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C.V. Kunhiman Vs. P.M.K. Idrosekutty - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKerala High Court
Decided On
Case NumberA.S. No. 708 of 1953 (M)
Judge
Reported inAIR1958Ker126
ActsCode of Civil Procedure (CPC) , 1908 - Sections 11 and 13; Madras Agriculturists Relief Act, 1938; Evidence Act, 1872 - Sections 40; Usurious Loans Act, 1918; Contract Act, 1872
AppellantC.V. Kunhiman
RespondentP.M.K. Idrosekutty
Appellant Advocate V.R. Venkitakrishnan, Adv.
Respondent Advocate Memana Raman, Adv.
DispositionAppeal dismissed
Cases ReferredRamiah v. Ramiah
Excerpt:
.....40 of madras agriculturists relief act, 1938, usurious loans act, 1918 and contract act, 1872 - appeal by defendant in suit on foreign judgment which was allowed by court below - plaintiff and defendant doing joint business in colombo - in settlement of account defendant executed promissory note in favour of plaintiff -plaintiff filed suit which was decreed by court at colombo - plaintiff claimed amount due at time of decree in colombo court inclusive of interest - suit decreed - judgment of district court of colombo confirmed by supreme court - judgment must be taken to be conclusive as between both parties - held, judgment passed by court below unassailable. - - 5. applying the above principles to the facts here, it appears perfectly clear that the a proper law governing the..........india. before the devicolam munsiff's court the debtor claimed the benefit of the tra-vancore debt relief act and it was granted. in appeal by the creditor, held (reversing the order) that the act will not apply to the foreign decree sought to be executed. and krishnaswamy iyer c. j. observed :'the debt evidenced by the decree in question is one which is the result of a contract entered into a foreign place. the substantive law relating to the contract between the parties is the british indinn law. the fact that a judgment has been obtained does not make any difference. a judgement debt is a chose in action and must be held situate in the country where the judgment was obtained. how the contract the debt resulting therefrom, and the decree evidencing it can be resolved is a matter.....
Judgment:

Varadaraja Iyengar, J.

1. This appeal is by the defendant in a suit on a foreign judgment which has been allowed by the Court below.

2. The plaintiff and the defendant both hail from Ponnani Taluk in Palghat District. For some time they were doing certain joint business in Colombo and in settlement of accounts in connection therewith and for other moneys borrowed, the defendant executed in favour of the plaintiff a promissory note dated 31-10-1947 for a sum of Rs. 3,823 and odd with provision for interest at 18 per cent. On foot of this promissory-note, the plaintiff filed suit and obtained ex parte judgment in the District Court of Colombo in. Action No. 9321/S on 11-6-1948. The plaintiff then filed suit O. S. 24 of 1948 before the Court of the Subordinate Judge at Ottapalam, vide Ext. B1 plaint, for enforcement of the ex parte Judgment or alternatively, for the realisation of the promissory note debt, but subsequently allowed it to be dismissed, because the ex parte judgment was set aside and the Action restored back to the file by the Colombo Court at the instance off the defendant.

In the contest which the defendant raised in the Action, he questioned his liability to the extent claimed or to any extent but the trial Court ultimately passed decree against him in terms of the plaint on 24-3-1950--vide Ext. A1 Judgment. The defendant subsequently appealed to the Supreme Court of the Island of Ceylon but that Court dismissed the appeal on 31-8-1951. It was based upon this judgment Ext. Al of the Colombo District Court as confirmed by the Supreme Court, that the suit herein was filed on 17-1-1952.

The plaint claim comprised the amount due at the time of the decree in the Colombo District Court inclusive of interest at the contract rate, and the costs decreed in the Action with future interest at 5 per cent on both these amounts totalling in all Rs. 7,069-15-9. The plaintiff claimed decree for this amount with interest from date of plaint till realisation. The suit was resisted by the defendant on various grounds.

We are concerned however with only two of his contentions, which were overruled by the Court below, viz. (i) that because the prior suit O. S. 24 of 1948 before this Court had been based not alone on the ex parte foreign judgment then existing but also on the promissory note, though in the alternative and that suit had been dismissed, the plaintiff was not entitled to any more xelief against the defendant, whether on foot of the promissory note or of the later judgment, (2) the defendant being admittedly an agriculturist was entitled to relief by way of scaling down under the Madras Agriculturists' Relief Act, 1938. The Court below, in the result, allowed the suit except to the small extent of the claim for future interest on the costs under the foreign decree. Hence this appeal by the defendant. The plaintiff, it may be added, has acquiesced in the decree as passed.

