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Bahori Lal and anr. Vs. Sri Ram and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1946All139
AppellantBahori Lal and anr.
RespondentSri Ram and anr.
Excerpt:
.....or attachment in execution of a decree has been held to give a good cause of action for a civil suit for damages: nityanand mathur air1939all168 .8. so far as the cases decided by english courts are concerned it is perfectly obvious that an action will lie against a person who procures an adjudication of bankruptcy to be made against another where such proceedings are found to have been taken maliciously and without reasonable and probable cause: it has been held that in cases like these such proceedings tend directly to injure or destroy credit and therefore they necessarily involve damage and thus afford a good cause of action though no pecuniary loss or special damage may have been suffered. similarly malicious arrests of persons on civil process and malicious execution proceedings..........by the defendant-respondents were malicious and without reasonable and probable cause, that a suit for damages in these circumstances was maintainable. it further found that the suits were within time and they were not barred by the provisions of section 26, provincial insolvency act. regarding the amount of damages, however, the learned munsif found that chhidda appellant suffered a loss of rs. 10 on account of his absence from his business while attending the court in connexion with the insolvency proceedings. he further held that each of the two plaintiff-appellants suffered a loss of reputation in society and he estimated that rs. 50 was a fair and reasonable compensation for each of them on this account. in the result the suit of chhidda appellant was decreed with proportionate.....
Judgment:

Wali Ullah, J.

1. These are two connected appeals, one by Bahori Lal plaintiff and the other by Chhidda plaintiff arising out of two suits filed by them for damages. Both the suits were partly decreed by the Court of first instance but on appeal the learned Civil Judge has dismissed both of them with costs. The two suits were consolidated in the Court of the learned Munsif and they were disposed of by a common judgment dated 29th February 1940. Similarly, the appeals arising out of the two suits were disposed of by the learned Civil Judge by a common judgment dated 31st July 1941. It will, therefore, be convenient to dispose of both these appeals to this Court by one common judgment.

2. The relevant facts necessary for purpose of these appeals are briefly these: Sri Ram and Joti Prasad, defendant-respondents, presented an application to the Court of the Insolvency Judge at Agra on 22nd November 1937 against Bahori Lal and Chhidda, plaintiff-appellants and one Sundar Lal It was alleged that these three persons were indebted to them inasmuch as a decree of the Court of small causes at Agra for Rs. 656-6-6 in favour of the applicants was outstanding and that Chhidda plaintiff-appellant was further indebted to Joti Prasad on the basis of a promissory note for Rs. 150, that these three persons were concealing and disposing of their property and they had also given notice to these creditors that they had suspended payment of their debts and that Bahori Lal had already disposed of his house with a view to defraud the creditors. On these allegations it was prayed that Bahori Lal and Chhidda appellants be declared as insolvents and an Official Receiver be appointed to seize their property. The learned Insolvency Judge adjudged these persons as insolvents and their property was seized by the Official Receiver. On appeal to the learned Civil Judge by Chhidda and Bahori Lal, the order of the learned Insolvency Judge was set aside and their property was released and they were also allowed costs of both the Courts. Thereafter Bahori Lal and Chhidda instituted suits Nos. 454 and 460 of 1939 respectively against Sri Bam and Joti Prasad for recovery of damages on the ground that the insolvency proceedings had been taken by the two defendant-respondents maliciously and without reasonable and probable cause. Each of these suits was for the recovery of Rs. 500 as damages and it was alleged in these suits inter alia that the plaintiffs had suffered much physical and mental pain and had been disgraced and lowered in the estimation of their friends and caste fellows. The defendant-respondents contested both the suits on these grounds: (1) That the insolvency proceedings were not started maliciously and without reasonable and probable cause; (2) That the present suits for damages for such proceedings were not maintainable; (3) That the amount of damages claimed was excessive; (4) That the suits were barred by limitation and also by the provisions of Section 26, Provincial Insolvency Act.

