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Smt. Panbai and ors. Vs. Sajjanraj and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial;Contract
CourtRajasthan High Court
Decided On
Case NumberSecond Appeal Nos. 341, 366, 368, 369, 386, 390, 391, 407, 415, 418, 420, 423, 424 and 446 of 1962
Judge
Reported inAIR1969Raj278; 1968()WLN238
ActsContract Act, 1872 - Sections 39 and 45; Code of Civil Procedure (CPC), 1908 - Order 1, Rule 1
AppellantSmt. Panbai and ors.
RespondentSajjanraj and ors.
Appellant Advocate Sumer Chand Bhandari,; M.M. Vyas,; Shri Krishna Mal Lodh
Respondent Advocate H.C. Jain and; J.K. Jain, Advs.
Cases ReferredMotilal v. Sajjanraj
Excerpt:
.....why one creditor cannot brim a suit for the recovery his share of the debt after impleading the remaining creditors as defendants.;(b) civil procedure code - order 1, rule 8--numerons parties--individually impleading & service not inconvenient--whether order 1. rule 8 applicable.;the general rule is that all persons interested in a suit ought to be joined as parties in a suit and served personally order 1. rule 8 is an exception to the rule service by publication is provided where the interested persons are all members & a small village, community or & a wellknil, reilgions, caste or other group where fifty-five the parties had to be impleaded as defendants in each suit, it was held that this could be done conveniently all & then be served individually order 1 rule 8..........defect, if any, can be remedied by remanding the suits and redeciding them after impleading the remaining creditors. so this question does not present any serious difficulty at this stage.8. the appellate court dismissed the suit on the ground that there was a novation of contract on 22-12-51 and separate suits for the debts remaining due to individual creditors could not be maintained.9. i have read the agreement carefully and i am satisfied that the parties intended to substitute a new contract in place of the old one. the agreement dated 22-12-51 does not merely relate to the mode or manner of payment.10. so far as the first part of the new agreement is concerned it was actually acted upon. the contention raised on behalf of the appellants that because a khata was not executed they.....
Judgment:

Jagat Narayan, J.

1. These 14 connected second appeals arise out of 14 suits for recovery of money brought by 14 creditors against defendants 1 to 4, the four sons of Sensmal who was the owner of the joint family firm Shermal Sultanmal. All these suits were decreed by the trial Court, but were dismissed by the appellate Court.

2. The facts which are necessary for the disposal of these appeals are these. The joint family of the debtors became heavily indebted in the year 1951. It owed a sum of Rs. 1,19,000 to 56 unsecured creditors on 20-12-51. It entered into an agreement with them for the compounding of the debt owed to them. This agreement was described as a deed of composition and was stamped with Rs. 10 which was the duty payable under Article 22 Schedule I of the Stamp Act on a composition deed at the time of its execution. In this deed the four brothers who were members of the joint family were described as party No. 1 and the 56 creditors were described as party No. 2. All the 56 creditors were named in this deed and the debts outstanding in favour of each of them were specified separately.

3. Party No. 1 agreed to place at the disposal of party No. 2 six houses described in the deed. It was stipulated that party No. 1 would execute sale-deeds of the 6 houses in favour of the person nominated by 7 of the nominees of the creditors whose names were mentioned in the deed. It was further stipulated that the price of 6 houses would be taken to be Rs. 53,000 whether or not they were sold for that amount. These six -houses were actually sold for a sum of Rs. 48,000 to two persons named by the 7 representatives of the creditors and the amount was deposited with the firm Hastimal Meghraj. The debtors deposited a sum of Rs. 6,500 in cash with this firm. The amount of Rs. 54,500 so deposited was distributed pro rate amongst the creditors with the exception of one creditor Chhoga-lal of Sheoganj (not appellant Chhogalal).

4. Party No. 1 further undertook to execute a Khata for Rs. 59,500 in favour of party No. 2. Further it undertook to pay half of this amount within 4 months and the balance within 8 months. It was stipulated that in case of failure of the first instalment of Rs. 29,750 within 4 months it would be open to party No, 2 to bring a suit for the recovery of the sum of Rs. 59,500.

5. The joint family owed various sums to some relatives and to Jodhpur Commercial Bank. It was stipulated that party No. 2 will have no objection to the sale or mortgage by party No. 1 of the other properties of the joint family for the payment of the debts owed to the relatives or to the Jodhpur Commercial Bank.

6. No Khata for Rs. 59,500 was executed by the debtors. The evidence on record shows that an attempt was made by the creditors for getting separate individual Khatas of the amounts remaining due to them executed by the debtors but the debtors refused to execute them as that was not stipulated in the agreement. The debtors served notices on some of the creditors to get a joint Khata in favour of all of them executed for Rs. 59,500, but they did not come forward to get it executed.

