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Muthuveerappa Chetti Alias Nellayappa Chetti Vs. Ramaswami Chetti (Deceased) and ors. - Court Judgment

LegalCrystal Citation
SubjectCriminal
CourtChennai
Decided On
Reported in(1916)31MLJ264
AppellantMuthuveerappa Chetti Alias Nellayappa Chetti;ramaswami Chetti (Deceased) and ors.
RespondentRamaswami Chetti (Deceased) and ors.;m.S. Muthuveerappa Chetti Alias Nellayappa Chetti
Cases ReferredIn Smith v. Monteith
Excerpt:
- - (1) that the plaintiff failed to render proper accounts of the business, (2) that the salary chit was not returned to him (an almost conclusive indication among nattukottai chetties, that the transaction was not closed between the parties), (3) that the defendants were prepared to institute a suit against the plaintiff for nearly rs. lord justice bowen in the case above referred to says :there might be a difficulty in recovering back money paid on the well-known ground which is shortly expressed in the maxim 'melior est conditio defendentis. 778 lays down distinctly that if the agreement was to stifle a prosecution, money paid can be recovered. even if the payment was induced only in part by the agreement, the whole consideration must fail......proceeded with. the agreement to stifle the criminal prosecution was illegal and it is said that money paid in pursuance of an illegal agreement cannot be recovered back. no doubt that is generally so according to the maxim in pari delicto potior est conditio defendeniis, but it appears to bewell established that when a payment of money is obtained by means of such an agreement the parties are not to be con-sidered in pari delicto and that the money may be recovered back. in bullen and leake's precedents of pleadings, 2nd edn. page 51, the law is stated as follows:--' but where the plaintiff having paid the money in execution of an illegal contract or for an illegal purpose is not in pari delicto he may in some cases recover it : as when the money was paid under oppression as the money.....
Judgment:

John Wallis, C.J.

1. The Subordinate Judge has found in this case--and we see no reason to differ from his finding on the evidence--that the plaintiff was induced to pay Rs. 7,000 to the defendants in order that a criminal prosecution instituted by the defendants against the plaintiff for an offence which was not compoundable should not be proceeded with. The agreement to stifle the criminal prosecution was illegal and it is said that money paid in pursuance of an illegal agreement cannot be recovered back. No doubt that is generally so according to the maxim in pari delicto potior est conditio defendeniis, but it appears to bewell established that when a payment of money is obtained by means of such an agreement the parties are not to be con-sidered in pari delicto and that the money may be recovered back. In Bullen and Leake's Precedents of Pleadings, 2nd Edn. page 51, the law is stated as follows:--' But where the plaintiff having paid the money in execution of an illegal contract or for an illegal purpose is not in pari delicto he may in some cases recover it : as when the money was paid under oppression as the money paid by a bankrupt to obtain his certificate (Smith v. Bromley (1760) 2 Doug 696, money paid by the defendant in a penal action to compound the action (Williams v. Hedley (1807) 8 East 378 Unwin v. Leaper) (1810) 1 M. & G. 747. In Williams v. Hedley (1807) 8 East 378 an action for penalties had been brought by the defendant against the plaintiff in respect of certain usurious transactions entered into by the latter and to escape the penal action the plaintiff had been induced to pay the persons who put forward Hedley the amount of a debt due to them by a third party; and it was held the money could be recovered back. Similarly in Unwin v. Leaper (1810) 1 M. & G. 747 the jury were directed that the money could be recovered if it had not been paid voluntarily but by coercion of the threatened penal actions. The Subordinate Judge held that the evidence did not show coercion within the meaning of the Contract Act but it is now settled that that is not the test, Kanhaya Lal v. National Bank of India I.L.R. (1913) C. 598. It makes no difference in my opinion here that money was found payable by the arbitrators, as the plaintiff's consent to the arbitration was obtained by means of the Criminal prosecution, or that it may have been really due, as in either case the plaintiff is entitled to get back what was obtained from him by coercion.

2. The appeal must be allowed with interest at 6% from the date of plaint. No order as to costs. As regards the connected appeals I agree with the Judgment of my learned brother.

Seshagiri Aiyar, J.

3. After stating the facts as extracted above and discussing the evidence, his Lordship allowed A.S. No. 178 of 1911 and dismissed A.S. No.177 of 1911, on the ground that the defendants had reasonable and probable cause forinstituting the complaint for criminal breach of trust and proceeded as follows.

