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Palaniappa Vs. Lakshmanan and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Judge
Reported in(1893)ILR16Mad429
AppellantPalaniappa
RespondentLakshmanan and ors.
Cases Referred and Bansidhar v. Sant Lal I.L.R.
Excerpt:
equitable assignment - proceeds of an intended appeal--property substituted by agreement between decree-holder and third parties for such proceeds--right to follow such proceeds in hands of such third parties--notice. - - again, one subramaniyam chetty had two decrees to be satisfied by respondents 4 to 6, one in original suit no. that, if it did, it did not perfect it; such being the case, the subordinate judge is clearly in error in holding that the transfer is binding on the appellant and defeats his prior charge on the amount in deposit. 12 of 1882 was as good a security as the fund in court......and the investment of a charity-fund in a bank. the appellant's claim to a charge upon the fund paid into court by father laberthere and paid out to the first three respondents at the instance of the others, must be upheld.6. for the respondents it is next contended that out of the amount paid into court by father laberthere, the appellant himself was paid rs. 3,000 and that he is not entitled to charge the whole of the balance due under b-1 upon rs. 28,600. this contention appears to us to be entitled to weight. under exhibit b-1, the amount due under it was a first charge upon the thirteen-fifteenths share of the amount paid into court by father laberthere. out of that amount rs. 28,600 was paid to respondents 1 to 3, rs. 7,000 and odd to the appellant himself and rs. 2,000 and.....
Judgment:

1. This was a suit brought by the appellant to compel the first, second and third respondents to refund Rs. 5,630, with interest thereon at 9 per cent. per annum, from Rs. 28,600 drawn by them out of the amount paid to the credit of Original Suit No. 7 1885, on the file of the Subordinate Court of Madura. The facts which have given rise to this claim may be briefly stated as follows: In 1885, respondents 4 to 6 desired to sue Adimulam Pillai and his sons, who owed them a large sum of money, upon a hypothecation bond for Rs. 43,000, but had no funds at their disposal to pay the expenses of the suit which they had to institute. They assigned to the appellant two-fifteenths of their interest in the hypothecation bond, and in return he advanced the funds necessary for the prosecution of their claim. The result was the institution of Original Suit No. 7 of 1885 by respondents 4 to 6 against Adimulam Pillai and his sons and against Father Laberthere. Although the decree passed therein was in their favor, yet it exonerated Father Laberthere, the fourth defendant in that suit, from all liability for respondents' claim. Adimulam and his sons not being solvent, the said respondents preferred an appeal to the High Court (No. 84 of 1886) against so much of the decree as absolved Father Laberthere. They again borrowed from the appellant Rs. 3,000 to prosecute the appeal and secured its re-payment by document B. That document purports to be an agreement executed by them in appellant's favour on the 21st July 1886 and, after reciting the advance, charged it upon the costs, if any, which the High Court might award on appeal and, if no costs were awarded upon the thirteen-fifteenths or the respondents' share of the debt that might be decreed. On the 17th January 1888, the High Court decided that Father Laberthere was liable to the respondents to the extent of about Rs. 45,000 and ordered him to pay that amount, but directed each party to bear his or their costs.

2. Father Laberthere paid into Court Rs. 41,000 and odd on the 13th October 1888 and Rs. 3,000 and odd on a subsequent date in satisfaction of the appeal-decree. At this time there were several decrees and claims outstanding against respondents 4 to 6. The first, second and third respondents had a decree against them for Rs. 36,000 and odd in Original Suit No. 12 of 1882 on the file of the Subordinate Court. The appellant himself had three distinct claims against the money in deposit. He had a decree for more than Rs. 7,000 in Original Suit No. 14 of 1887, and he was also entitled to two-fifteenths of the amount in deposit by virtue of the assignment already mentioned, He claimed further a charge upon it for the amount due under agreement B-1, which formed the subject of Original Suit No. 48 of 1888 then pending. The fourth to sixth respondents urged that a thirty-two forty-thirds share of the amount in deposit represented certain properties which had been dedicated to a charity, and should be paid out to them in their capacity as trustees of that charity without being applied in liquidation of their private debts. Again, one Subramaniyam Chetty had two decrees to be satisfied by respondents 4 to 6, one in Original Suit No. 13 of 1887 and the other in Original Suit No. 546 of 1888. Each of these persons claimed payment from the amount in deposit, and on the 13th March 1889, the Subordinate Judge, by his order, Exhibit C-2, distributed it in the following manner:

Rs. A. P.

