as at an end, or of waiting until the time for performance has arrived, before making any claim for breach of contract. The party to whom the right of election falls must signify his election to rescind in an unqualified manner and with every reasonable dispatch. If he elects to wait, he remains liable to perform his part of the contract, and enables the party in default not only to perform the contract notwithstanding his previous repudiation of it, but to take advantage of any supervening circumstance which would justify him in declining to perform it.'

21. Sections 39 and 75 of the Contract Act also embody the same principle.

22. In Subhadrayamma v. Vcnkatapathi Raju, ILR 48 Mad 230 at p. 247: (AIR 1924 PC 162 at p. 172) Lord Atkinson observed that a party to contract could not terminate it by simply committing a breach of it. In a recent decision of the House of Lords in White and Carter v. McGregor, (1961) 3 All ER 1178, it was laid down that if one party to a contract wrongfully repudiated it and the other party did not accept the repudiation, the contract survived and the rights of the innocent party were preserved; and accordingly he could perform his part of the contract and could recover on that fooling, for there was no duty on him to vary the contract at the behest of the other party so as to deprive himself of its benefit.

23. Judged in the light of the above princi-ples, it is clear that the repudiation by the petitioner, even if true, did not discharge the contract. In this context, it is to be observed that the financier himself has not come forward to disclaim his interest in the subject-matter of the agreement. The question whether the financier has exercised the option of terminating the contract or keeping it alive, is one of fact and upon a consideration of all the material circumstances, we are unable to hold that the agreement has been terminated.

24. The learned Advocate-General has contended that a contract to lend money cannot be specifically enforced and, therefore, even if the rescission of the agreement by the petitioner is wrongful, the remedy of the financier is only to sue for damages. As supporting this contention, he relied upoti the decisions in Rajagopala Aiyar V. Davood Rowiher, 34 Mad LI 342: (AIR 1918 Mad 364), Anakaran Kasmi v. Saidamadath, ILR 2 Mad 79 arid Yadavendra v. Srinivasa, AIR 1925 Mad 62. None of these decisions has a bearing on the construction of Order 33, Rule 5(c). There is nothing in the language of the Rule which warrants this construction. To say that the agreement contemplated by the provisions should be one which in law can be specifically enforced would result in adding words to the Rule which are not there. It is not permissible to enlarge the scope of the Rule be importing into it considerations not warranted by the terms and tenor of the provision. If what is contended for is the correct view, a financing agreement can never be brought within the purview of Order 33, Rule 5(e).

25. It is then contended by the learned Advocate-General that Rule 5(c) cannot be invoked unless a third party has, under an agreement, obtained an interest in the subject-matter of the suit; that the agreement. Ex. A-1, does not create an immediate interest but that the financier will acquire such an interest only after he advances the money for the requisite Court-fee and meets the expenses for the further conduct of the litigation. As supporting his contention, he has relied upon the following clauses in the agreement:

'(1) It is agreed between the parties that the party of the first part shall spend monies as and when necessary for the purpose of filing the said suit and also for the filing of or defending any appeal or appeals or other proceedings arising out of the same till the final adjudication of the matter, and shall keep an account of the monies so spent by him.

(2) It is agreed between the parties hereto that in case the party of the second part succeeds finally in the suit or appeal either partially or fully, half of the amount, property or jewellery, etc., decreed in her favour in the said suit or appeal shall be paid by the party of the second part to the party of the first part freely.

(3) It is agreed that in case of success of the party of the second part in the said surt, the party of the first part, in addition to half of the decretal amount as stated above, will be entitled to recover such sums which he will spend from time to time for the purpose of the said suit or appeal or proceedings and the party of the second part shall pay the amounts so spent by him after due verification of the accounts.'

26. It is argued that the filing of the plaint with the requisite Court-fee is a condition precedent to the agreement becoming operative. This contention is not borne out by the terms of the document. The agreement does not contain any words which expressly or by necessary implication make it obligatory on the part of the financier to pay the requisite Court-fee for the proposed suit. All that it says is that the financier shall spend all monies necessary for the prosecution of the suit till its final determination and that in return therefor he is to take half the fruits of the decree plus all the monies spent by him; and in case she is unsuccessful, he is to forego all the monies exponded by 'him. It is a matter of no interest to the petitioner whether the suit is filed with the requisite Court-fee or whether it is commenced with an application for permission to sue in forma pauperis. On the other hand, it is the financier that is interested in launching the suit in forma pauperis obviously because that would relieve him of the need to pay the requisite Court-fee, which in this case amounts to more than a lakh of rupees.

