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Nagamma Bai and anr. Vs. S. Rajaram Rao and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil;Property
CourtChennai
Decided On
Reported in(1947)2MLJ344
AppellantNagamma Bai and anr.
RespondentS. Rajaram Rao and anr.
Cases ReferredRaja Raghunandan Prasad Singh v. Raj Kirtyanand Singh Bahadur
Excerpt:
.....security the plaintiff applied to the district court on 14th august, 1936, for assignment of the security bond executed by the first defendant in o. they have been impleaded in the present suit which was filed on 18th november, 1942 as persons bound to satisfy the plaintiff's claim against the first defendant in consequence of the failure of the security bond ex. it is stated that if those conditions are satisfied the bond would be void and of no effect. it was possible according to him, intrinsically from the security bond itself to spell out a charge on the properties mentioned in the schedule but in any case it would be permissible to examine the various orders passed by the district judge before and after taking of this bond and if read in the light of those orders it would be..........been asked for in the trial court itself but had been refused.2. the appellants are purchasers of suit properties from court auction purchasers. the plaintiff rajaram rao was born on 1st june, 1906 and in o. p. no. 502 of 1915, his elder brother venkata rao applied to be appointed as his guardian. a security bond, ex. p-1 was executed by him to the district judge on 7th august, 1916, and he was appointed guardian by the order of the judge ex. d-5 dated 18th august, 1916. the plaintiff attained majority on 1st june, 1927. in the meantime the first defendant mortgaged item 1 of the plaint schedule which is a house to t.m.g. nagaraja rao for rs. 1,200. this constituted one of the items of property which was given as security in the guardianship proceedings. on 1st march, 1927, the first.....
Judgment:

Yahya Ali, J.

1. The second and third defendants are the appellants. The plaintiff brought O.S. No. 40 of 1943 out of which this appeal arises, in the Court of the Subordinate Judge of Tanjore to direct his brother the first defendant to render an account for the management of his estate during his minority and also to recover monies that may be found due and payable to him and for enforcing the security bond given to the Court when he was, appointed the plaintiff's guardian in O. P. No. 502 of 1915. The suit was dismissed, the learned Subordinate Judge holding that no charge was created on the properties by the security bond, that the suit was barred by limitation, that the plaintiff had attained majority in 1927 more than 12 years prior to the institution of the suit and that the suit for accounts was not maintainable as the accounts had been already settled and satisfaction rendered. The plaintiff appealed in A.S. No. 222 of 1944 and the District Judge, Tanjore, set aside the decree of the Subordinate Judge and remanded the suit for fresh disposal. He found, differing from the trial Judge on the construction of the security bond that there was a charge on the property. He also found that the suit was not barred as the bond had been assigned by the District Judge on the plaintiff's application to him within 12 years prior to the institution of the suit. He permitted the plaintiff to amend the plaint in order to confine his claim to a decree for Rs. 4,500 instead of the general prayer for account. This amendment had been asked for in the trial Court itself but had been refused.

2. The appellants are purchasers of suit properties from Court auction purchasers. The plaintiff Rajaram Rao was born on 1st June, 1906 and in O. P. No. 502 of 1915, his elder brother Venkata Rao applied to be appointed as his guardian. A security bond, Ex. P-1 was executed by him to the District Judge on 7th August, 1916, and he was appointed guardian by the order of the Judge Ex. D-5 dated 18th August, 1916. The plaintiff attained majority on 1st June, 1927. In the meantime the first defendant mortgaged item 1 of the plaint schedule which is a house to T.M.G. Nagaraja Rao for Rs. 1,200. This constituted one of the items of property which was given as security in the guardianship proceedings. On 1st March, 1927, the first defendant executed a promissory note for Rs. 2,000 to Somanatha Vyas. After the plaintiff attained majority the first defendant conveyed to the plaintiff by sale deed dated 16th January, 1928, Ex. P-4, 12 out of the 13 suit items for a sum of Rs. 14,000. It was recited in that document that in respect of the first defendant's management of plaintiff's property during his minority it was agreed that a sum of Rs. 12,000 was due and payable by the first defendant. Out of that a sum of Rs. 9,000 was to be adjusted towards the consideration for this sale deed. The balance of Rs. 5,000 was to be paid in discharge of certain other secured and unsecured debts of the first defendant. Even with regard to the balance of Rs. 3,000 that had to be paid out of the agreed sum of Rs. 12,000 in respect of the first defendant's management of the plaintiff's properties, the first defendant subsequently assigned certain mortgages to the plaintiffs on 21st October, 1930.