3. The Court of first instance found that the insolvency proceedings taken by the defendant-respondents were malicious and without reasonable and probable cause, that a suit for damages in these circumstances was maintainable. It further found that the suits were within time and they were not barred by the provisions of Section 26, Provincial Insolvency Act. Regarding the amount of damages, however, the learned Munsif found that Chhidda appellant suffered a loss of Rs. 10 on account of his absence from his business while attending the Court in connexion with the insolvency proceedings. He further held that each of the two plaintiff-appellants suffered a loss of reputation in society and he estimated that Rs. 50 was a fair and reasonable compensation for each of them on this account. In the result the suit of Chhidda appellant was decreed with proportionate costs for Rs. 60 and the other suit of Bahori Lal appellant was decreed for Rs. 50 with proportionate costs against the two defendants. The rest of their claims was dismissed.

4. Against the decree passed by the learned Munsif in each suit the defendants preferred appeals to the learned District Judge and the plaintiffs filed cross-objections on the ground that the damages allowed by the Court below were too low. The lower appellate Court also found that the insolvency proceedings had been started by the defendant, respondents without any reasonable or probable cause and that they were actuated by malice. It further found that the suits were within time and that they were not barred by Section 26, Provincial Insolvency Act, but it held that both the suits for damages were legally not maintainable. In effect, therefore, the lower appellate Court affirmed all the findings of the trial Court with one exception that is differing from the Court of first instance it held that the suits were not legally maintainable. In view of these findings both the appeals were allowed and the cross-objections dismissed with costs. The principal question that we have to decide in these appeals is whether the two suits for damages were in the circumstances set out above legally maintainable. At the outset it must be stated that it is an actionable wrong to institute certain kinds of legal proceedings against another person maliciously and without reasonable and probable cause. It is well-known that malicious criminal prosecutions afford a good ground for instituting suits for damages. In Savile v. Roberts (1699) 1 Ld. Raym. 374, the authority which established the tort of malicious prosecution in its modern form, Holt, C.J. laid down that the gist of the action was 'damage' and defined it to be one of three kinds:

(1) Damage to a man's fame, as if the matter whereof he is accused be scandalous.

(2) Damage to the person, as where a man is put in danger to lose his life or limb or liberty, and

(3) Damage to his property, as where he is forced to expend his money in necessary charges to acquit himself of the crime of which he is accused.

5. But generally speaking, it is not an actionable wrong to institute civil proceedings without reasonable and probable cause even if malice be established. The law allows every person to employ its process for the purpose of asserting his rights without subjecting him to any liability other than the liability to pay the costs of the proceedings, if unsuccessful. The reasons for this rule were expounded by the Court of Appeal in Quartz Hill Gold Mining Co. v. Eyre (1883) 11 Q.B.D. 674. Bowen, L.J. quoted with approval the doctrine laid down by Holt C.J. in Savile v. Roberts (1699) 1 Ld. Raym. 374. After discussing the matter at some length he came to this conclusion at p. 689:

It is clear that Holt, C.J. considered one of those three heads of damage necessary to support an action for malicious prosecution. In no action, at all events, in none of the ordinary kind not even in those based on fraud where there are scandalous allegations in the pleadings, is damage to a man's fair name the necessary and natural consequence of bringing the action.

At p. 691 Bowen, L.J. further stated:

But although an action does not give rise to an action for malicious prosecution inasmuch as it does not necessarily and naturally involve damage, there are legal proceedings which do necessarily and naturally involve that damage and when proceedings of that kind have been taken falsely and maliciously and without reasonable or probable cause then inasmuch as an injury has been done, the law gives a remedy. Such proceedings are indictments...but there are other proceedings which necessarily involve damage such as the presentation of a bankruptcy petition against a trader...but a trader's credit seems to me to be as valuable as his property and the present proceedings in bankruptcy although they are dissimilar to proceedings in bankruptcy under the former Act they resemble them in this that they strike home at a man's credit and, therefore, I think the view of those Judges is correct who held in Johnson v. Emerson (1871) 6 Ex. 329 that the false and malicious presentation, without reasonable and probable cause of a bankruptcy petition against a trader under the Bankruptcy Act, 1869, gave rise to an action for malicious prosecution.