27. We may now consider the contention that the financier, has not, under the agreement, obtained an interest in the subject-matter of the litigation. The words 'has obtained an interest' mean 'has been given or granted an interest'. The interest need not be a vested interest; even a contingent interest is sufficient to satisfy the requirement of Rule S(e).

28. On a reading of Rule 5(e), it is plain that the question would be whether at the institution of the suit there was a subsisting agreement falling within the provision, with reference to the subject-matter of the suit. There is no warrant for reading a further limitation into the provision that the interest created by the agreement should be an immediate interest. A reference to Rule 9(c), which relates to the dispaupering of the plaintiff, throws some light on the question. The terms of that provisions are these:

'The Court may, on the application of thedefendant, or of the Government Pleader, of whichseven days' clear notice in writing has been givento the plaintiff, order the plaintiff to be dispanpered.

* * * (c) if he has entered into any agreement with reference to the subject-matter of the suit under which any other person has obtained an interest in such subject-matter.'

29. Under this rule, for a plaintiff being dispaupered, all that need be shown is that he has entered into an agreement of the character described, with reference to the subject-matter of the suit. It is difficult to hold that Rule 5 embodies a different principle from Rule 9, the object of both the rules being to prevent payment of Court-fee being evaded. Read in juxtaposition, Rule 5 (e) and Rule 9 (c) are in pari materia except that the word 'proposed' does not occur in the tatter provision. The reason for this is obvious. The agreement to finance contemplated by Rule 5(e) is before the suit is launched, while the dispaupering provision comes into play subsequent to the institution of the suit. Both the provisions contemplate an agreement, in and by which an interest is transferred or created in the subject-matter of the suit in favour of a third party.

30. It only remains to consider whether the interest contemplated by Rule 5 (e) must be a vested interest. A Division Bench of the Madras High Court, consisting of Venkata Subba Rao and Abdur Rahman, JJ. held in Kayambu Pillai v. Ammani Animal, AIR 1938 Mad 491 that the provisions of Order 33, Rule 5 (e)

'are intended to aid a pauper suing for hisown benefit, but not to enable an ostensible pau-par to figure as plaintiff, when in the fruits ofthe litigation, a third party has been given aninterest' The learned Judges held that the only reasonableway of construing the word 'interest' occurring inClause (e)

'is to hold that it is used in its general and ordinary sense and not in the technical sense' contemplated by the provisions of the Transfer of Properly Act and the Registration Act. This decision is an authority for the view that the interest contemplated by Rule 5 (e) need not be a vested interest. The word 'interest' has to be read in conjunction with the expression 'in the subject-matter of the proposed suit,' and so read, it is plain that the rule does not contemplate the vesting of an immediate interest in a third party.

31. Finally, there was much debate and discussion before us with regard to the scope of the power vested in this Court under Section 115 of the Code of Civil Procedure. In Venkatagiri Ayyangar v. Hindu Religious Endowments Board, Madras, AIR 1949 PC 156, their Lordships of the Privy Council observed as follows:

'The section empowers the High Court to Satisfy itself upon three matters: (a) That the order of the Subordinate Court is within its jurisdiction; (b) That the case is one in which the Court ought to exercise jurisdiction; and (c) That in exercising jurisdiction, the Court has not acted illegally, that is, in breach of some provision of law, or with material irregularity, that is, by committing some error of procedure in the course of the trial which is material in that it may have affected the ultimate decision. If the High Court is satisfied upon those three matters, it has no power to interfere because it differs, however, profoundly, from the conclusions of the subordinate Court upon questions of fact or law.'

32. The above statement of the law with regard to the scope of the interference of this Court in the exercise of its revisional jurisdiction has been affirmed by their Lordships of the Supreme Court in Keshardeo v. Radhakishen, : [1953]4SCR136 .

33. Having regard to the conclusions reached by the Court below, we are satisfied that there is no illegal or irregular exercise of jurisdiction by the learned Judge: In our opinion, the order of the Court below is proper and there are no grounds for interference in revision.

34. This Revision Petition fails and is accordingly dismissed with costs. The petitioner isgranted two months' time for payment of the requisite Court-fee. We fix the Advocates' fee atRs. 250/-.


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