4. In dealing with the other two appeals, I accept in their entirety the findings of the learned Subordinate Judge. No serious attempt was made on either side to show that he was wrong and the evidence fully supports his conclusions. Briefly stated, the facts established are:

(1) That the plaintiff failed to render proper accounts of the business, (2) that the salary chit was not returned to him (an almost conclusive indication among Nattukottai Chetties, that the transaction was not closed between the parties), (3) that the defendants were prepared to institute a suit against the plaintiff for nearly Rs. 30,000 (4) that the defendants resorted to the expedient of a criminal prosecution to coerce the plaintiff to come to terms, (5) that the plaintiff was arrested, (6) that while on bail the parties referred their differences to two arbitrators and (7) that as a result of the mediation it was agreed that the prosecution against the plaintiff should not be pressed, provided he gave Rs. 7,000 at once and executed a hundi for Rs. 3,000 more. On these facts the question is whether the defendants are entitled to recover the amount due on the hundi and whether the plaintiff is entitled to recover money paid by him. There can be no doubt on the first question. As the document was given with a view to stifle the prosecution, Courts cannot give a decree on the hundi. Section 23 of the Contract Act makes the consideration illegal. Majibar Rahman v. Muktashed Hossein I.L.R. (1912) C. 113 Mottai v. Thanappa I.L.R. (1912) M. 385 are directly in point. In Jones v. Marionethshire Building Society (1892) 1 Ch. 173 Lord Justice Lindley says, 'If any bargaining could be shown here to stifle a prosecution for a criminal act, the action certainly could not be maintained.' Lord Justices Bowen and Fry are equally emphatic. The Subordinate Judge was therefore right in dismissing the suit. The appeal should be dismissed with costs.

The claim for the refund cannot be so easily disposed of. Lord Justice Bowen in the case above referred to says : 'There might be a difficulty in recovering back money paid on the well-known ground which is shortly expressed in the maxim 'Melior est conditio defendentis.' It may be that if both parties are in pan delicto, the position of the defendant may give him an advantage. But where one party used his position as prosecutor to secure monies which but for the arrest he would not have got, the principle of the parties being in pari delicto cannot apply. Mr. Rangachariar foresaw this difficulty and contended that the payment was under the award of the arbitrators and that a decree directing the refund would offend against the principle of placing the parties in status quo ante. The arbitrators' decision may show that the claim was honest, but when money is given with the object of stifling a pending prosecution, the consideration is opposed to public policy. It is true that in directing the payment care should be taken to see that the parties are placed in status quo ante. If in this case, the defendants had pleaded that they were entitled to retain the amount towards what is due to them from the plaintiff, I would have been inclined to direct the trial of an issue in that behalf. I agree with the dictum in Shridhar Balakrishna v. Balaji Mula I.L.R. (1914) 38B that the defendant should not be estopped from showing that the money which he seeks to retain was really due to him. See. also Cocks v. Masterman (1829) 9 B. & C. 908 and Imperial Bank of Canada v. Bank of Hamilton (1903) A.C. 49. But that is not the defendant's case. Therefore the only question is whether the money can be recovered having been paid as a consideration for not pressing a criminal prosecution. In the first place we have the statutory declaration in Section 72 of the Contract Act that a person to whom money is paid under coercion must repay it. it was recently-held by the Judicial Committee that the term ' coercion ' is not synonymous with the definition in the Act, Kanhaya Lal v. The National Bank of India Ltd. 25 M.L.J. 104. In my opinion, the plaintiff would not have paid the Rs. 7,000 had he not been under arrest. He was coerced into paying the amount by the prosecution and by the promise to withdraw it. The decision in Amjadennissa Bibi v. Rahim Baksh Shikdar I.L.R. 1 (1911) C. 286 is distinguishable from the present case. It was a compoundable offence and the learned judges found that the defendant did not use his dominant position to get the money. In effect the finding in that case was that there was no coercion. On the other hand Atkinson v. Denby (1861) 6 H. & N. 778 lays down distinctly that if the agreement was to stifle a prosecution, money paid can be recovered. Even if the payment was induced only in part by the agreement, the whole consideration must fail. See Section 24 of the Contract Act and Clark v. Woods (1818) 2 Ex. Rep. 395. Mr. Rangachariar relied on Flower v. Sadler (1882) 10 Q.B.D. 572. In that case there was no arrest. The party lawfully bound to pay paid the amount as soon as he was threatened with a prosecution. The illegality consists not in using questionable means to secure a lawful debt, but in endeavouring to defeat public justice. In In re Mapleback v. Exparte Caldecott (1876) 4 Ch.D. 160 also there was no arrest. In Smith v. Monteith 153 E.R. 178 it was held that when a man is arrested under a process of law devised for recovering money, he is not entitled to be paid back. This is obvious. Otherwise the provisions of our Code for arrest in execution will be rendered nugatory.

5. I am, constrained to therefore, hold that the plaintiff is entitled to the refund. As the claim of the defendants appears to have been just and reasonable there will be interest at 6 per cent. per annum on the amount of the decree only from the date of the plaint. Each party will bear his own costs throughout.


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