3. The only two questions that arise for consideration in this appeal are therefore, firstly whether the dismissal o the prior suit O. S. 24 of 1948 precludes the grant of any relief in this suit to the plaintiff, and secondly whether the defendant was wrongly refused relief under the Madras Agriculturists' Relief Act. The first question need not detain us long. For the judgment disposing of O. S. 24 of 1948 has not been produced in the case and We cannot be sure whether the dismissal was on any ground further than the setting aside of the ex parte decree in Action No. 9321/S by the Colombo District Court. Even otherwise, we are here not concerned with a relief based on the promissory note which had been once before put in suit in the local Court and which had been disallowed but rather with the enforcement of a foreign judgment granting such, relief, after contest.

The plea that the dismissal of O. S. 24 of 1948 stood as a bar against the plaintiff, should if all, have been raised in the Colombo District Court during trial after the Action No. 9321/8 was restored back to the file or in the appeal before the Supreme Court of Ceylon. But that was not done. It is no doubt true that a foreign judgment does not preclude fresh suit in the local jurisdiction on foot of the original obligation apart from enforcing the judgment itself by way of suit. But that is the option of the plaintiff and so long as the present suit is only based upon the foreign judgment, the question ofi the availability of a separate cause of action under the promissory note does not arise. We therefore repel the first contention.

4. Turning now to the second question, Mr. Sundara Iyer, learned counsel for the defendant-appellant urges, that the defendant being admittedly an agriculturist and the promissory note debt herein having been incurred after the commencement of the Madras Agriculturists' Relief Act. 1938 Section 13 of the Act applied and the defendant was therefore entitled to have a scaling down of all interest, so as not to exceed a sum calculated at 6 1/4 per cent per annum simple interest. It was no doubt true that the Madras Agriculturists' Relief Act, 1938 did not apply to a decree passed after the Act came into force, Kotayya v. Pun-nayya, AIR 1940 Mad 910 (A) or to a decree of other Province Santhappa v. Easwarappa, AIR 1941 Mad 810 (B), and the Court contemplated by Section 19 of the Act which could amend the decree is the Court of first instance and none other, still, according to learned counsel the Court below was possessed of the jurisdiction and was also under a duty, to apply Section 13 of the Act when it disposed o the suit before it. For the foreign judgment here sought to be enforced was being questioned as regards its conclusiveness, by the defendant.

The argument is that to the extent Section 13 of the Act was ignored by the Colombo District Court in granting the contract rate of 18 per cent interest under Ext. Al decree, it was sustaining 'a claim founded upon a breach of any law in force in India' within the meaning of Section 13, Clause (f) of the C.P.C. The Court below met this objection by the simple observation that the suit here was not based on the promissory note of 31-10-1947 but, on .the other hand, was for the enforcement of Ext. Al judgment already passed thereon. This approach by the lower Court was certainly not satisfactory.

But the question still is, whether Clause (f) of Section 13, C.P.C. can at all be invoked by the defendant. For one thing, the contract under the promissory note for simple interest at 18 per cent sustained by Ext. Al judgment did not contravene any statutory provision in any all-India enactment e.g., the Usurious Loans Act, V. of 1918' or the Contract Act IX of 1872. Secondly, there could not be said to be a breach of even the Madras Agriculturists' Relief Act, unless that Act governed the transaction in suit in Ext. Al case. On this matter, the principle of Private International Law is clear. For as staled in Dicey's Conflict of Laws, 6th edn. at page 708, Rule 157,

'The liability to pay interest, and the rate of interest payable in respect of a debt, e.g. in respect of a loan, is determined by the proper law of the contract under which the debt is incurred, e.g. by the proper law of the contract under which the loan is made.'

And dealing with the proper law of a contract, Rule 136 at page 579 states 'the term 'proper law of a contract' means the law or laws by which the parties intended or may fairly be presumed to have intended the contract to be governed, or (in other words) the law or laws to which the parties intended or may fairly be presumed to have intended, to submit themselves'. The Sub-rule 3 of Rule 136 at page 593 then states as the first presumption, in the matter: 'Prima facie the proper law of the contract is presumed to be the law of the country where the contract is made (lex loci contractus) and as a second presumption: 'when the contract is made in one country, and is to be performed either wholly or partly in another, then the proper law of the contract may be presumed to be the law of the country where the performance is to take place (lex loci solu-tionis). The principle is however stated in Cheshire's Private International Law, 5th edn. page 241:

'Despite the invariable reference by the Judges to the intention of the parties, the authorities show that normally this law is the law of the country with which +he contract has the most substantial connection. The only conceivable con-troversy is whether this can be displaced by the express selection of a law with which the contracthas an insignificant connection or no-connection at all.'

Reference may also be made to the observation of Lord Wright (on this subject) while delivering the judgment of the Privy Council in Mount Albert Borough Council v. Aus. T. and G Mutual Life Assurance Society Ltd., (1937) 4 All ER 206 at p. 214 (C).