3. Somanath Vyas, the promisee under the promissory note dated 1st March, 1927, filed O.S. No. 64 of 1928 in the District Munsiff's Court, Tanjore, under the summary procedure. Security was demanded and given by the plaintiff himself. After obtaining a decree in that suit Somanath Vyas first executed it against the property of the plaintiff which had been given as security in that suit and for the balance of Rs. 800 odd that was due he attached the suit items 1 to 13. Claim proceedings followed and the claim was allowed. Thereupon Somanath Vyas filed O.S. No. 59 of 1934 in the District Munsiff's Court, Mannargudi to set aside the claim order and to declare the sale by the first defendant to the plaintiff under Ex. P-4 to be void as being in fraud of creditors. On 12th February, 1931, through Ex. D-1, the plaintiff had made a settlement on the wife of his brother, the first defendant of all the items comprised in the security bond Ex. P-1 except items 1, 3 and 7 and also of his other properties. The validity and binding nature of this settlement deed was also impugned by Somanath Vyas in O.S. No. 59 of 1934. That suit was decreed by the trial Court on 19th March, 1935, (Ex. D-2) holding both Ex. P-4 and Ex. D-1 to be in fraud of creditors. An appeal against that decree in the Sub-Court, Tanjore failed (Ex. D-2 (a) dated 30th March, 1937). After the failure of his security the plaintiff applied to the District Court on 14th August, 1936, for assignment of the security bond executed by the first defendant in O. P. No. 502 of 1915. The assignment was ordered on 21st October,; 1936, and the assignment deed was executed by the Court, Ex. P-1 (a) on 18th November, 1936. This deed was not registered although the security bond itself was registered.

4. It has been already mentioned that the first item which is a house had been mortgaged, by the first defendant to T.M.G. Nagaraja Rao on 26th July, 1924. Nagaraja Rao filed O.S. No. 93 of 1937 in the District Munsiff's Court, Tanjore, to enforce his mortgage and in that suit he impleaded the plaintiff also as a party. The suit was decreed (Ex. D-4 dated 7th July, 1937) and Nagaraja Rao executed it against the mortgaged property, item 1. In Court sale he purchased the property himself. He died subsequently and the third defendant is his widow and legal heir.

5. Somanath Vyas, after obtaining a declaration that the alienation by the first defendant under Ex. P-4 was void as also the settlement by the plaintiff on the first defendant's wife, executed his decree in O.S. No. 64 of 1928 against suit items 2 to 13. These items were purchased in Court auction by S. Nagaraja Rao who sold them in turn to the second defendant. Thus the second and the third defendants are on record as purchasers from the Court auction purchasers of the respective items. They have been impleaded in the present suit which was filed on 18th November, 1942 as persons bound to satisfy the plaintiff's claim against the first defendant in consequence of the failure of the security bond Ex. P-1 by reason of the declarations made in O.S. No. 59 of 1934 and A.S. No. 50 of 1936.

6. Mr. Viswanatha Sastri who argued the appellants' case raised a number of contentions that the security bond does not create a charge or mortgage on the suit properties, that even if it does the assignment executed by the Court of that bond not being registered does not pass a charge to the plaintiff, that Ex. P-1 is a security by way of indemnity and the cause of action to enforce it would arise at the latest on 1st June, 1927, when plaintiff attained majority and that the suit is barred as it was filed more than 12 years after that date, that the assignment bond by the Court does not have the effect of extending the period of limitation as on the original document since an intermediate assignment does not postpone the starting point of limitation, that the District Judge's view that fresh cause of action arose to the plaintiff on Ex. P-4 being declared to be in fraud of creditors in O.S. No. 59 of 1934, is untenable as the security bond Ex. P-1 will have to be enforced according to the law of limitation applicable to it and it cannot be enforced against persons who are not parties to it or against persons against whom no cause of action can be founded on the basis of Ex. D-2, the judgment in O.S. No. 59 of 1934. There were some further arguments raised on the merits which it is unnecessary to mention here.