7. The present 14 suits were instituted within 3 years of the date of the agreement by 14 of the creditors. The agreement was executed by 34 out of 56 creditors. Twelve out of the 14 plaintiffs of the present suits are signatories to the agreement. They are bound by it. The remaining 2 plaintiffs are not signatories to the agreement, but their plaints show that they gave their assent to the agreement. Although they did not actually receive payment of half of their debts they have treated the payment made by the firm Hastimal Meghraj to them as payment of half of the debts in terms of the agreement. No allegation has been made in the plaint by any of the plaintiffs who was signatory to the agreement that any creditor who had not signed it did not assent to it.

In all the suits at least 2 of the non-suing creditors were impleaded as representing the remaining 55 creditors and proceedings under Order 1 Rule 8 Civil P. C., were taken by the trial Court. An objection was taken in the written statement by the debtors that proceedings under Order 1, Rule 8, Civil P. C., were not applicable to the suits as all the creditors did not have the same interest, each plaintiff having claimed his amount of debt. The trial Court did not frame any issue on the point and did not give any decision, as to whether Order 1, Rule 8 was applicable.

In the appeals filed by the debtors in the Court of the District Judge an objection was taken about it, but it was not decided as in the view taken by the learned District Judge the decision of it was unnecessary. As the objection taken in the written statement was not pressed, if the suits are otherwise maintainable the defect, if any, can be remedied by remanding the suits and redeciding them after impleading the remaining creditors. So this question does not present any serious difficulty at this stage.

8. The appellate Court dismissed the suit on the ground that there was a novation of contract on 22-12-51 and separate suits for the debts remaining due to individual creditors could not be maintained.

9. I have read the agreement carefully and I am satisfied that the parties intended to substitute a new contract in place of the old one. The agreement dated 22-12-51 does not merely relate to the mode or manner of payment.

10. So far as the first part of the new agreement is concerned it was actually acted upon. The contention raised on behalf of the appellants that because a Khata was not executed they are entitled to repudiate the whole agreement under Section 39 of the Contract Act is not tenable. In Union of India v. Kishorilal Gupta and Bros., AIR 1953 Cal 642, it was held that breach of the substituted agreement does not revive the original agreement. This decision was confirmed by their Lordships of the Supreme Court in Union of India v. Kishorlal AIR 1959 SC 1362.

11. The only remedy of the appellants was to bring a suit on the basis of the agreement dated 22-12-51. The contention on behalf of the debtors is that by virtue of Section 45 of the Contract Act only one suit on behalf of all the promisees for the whole amount of Rs. 59,500 was maintainable even if all of them had not agreed to join as plaintiffs.

12. It is also contended that on the basis of the novated contract dated 22-12-51 only one suit for the whole amount of Rs. 59,500 was maintainable against them.

13. The terms of the agreement have been given in the beginning of this judgment. Part of the promise contained in the agreement was performed inasmuch as six houses were placed by the debtors at the disposal of the creditors and they were sold and the amount distributed amongst the creditors. One remedy of the creditors was to bring a suit for the specific performance of the agreement and thereby to compel the debtors to execute a Khata for Rs. 59,500 in favour of all the creditors. The other remedy of the creditors was to bring a suit for damages for breach of contract on the basis of the novated agreement and the amount of damages would be Rs. 59,500, which was the debt remaining due to the creditors under the above agreement.

14. The first question which arises , for determination is whether it was open to a creditor to bring a suit for his share of the debt after impleading the remaining creditors as defendants. On behalf of the creditors it was contended that this could be done. Reliance was placed on the decisions in Abdul Hakim v. Adyata Chandra Das, AIR 1919 Cal 593 and Nabendra Nath v. Shasabindoo Nath, AIR 1941 Cal 595. In Abdul Hakim's case, AIR 1919 Cal 593 the following passage occurring in the Tagore Lectures for 1876 (Ed. 4) at page 452 was relied on :--

'In the absence of any evidence or circumstances which would justify a contrary inference, it will be presumed notwithstanding the terms of the obligation that the debt is due to the creditors in severally.'

IN Nabendra Nath's case, AIR 1941 Cal 595, four brothers were running a joint money-lending business. One of the brothers, defendant No. 1 had drawn excessive amounts from the business and after accounting he executed a Hatchitha in favour of all the brothers. He however did not pay the money. Two of the brothers brought a suit for the recovery of their share. The legal representative of the third brother was impleaded as a defendant as she declined to join as a plaintiff. It was contended on behalf of defendant No. 1 that the plaintiffs ought to have prayed for a decree for the entire amount due on the Hatchitha, This contention was overruled, A perusal of the agreement dated 22-12-51 goes to show that the debts in favour of several creditors were specified separately. There is nothing to show that these debts lost their severally and became a joint debt in favour of all the creditors.