6. It is thus clear in the light of the above decision that an action analogous to malicious prosecution would lie for maliciously and without reasonable and probable cause instituting certain forms of civil proceedings against another. Such proceedings, though civil, are not ordinary actions and fall within the reason of the law which allows an action for the malicious prosecution of a criminal charge. They are generally speaking proceedings which tend to cause an injury, at any rate to the credit, fair fame, and reputation immediately that that they are instituted. They have been compendiously described under the head of 'malicious abuse of civil proceedings.' The principles which govern such actions are the same as are applicable to actions for malicious prosecution, mutatis mutandis. The principles laid down by the Court of appeal in Quartz Hill Gold Mining Co. v. Eyre (1883) 11 Q.B.D. 674 have been followed and acted upon in a large number of cases decided by this Court in India. It is true that no case similar to the present one appears to have been decided by the Courts in India. It has, however, been held by the Allahabad High Court that a suit lies for damages for malicious proceedings taken under Section 107, Criminal P.C., against a person inasmuch as such proceedings attack the credit and reputation in the locality of the individual concerned: see Mohammad Niazullah Khan v. Jai Ram ('19) 6 A.I.R. 1919 All. 388. Again it has been held by the Madras High Court that a suit lies for maliciously securing the attachment of a person's property inasmuch as such proceedings must necessarily injure the credit and reputation of the party against whom the order is made. General damages, therefore, were recoverable: vide Palani Kumarasamia v. Jai Ram ('09) 32 Mad. 170. Again it has been held by the Calcutta High Court in Har Kumar v. Jagat Bandhu : AIR1927Cal247 that where a temporary injunction is wrongfully obtained on utterly insufficient grounds a suit for damages is maintainable. To the same effect is the decision of the Allahabad High Court reported in Mizazi Lal v. Babu Ram : AIR1944All32 . In Bishun Singh v. Wyatt ('11) 11 I.C. 729 Mukerji, J. is reported to have observed as follows:

The broad proposition that the institution of an ordinary civil action, however unfounded, vexatious and malicious it may be, is not a good cause of action must be qualified when there has been arrest of person or seizure of property.

7. In Arjun Singh v. Mst. Parvati ('22) 9 A.I.R. 1922 All. 465 a Bench of two learned Judges of this Court has. held, following the principles laid down in Quartz Hill Gold Mining Co. v. Eyre (1883) 11 Q.B.D. 674 that although as a general rule the mere failure of a litigant to establish his claim to a relief in a civil suit does not usually give the successful party a cause of action for damages simply by reason of his success yet the case is different where the bringing of the case does as a necessary consequence involve an injury to property which cannot be compensated by the grant of costs in the action. Again in Bishambhar Nath v. Gaddar ('11) 33 All. 306 two learned Judges of this Court laid down the principle that the wrongful act of the defendant in the suit could be the basis of an action for general damages in addition to the loss of property actually incurred by the plaintiff in consequence of the wrongful attachment. To the same effect are the decisions of the Madras High Court in Nanjappa v. Ganapathi ('12) 35 Mad. 598 and Nicholas v. Sivarama Iyer ('22) 9 A.I.R. 1922 Mad. 206. A malicious attempt to get a person declared a lunatic has been held by the Madras High Court to constitute a good cause of action for a suit of this nature: vide Sriramulu v. Kolandaivelu ('18) 5 A.I.R. 1918 Mad. 206. (See also Cooley Torts vol. 1 pp. 341 and 448). Again maliciously procuring arrest or attachment in execution of a decree has been held to give a good cause of action for a civil suit for damages: vide Velji Bhimsey & Co. v. Bachoo Bhaidas ('25) 12 A.I.R. 1925 Bom. 118. Similarly where proceedings were launched maliciously and without reasonable and probable cause against a legal practitioner under the Legal Practitioners Act for professional misconduct, it has been held by this Court in Nitya Nand Mathur v. Babu Ram : AIR1937All506 that an action for malicious abuse of process would lie. This judgment by a learned single Judge of this Court was affirmed in an appeal under the Letters Patent by two learned Judges of this Court in Babu Ram v. Nityanand Mathur : AIR1939All168 .