7. The principal contention is the first relating to the question whether on a proper construction of the security bond a charge can be deemed to have been created on the properties mentioned in the schedule attached thereto. If on a true interpretation of that document it is held that no charge was created on the properties mentioned therein it is admitted by both sides that the plaintiff would not be entitled to any relief against the appellants who claim under persons who subsequently purchased the property in Court sales. It is only if the bond amounts to a mortgage or its terms have the effect in law of creating a charge that having been executed on 7th August, 1916, long prior to the subsequent alienations it will prevail against all those subsequent transactions affecting those properties. Upon this question the trial Judge took the view that no charge was created on those properties by the security bond. If only to indicate the intensity of his conviction on that matter I would extract a passage from his judgment:

In the absence of language, clear or clouded, wide or narrow, definite or indefinite, directly Or remotely indicating an intention to create a charge upon the properties, a list of which was appended in Ex. P-1, I am unable to hold that the executants, who certainly did not say so, should be deemed to have given a charge on the immoveable properties for the fulfilment of the conditions of the bond merely because a list of properties, not even described as the 'secured' properties, was appended to the bond.

The lower appellate Court was of a different opinion as its view was that the bond did create a charge over the properties shown therein for the due fulfilment of the obligations referred to therein and that no other interpretation of the bond is possible or legally justifiable. After bestowing close attention upon the whole matter and upon the able arguments on both sides I am disposed to agree with the view of the trial Judge.

8. Ex. P-1 is the security bond given by the first defendant and Gopal Rao Paishwa. They bound themselves jointly and severally to the District Judge in a sum of Rs. 13,540 to be paid to him for which payment they, their heirs, executors and administrators bound themselves jointly and severally. Then follows this sentence.

Whereas in the above matter the said Judge has by order, dated 4th August, 1916, approved of the above Gopal Rao Paishwa as surety for the said Venkata Rao and has also approved of the above written bond with the under written conditions as a proper security to be entered into by the said parties and in testimony of such approbation has signed his name in the margin hereof. Now the conditions of the above written bond is such, etc. etc.

The conditions mentioned in the bond relate to furnishing of accounts and payment of the sums found due according to the directions of the Court. It is stated that if those conditions are satisfied the bond would be void and of no effect. Otherwise it shall remain in full force. At the end of the document a list of properties is attached under the heading ' particulars of property.' The appellants' contention is that there are no operative words in the bond itself creating a charge and the mere incorporation of a schedule containing a list of properties without any reference thereto in the body of the document and without any words to indicate that those properties were intended to be the subject-matter of a charge created by the document was of no importance whatever. It is a simple bond, so the argument runs, and the words ' otherwise shall remain in full force ' occurring at the end indicate that the liability sought to be created was in the nature of personal liability. It has to be borne in mind that the Guardians and Wards Act, (vide Section 34) does not insist in all cases of security of immoveable property being taken on the appointment of a property guardian of a minor. Likewise Rules 7, 8 and 9 of the rules made under that Act do not contemplate any such security. The form that is prescribed, (form No. 8 volume II, Civil Rules of Practice, page 290) which appears to have been virtually adopted in this case does not require that the guardian should offer immoveable property as security. It is left to the Judge in each case having regard to the welfare of the minor to prescribe such security as may be deemed necessary or sufficient to safeguard the minor's interests.

9. Mr. Panchapakesa Sastri for the respondents contended that since a particular form was prescribed under the Guardians and Wards Act all that the District Judge did was to adopt that form. It was possible according to him, intrinsically from the security bond itself to spell out a charge on the properties mentioned in the schedule but in any case it would be permissible to examine the various orders passed by the District Judge before and after taking of this bond and if read in the light of those orders it would be perfectly clear that the Judge when he took the security, intended that a charge should be created thereby over the schedule mentioned properties. Mr. Viswanatha Sastri contends that antecedentally passed orders can be looked into only if there is ambiguity or doubt but if the terms of the bond are clear and free from ambiguity, extrinsic evidence or evidence of surrounding circumstances cannot be permitted. With reference to the intrinsic evidence appearing in the document itself to signify that a charge was created Mr. Panchapakesa Sastri refers to the two expressions underlined (Italicized) by me in the extract furnished above from Ex. P-1, viz., 'Judge has by order, dated 4th August, 1916, and as a proper security.' In addition to this he points out that the schedule containing the list of properties forms an integral part of the bond and asks for what other purpose could it have been appended except for describing the properties which would be answerable for the amount for which the guardian and surety bound themselves. I am not in a position to infer from the two expressions 'Judge has by order dated 4th August, 1916 ' and 'as a proper security ' that the Judge had intended that a charge should be fastened on the immoveable properties for the due fulfilment of the conditions specified in the bond. Those expressions are equally consistent with the appellant's contention that what was created was only a personal liability. As to the purpose of adding the list of properties at the end of the bond, it is difficult to speculate whether it was intended merely to sh6w that the surety owned those properties and that he was sufficiently solvent or that it was intended to be given as security for the performance of the stipulated conditions. In the absence of any words in the body of the document itself either directly or indirectly fastening an obligation in the nature of a charge on the property the mere insertion of a list does not seem to be of any legal effect.