15. If the debts are due to the creditors in severally I do not see why one creditor cannot bring a suit for the recovery of his share of the debt after impleading the remaining creditors as defendants irrespective of the fact whether or not they were asked to join as plaintiffs and declined to do so. The remaining creditors thereby get an opportunity to safeguard their interest by bringing separate suits against the debtors in respect of the debts due to them individually. Where money is lent by several persons to another the general rule in equity is that they will be regarded prima facie as tenants in common. Although all the creditors executed the agreement dated 22-12-51 jointly each meant to take back what he had lent.

16. The next question for determination is as to whether Order 1, R. 8, Civil P. C., is applicable to the present suits. The general rule is that all person interested in a suit ought to be joined as parties to it by name and served personally. Order 1, R. 8 is an exception to this general rule. Service by publication as is provided under this rule rarely gives actual notice to all the interested persons except when they are members of a small village community or of a well-knit, religious, caste or other group.

The first essential for the application of this rule is that the parties must be numerous. It should only be applied when the Court can fairly hold that the parties are so numerous that it would not be convenient to implead all of them individually. In the present case there were only 56 creditors all of whom were named in the agreement dated 22-12-51. Fifty-five of them had to be impleaded as defendants in each suit. This could be done conveniently and all of them served individually. In these circumstances, I hold that Order 1, Rule 8,, Civil P. C., is not applicable to the present suits.

17. I would like to observe that even in suits to which this rule is applicable the Court should insist that at least 20 persons belonging to the party suing or sued are impleaded by name and served personally so that the chances of all the interested persons getting actual notice of the suit by publication are increased.

18. An objection was taken in the written statement that Order 1, Rule 8 is not applicable to these suits, but it was not pressed. If the objection had been pressed and if the remaining creditors had not been impleaded then the present suits would have been dismissed. The present suits are not maintainable without impleading the other creditors. The result of my finding that Order 1, Rule 8 is not applicable to the present suits is that the other creditors have not been impleaded in these suits with the exception of two or three creditors which is not sufficient to comply with the requirements of law. The suits in their present form are thus bound to fail.

19. As however the creditors were under a bona fide misapprehension that Order 1, Rule 8 was applicable, it is expedient in the interest of justice that an opportunity should be given to them to implead the remaining creditors in each suit.

20. In suit No. 233 of 1954 Hastimal v. Sajjanraj (Second Appeal No. 341/1962) and in suit No. 211/1954 Jethmal v. Sajjanraj (Second Appeal No. 369 of 1962) the learned counsel representing the debtors made a statement before the trial Court that personal service on all the creditors need not be made. In these two suits the debtors are estopped from raising an objection regarding the non-applicability of Order 1, Rule 8, Civil P. C. These two appeals are accordingly allowed and the suits are decreed for Rs. 3375 and Rs. 1500 respectively. The agreement dated 22-12-51 does not provide for any interest. The plaintiffs will be entitled to recover proportionate costs throughout. They will further be entitled to recover pendents lite and future interest at the rate of 3% per annum simple till the date of realisation.

21. In suit No. 165 of 1954 Firm Ram-chandra Motilal v. Sajjanraj (Second Appeal No. 391/1962) an application for impleading the creditors in a representative capacity under Order 1, Rule 8 was made by the plaintiff on 22-12-54. This application was dismissed on the ground that Order 1, R. 8 was not applicable to the suit. No application to implead the remaining creditors was thereafter made by the plaintiff. This suit is thus liable to dismissal as the remaining creditors were not impleaded. I accordingly dismiss it. In the circumstances of the case, I leave the parties to bear their own costs of it throughout.

22. The remaining appeals are allowed, the decrees of the appellate Court are set aside and the suits are remanded to the trial Court for, fresh trials after permitting the plaintiffs to implead the remaining creditors in each suit. The debtors will get an opportunity of filing a fresh written statement. In the circumstances of the case, I leave the parties to bear their own costs of the two appellate Courts. The plaintiffs in these appeals will be entitled to get a refund of the court-fees paid on the memos of appeal in this Court. They will also be entitled to get a refund of the amounts recovered from them as court-fee in respect of the pauper appeals filed in the first appellate Court. The costs of the trial Court shall abide the final result of the suits.

23. Leave to file special appeal was prayed for on behalf of the debtors but isdeclined.


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