'The proper law of the contract means that law which the English or other court is to apply in determining the obligations under the contract. English Law, in deciding these matters, has refused to treat as conclusive, rigid or arbitrary criteria such as lex loci contractus or lex loci solutionis and has treated the matter as depending on the intention of the parties, to be ascertained in each case on a consideration of the terms of the contract, the situation of the parties & generally on all the surrounding facts. It may be that the parties have in terms in their agreement expressed what law they intend to govern, and in that case prima facie their intention will be effectuated by the court. But in most cases they do not do so. The parties may not have thought of the matter at all. Then the Court has to impute an intention, or to determine for the parties what is the proper law which, as just and reasonable persons, they ought to or would have intended if they had thought about the question when they made thecontract. No doubt there are certain prima facie rules to which a Court, in deciding on any particular contract, may turn for assistance, but they are not conclusive. In this branch of law, the particular rules can only be stated as prima facie presumptions.

5. Applying the above principles to the facts here, it appears perfectly clear that the a proper law governing the promissory note transaction between the parties was the law of Cey-lon, and not certainly the Madras Agriculturists' Relief Act. And this must have accounted for the failure of the defendant to raise a plea based on Section 13 of that Act, before either the District Court of Colombo or in appeal before the Supreme Court. In the Travancorc case in Lekshmanan Chettiar v. Chinnachami Pillai, 1943 Trav LR943 (D) a decree passed by the Periyakulam Munsiff's Court (in British India) was transferred for execution to the Munsiff's Court in Devi-colam. The debtor and the creditor were of British Indian domicile and permanent residents of British Indian territory, and the contract was entered into and intended to be performed only in British India. Before the Devicolam Munsiff's Court the debtor claimed the benefit of the Tra-vancore Debt Relief Act and it was granted. In appeal by the creditor, held (reversing the order) that the Act will not apply to the foreign decree sought to be executed. And Krishnaswamy Iyer C. J. observed :

'The debt evidenced by the decree in question is one which is the result of a contract entered into a foreign place. The substantive law relating to the contract between the parties is the British Indinn Law. The fact that a judgment has been obtained does not make any difference. A judgement debt is a chose in action and must be held situate in the country where the judgment was obtained. How the contract the debt resulting therefrom, and the decree evidencing it can be resolved is a matter of substantive law. The rules of Private International Law require that the Courts of the State should apply the substantive law of British India to the decree, just as the British Indian Courts may have to apply the Debt Relief Act of Travancore in, the matter of a decree of a Court of a State transferred for execution to a British Indian Court.'

The question in this case is practically the same. Only, the foreign judgment is here the subject of a separate suit while there, it was capable of execution by transfer to the local Court and was so transferred. 'We have no hesitation therefore to follow the above decision. Reference may also be made to Ganga Prasad v. Ganeshi Lal, AIR 1924 All 161 (E). The suit there, was brought in British India and was founded on a judgment passed by a Dholpur Court (foreign Court) & it was pleaded that if the suit upon which the foreign judgment was passed had been brought in British India it would have been held to be time barred under the law of limitation in operation in British India. It was held, however, repelling the plea, that there had been no refusal to recognise the law in British India where such law was applicable. And the general rule was also stated that: 'A Court which entertain a suit on a foreign judgment cannot in-stitute an enquiry into the merits of the original action or the propriety of the decision.'

6. Learned counsel referred to Ramiah v. Ramiah, AIR 1943 Mad 330 (F), where the decision of the Privy Council in the Mount Albert Borough Council case (C), above referred to was cited with approval. There the contract of mortgage of land situate within the Madras Presidency was executed within the Madras Presidency though in discharge of a debt contracted outside the Madras Presidency and imposing conditions quite different from those governing that debt. It was held that the mortgage was governed by the laws of the Madras Presidency and therefore the liability under the mortgage could be scaled down under the Madras Agriculturists' Relief Act The principle of the Privy Council case was followed, that when a State law had defined the extent of an obligation to pay a debt, the principal amount and the interest thereon, charged on property in the State, the State Courts were bound to give effect to that law and not to the law as varied by the legislature of another State.

That is to say, the legislature of the other State had no extra-territorial force and could not change the amount secured. It is difficult to understand how this principle comes in, for application here. The simple question here is, how far the judgment of the District Court of Colombo confirmed by the Supreme Court, suffers from any of the defects contained in clauses (a) to (f) of Section 13 of the C.P.C. If it is found that there are no such defects the judgment must be taken to be conclusive as between both the parties. And once it is found that Clause (f), which was relied upon in this connection cannot apply, there must be an end of defendant's plea.

The judgment and decree passed by theCourt below are therefore unassailable. The ap-peal fails in the result and it is dismissed withcosts.


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