10. The next question is whether the antecedent orders of a Judge can be examined to ascertain what was intended by the Judge by accepting a bond which contained a list of properties and if those orders can be examined what the combined effect of the orders and the bond is with regard to the question of the charge.

11. Although the object of all interpretation of a written instrument is to discover the intention of the author, the written declaration of whose mind it is always considered to be, it is an established principle that the intention must be gathered from the written instrument. The function of the Court is to ascertain what the parties meant by the words that they have actually used, to declare the meaning of what is written and not what was intended to have been written, to give effect to the intention as expressed, the expressed meaning being, for the purpose of interpretation, equivalent to the intention. It is not permissible to guess at the intention of the parties and substitute the presumed for the expressed intention. The principle goes to the extent of justifying the application of the ordinary rules of construction even if by so doing the real intention of the parties may in some instances be defeated, the reason for the rule being that such a course tends to an establishment of greater degree of certainty for the administration of law. In the case of a grant by the Bombay Government which came for interpretation before the Judicial Committee the trial Judge had construed it in the light of the antecedent correspondence between the parties. After referring to that circumstance, the Judicial Committee observed in Bomanji Ardeshir Wadia v. Secretary of State for India :

The learned trial Judge examined with great care the correspondence which took place between the parties before the deed of 1847 was granted, and he came to his opinion on the true meaning of the deed, as he puts it himself, ' after a careful consideration of the deed in the light of the correspondence.' Their Lordships must say at once that this way of approaching the true construction of the deed is quite illegitimate. The learned Judge in another passage says that because the correspondence is referred to in the deed that makes it part and parcel of it. The only reference to the correspondence is in the narrative in the preamble of the deed that there had been such a correspondence, but it is a vital mistake to suppose that that introduces the correspondence as a part of the deed. Nothing is better settled than that when parties have entered into a formal contract that contract must be construed according to its own terms and not be explained or interpreted by the antecedent communing which led up to it. This is especially true of a conveyance. There even, if there has been a formal antecedent contract, that contract cannot be looked at to control the terms of the conveyance ; much less can mere communings which could only show what parties meant to do but cannot show what they did. It would be otiose to set forth at length the authorities, but reference may be made to Shore v. Wilson (1842) 9 Cl. & F. 355 dictum by Baron Parke, Smith v. Doe Dem Jersey (1821) 2 Brod. & B. 473. Prison Commissioners v. Clerk of the Peace for Middlesex (1882) 9 Q.B.D. 506 per Sir G. Jessel, and Lee v. Alexander (1883) 8 App. Cas. 853 where although the case is a Scotch case where the law is the same, Lord Selborne states the proposition as a general one.

It is important to note in the passage extracted above that even a reference in the deed to the correspondence was deemed insufficient to make it a part and parcel of the deed or even to introduce the correspondence as a part of the deed. Mr. Panchapakesa Sastri argued that the reference in the deed to the order of the Judge dated 4th August, 1916, and its approval as a proper security bond had the effect of introducing into the bond the antecedent orders of the Judge. The respondent's advocate drew my attention to three cases in support of his contention that security bonds should be construed in the light of the order directing security to be given-Raja Raghunandan Prasad Singh v. Raja Kirtyanand Singh Bahadur (1932) 63 M.L.J. 85 Kesar Chand v. Uttam Chandi (1945) 2 M.L.J. 160 : L.R. 72. IndAp 165 Mahendranath Banerji v. Sateeshchandra Chaudhuri I.L.R.(1934) Cal. 890 the first two cases being decisions of the Judicial Committee. A close scrutiny of the facts in each of these cases will show that there was some ambiguity in the language employed in the bond which could not be cleared except by reference to the order directing the security to be given. In Raja Raghunandan Prasad Singh v. Raja Kirtyanand Singh Bahadur the question was whether security created by the bond was an absolute security which the decree-holders were free to realise immediately on the 1st April, 1920, or whether it was security to the extent of Rs. 77,000 for the balance of the sum, if any, remaining unpaid after sale. Their Lordships had recourse to the perusal of the antecedent order and held that having regard to the circumstances in which the bond was executed it was a bond for securing the balance unprovided for by the proceeds of sale of the mortgage property, up to a sum not exceeding Rs. 77,000. The second case in Kesar Chand v. Uttam Chand (1945) 2 M.L.J. 160 : L.R. 72. IndAp 165 is still clearer. In the bond executed by the surety it was stipulated thus:

I hereby stand surety for...minors judgment debtors and agree that in the event of the appellate Court's decision being against the judgment-debtors my moveable and immoveable properties detailed hereunder, shall be liable for making good the deficiency if the sale proceeds of the hypothecated properties are not sufficient to meet the demand.

