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Swaminatha Pillai Vs. Krishna Padayachi and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1942Mad28; (1941)2MLJ601
AppellantSwaminatha Pillai
RespondentKrishna Padayachi and ors.
Cases ReferredGregg v. Wells
Excerpt:
- - he had no inkling of the appellant's claim and throughout acted in good faith. his object was no doubt to escape the payment of the court-fee which a suit to recover from the principal debtor would involve, but in view of the very emphatic provision contained in the second proviso to rule 16 of order 21 the appellant was clearly not entitled to do what he endeavoured to do. 35. that the principle can be applied to movable property as well as to immovable property cannot be doubted. the appellant certainly allowed murugesa to hold himself out as the holder of this decree and having done so he cannot be preferred to the respondent who bought the decree for valuable consideration and in full good faith......mr. t.v. muthukrishna aiyar conceded that in obtaining a transfer of the decree in the name of murugesa the appellant was guilty of what in law amounts to a fraud. his object was no doubt to escape the payment of the court-fee which a suit to recover from the principal debtor would involve, but in view of the very emphatic provision contained in the second proviso to rule 16 of order 21 the appellant was clearly not entitled to do what he endeavoured to do. the reason given by king, j., for dismissing the appellant's appeal was that he had allowed murugesa to appear as the owner of the decree and consequently the principle embodied in section 41 of the transfer of property act applied. that section only relates to immovable property, but the principle has been applied where.....
Judgment:

Alfred Henry Lionel Leach, C.J.

1. The question involved in this appeal is whether the appellant shall be allowed to profit by a 'scheme (for which he himself was responsible) to defeat the provisions of Rule 16 of Order 21 of the Code of Civil Procedure. One Srinivasa Aiyangar obtained a money decree against the appellant and one Idumban Chettiar. The appellant had become the surety for money owing by Idumban Chettiar and the decree was obtained in a suit filed to enforce repayment of the loan. In order to avoid execution proceedings being instituted against him the appellant paid the decree-holder, and naturally he desired to recover the amount from the principal debtor. Instead of adopting the proper course, which was to file a suit against Idumban Chettiar, the appellant arranged with the decree-holder to transfer the decree to one Murugesa Padayachi. The decree-holder, having been paid, raised no objection to this course. It has been established that Murugesa was acting as the benamidar for the appellant, who hoped that with the decree standing in the name of a stranger to the suit he would be able to execute it against Liumban Chettiar. The second proviso to Rule 16 of Order 21 of the Code of Civil Procedure states that where a decree for the payment of money against two or more persons has been transferred to one of them, it shall not be executed against the others. As Murtigesa was actually the appellant's benamidar the transfer of the decree meant the transfer to the appellant himself. The appellant was not entitled to do something in the name of a dummy which the law does not allow him to do in his own name.

2. While Murugesa was the ostensible owner of the decree he sold it to Krishna Padayachi, the respondent. The respondent paid Rs. 1,000 as the consideration. He had no inkling of the appellant's claim and throughout acted in good faith. At any rate, that is the effect of the finding of the first appellate Court and its decision on the question of fact is binding upon us. The respondent having become the transferee of the decree he wished to execute it against the appellant and accordingly instituted execution proceedings in the Court of the District Munsif of Kumbakonam. The District Munsif held that he was not entitled to an order in execution, but on appeal to the Subordinate Judge of Kumbakonam this decision was reversed. The appellant then appealed to this Court, but King, J., agreed with the Subordinate Judge and dismissed the appeal. The present appeal has been filed under the provisions of Clause 15 of the Letters Patent, the learned Judge having given the necessary certificate.

3. Mr. T.V. Muthukrishna Aiyar conceded that in obtaining a transfer of the decree in the name of Murugesa the appellant was guilty of what in law amounts to a fraud. His object was no doubt to escape the payment of the court-fee which a suit to recover from the principal debtor would involve, but in view of the very emphatic provision contained in the second proviso to Rule 16 of Order 21 the appellant was clearly not entitled to do what he endeavoured to do. The reason given by King, J., for dismissing the appellant's appeal was that he had allowed Murugesa to appear as the owner of the decree and consequently the principle embodied in Section 41 of the Transfer of Property Act applied. That section only relates to immovable property, but the principle has been applied where movable property has been sold to a bona fide purchaser for value by the ostensible owner. The learned judge in the course of his judgment drew attention to the judgment in Gregg v. Wells (1839) 10 Ad. & E. 90 : 113 E.R. 35. That the principle can be applied to movable property as well as to immovable property cannot be doubted. In fact the principle is embodied in Section 27 of the Sale of Goods Act.

4. Even if it were to be assumed that the appellant's action in obtaining a transfer of the decree in the name of Murugesa was justifiable and that he can be regarded as an innocent party this would not help the appellant. The principle stated in Lick-barrow v. Mason (1787) 2 T.R. 63 : 100 E.R. 35 would then apply. Wherever one of two innocent persons has to suffer by the act of a third person the person who has enabled the third person to occasion the loss must sustain it. The appellant certainly allowed Murugesa to hold himself out as the holder of this decree and having done so he cannot be preferred to the respondent who bought the decree for valuable consideration and in full good faith. The appellant has only himself to blame for the position in which he finds himself. He could have avoided having to pay the decretal amount twice over, as he now has got to do, if he had not attempted to get round the provisions of Order 21, Rule 16. We consider that the decision of King, J., is in accordance with law and consequently this appeal must be dismissed with costs in favour of the first respondent.


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