8. So far as the cases decided by English Courts are concerned it is perfectly obvious that an action will lie against a person who procures an adjudication of bankruptcy to be made against another where such proceedings are found to have been taken maliciously and without reasonable and probable cause: vide Johnson v. Emerson (1871) 6 Ex. 329. Similarly a malicious and groundless attempt to have a company wound up as insolvent has, on the same principle, been held to amount to an actionable tort: vide Quartz Hill Gold Mining Co. v. Eyre (1883) 11 Q.B.D. 674 mentioned above. It has been held that in cases like these such proceedings tend directly to injure or destroy credit and therefore they necessarily involve damage and thus afford a good cause of action though no pecuniary loss or special damage may have been suffered. Similarly malicious arrests of persons on civil process and malicious execution proceedings have been held by Courts in England to afford a good ground for a suit for damages. The above instances cannot be considered to give an exhaustive list of all varieties of cases in which an action will lie for malicious abuse of civil proceedings. After referring to the cases mentioned above in which English Courts have held that a suit for malicious civil proceedings would lie, Sir John Salmond in his well known book on the Law of Torts, 7th Edition, p. 617, observes as follows:

To what classes of civil proceedings this rule of exemption applies is far from clear. Will an action lie at the suit of a person maliciously joined as a co-respondent in a divorce suit or at the suit of a person against whom affiliation proceedings have been maliciously taken or at the suit of a solicitor whom the defendant has maliciously endeavoured to have struck of the roll? If malicious proceedings in bankruptcy are, as we have seen, a good cause of action there seems no reason why a similar conclusion should not be drawn with respect to the proceedings mentioned.

9. The provisions of Section 26, Sub-clause (2), Provincial Insolvency Act (5 [V] of 1920), to my mind, clearly assume that there is a right of action for a suit of this nature. Considering the principles on which the above cases have been decided it seems to me very clear that in a case like the present the plaintiffs must be held to have had a good cause of action. As mentioned above, both the Courts below have concurred in finding that the application for insolvency made by the defendants was made maliciously-and without a reasonable and probable cause. The mere presentation of the petition for insolvency would tend to injure the credit and the reputation of the plaintiffs in the society in which they move. But here the matter went much further. They were actually adjudged insolvents and their property was seized by the Receiver. It was, however, at the appellate stage that the adjudication was annulled and their property restored to them. There can, therefore, be no doubt whatsoever that both of them suffered grievous damage as contemplated by the law. The learned Judge of the lower appellate Court was, in my judgment, entirely in error when he observed:

It may be said that there was a damage to the plaintiffs' fame on account of these proceedings but as none of the plaintiffs is a trader therefore these insolvency proceedings could have no effect on the plaintiffs' fame as it is the fame of a trader only that suffers on account of insolvency proceedings.

On principle in a matter like this there can be no distinction between a trader and a non-trader for each of such persons has a credit and a reputation at stake. In Wyatt v. Palmer (1899) 2 Q.B. 106 at p. 110 which was a case of a non-trader and where it was contended that an action will not lie unless special damage was alleged, Lindlay M.R. made observations which to some extent support this view of mine. In view of the above I am clearly of the opinion that the plaintiffs in these cases had a good cause of action for damages. The result, therefore, is that I would allow both the appeals, set aside the decrees passed by the lower appellate Court and restore those of the Court of first instance with costs throughout.

Sinha, J.

10. I agree.


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