There was no difficulty about proceeding against the immoveable property but the question was whether in view of the words 'I hereby stand surety' in the bond personal liability was imported. There was thus clear ambiguity in the document, the first part of it indicating the undertaking of personal liability and the statement immediately following it qualifying the statement and limiting its scope of liability to proceedings against the properties specified only, thus creating a charge on those properties excluding all personal liability. It is in these circumstances that the Privy Council held that reference should be made to the order which directed giving of security and the bond should be construed in the light of that order. In one part of the judgment their Lordships said this:

Another argument urged by the learned Counsel in support of his contention, viz., that the appropriate form of the bond in a case of this kind, as may be seen from Appendix G, Civil Procedure Code, would clearly provide for a personal liability, and that the order for furnishing security must therefore be construed as having been made with reference to such a form, overlooks the fact that the order of the Court is perfectly clear, and what their Lordships are called upon to do is to construe a specific document with reference to its specific terms, and if need be in the light of the Court's order, which, as they have already stated, is not open to any doubt.

The words ' If need be ' underlined by me are of vast importance having regard to the general principles of interpretation to which the category of security bonds cannot be deemed to be an exception. The last case contains a decision of a Bench of the Calcutta High Court which after referring to Bomanji Ardeshir Wadia v. Secretary of State for India and other decisions lays down the principle in these terms:

The cases...merely lay stress on the fact that a security bond must be strictly construed according to its own terms. This is certainly true when there is no ambiguity in the terms but where there is a contradiction in terms as in the present case, the law allows a reference to antecedent circumstances.

In that case there was a doubt and applying the principle of the Privy Council in Raja Raghunandan Prasad Singh v. Raj Kirtyanand Singh Bahadur (1932) 63 M.L.J. 85 the learned Judges construed this bond in the light of the antecedent order.

12. Assuming that the Judge's orders can be looked into to aid in the construction of the bond the respective orders passed in this case by the Judge do not appear to be of much assistance to the respondent. On the filing of the application for appointment as guardian the first defendant was directed to furnish security for double the amount of the minor's property. There was no reference to immoveable property in that order. The draft bond was filed and on 3rd July, 1916, it was asked to be tested by the Central Nazir. The Central Nazir reported that security was not sufficient. Then on the 19th July, 1916, on the first defendant undertaking to find further security the application was adjourned to 4th August. On that day further security which was filed was tested and the Amin reported that the properties were worth Rs. 13,540. The Judge passed an order on the 4th August, 1916, (this is the order referred to in the bond) in the following terms:

Further security tested. The amin reports that the properties are worth Rs. 13,546 and there are no encumbrances there. Security bond to be engrossed on stamp papers and filed in Court after registration. Security accepted. Adjourned to 18th August, 1916.

On 18th August, 1916, the registered security bond was filed and the petitioner was appointed guardian with a direction that he should render accounts in the manner prescribed. There is nothing in any of these orders to show that anything beyond personal liability was intended. At all events there is nothing to show that the Court wanted, or that the persons who executed the bond intended to offer, immoveable property as security. This circumstance, coupled with the fact that the bond itself makes no reference to immoveable property being given as security and does not even refer to the list that was appended to the bond and does not describe the property descibed therein as secured property clearly establishes that all that was required was in the nature of a personal guarantee and in order to satisfy itself that those who furnished the guarantee were in a position to fulfil the obligations, the Court wanted to know whether they were possessed of sufficient means and when it was found that the first defendant himself was not possessed of sufficient property he was called upon to furnish other security and thus the other surety Gopal Rao Paishwa came in.

13. I am for these reasons of the opinion that whether construed on its own terms or whether examined in the light of the antecedent orders, the security bond Ex. P-1 does not create a charge on the properties mentioned in the list appended thereto. In view of this finding it is unnecessary to deal with the other contentions which have been raised on both sides. There being no charge subsequent alienations in favour of the persons under whom the appellants claim have to prevail. The plaintiff's suit having been filed more than twelve years after he attained majority is therefore clearly statute-barred and must be dismissed.

14. In the result the appeal is allowed and the suit dismissed with costs throughout. No leave.


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