Amount in deposit ... ... ... 44,763 12 8

Thirty-two forty-thirds of the amount

which is charity money ... ... ... 33,312 9 7

Amount available for distribution among

creditors ... ... ... 11,451 3 1

Amount set apart on account of the claim

of the appellant as the fourth plaintiff

in Original Suit No. 7 of 1885 ... ... 1,526 13 2

Amount due to do. as decree-holder in

Original Suit No. 14 of 1887 ... ... 7,801 15 7

Balance available for decree-holder in

Original Suit No. 13 of 1887 ... ... 2,122 6 4

3. Exhibit C-2 shows that the claim made by respondents 1 to 3 as decree-holders in Original Suit No. 12 of 1832 and so much of the appellant's claim as rested on agreement B-1 were excluded from the distribution. On the 27th April 1889, however, respondents 1 to 3 entered into a compromise with respondents 4 to 6 whereby the latter agreed, inter alia, that Rs. 28,600 which was excluded from the distribution on the ground that it was charity-fund should be paid to the former, and the Subordinate Judge accepted the compromise and paid Rs. 28,600 to the first three respondents on the 29th April. On the 8th July 1889, Original Suit No. 48 of 1888, Instituted by appellant against respondents 4 to 6 upon agreement B-1, was decreed in his favour, and on the 3rd October 1890 appellant brought the present suit. His case was that he had a first charge for the amount due under document B-1 on the sum of Rs. 28,600 drawn by the first three respondents. The Subordinate Judge held that the charge could not be enforced against Rs. 28,600 paid to the respondents 1 to 3 and that the appellant ought to proceed against the property substituted for it by Exhibit II; and on this ground he dismissed the suit. Hence this appeal.

4. The appellant's claim rests on agreement B-1, and there is no dispute as to its genuineness. The Subordinate Judge finds that Rs. 3,000 was, as stated therein, advanced by the appellant to respondents 4 to 6. The former and his two witnesses deposed to the advance and there is no evidence to the contrary. It is clear from Exhibit B-1, that the amount due thereunder was agreed to be paid first out of monies which might be realized in execution of the final decree in Original Suit No. 7 of 1885. The material words in the document are, 'you should first take out of the amount that may be first collected from the defendants (in Original Suit No. 7 of 1885) towards thirteen-fifteenths share of the decree-debt due to us, the whole of the amount incurred (spent) on account of the said costs.'

5. It was urged in the Court below, and is reiterated on appeal, on behalf of respondents 1 to 3 that the document did not create a charge; that, if it did, it did not perfect it; that even if there was a completed charge, it was invalid; and that it was not enforcible either against respondents 1 to 3 or against Rs. 28,600 paid to them on account of their decree in Original Suit No. 12 of 1882.

6. The Subordinate Judge was of opinion that a complete charge was created and that it was valid as against the respondents, and we concur in that opinion. The transaction evidenced by document B-1 was substantially a contract by respondents 4 to 6 to appropriate what they might realize under the final decree in Original Suit No. 7 of 1885 for their thirteen-fifteenths share first to repayment of the money advanced by the appellant under B-1. Though, at the date of the document, the fund out of which the advance was to be repaid had not come into existence, and though it might possibly never have come into existence afterwards, yet that circumstance is not sufficient to prevent the charge taking effect against the fund when it subsequently came into existence. In Collyer v. Isaacs L.R. 19 Ch. D. 342 the Master of the Rolls, Sir GEORGE JESSEL, observed as follows: 'The creditor had a mortgage security on existing chattels and also the benefit of what was in form an assignment of non-existing chattels which might be afterwards brought on to the premises. That assignment, in fact, constituted only a contract to give him the after-acquired chattels. A man cannot in equity, any more than at law, assign what has no existence. A man can contract to assign property which is to come into existence in the future, and when it has come into existence, equity, treating as done that which ought to be done, fastens upon that property, and the contract to assign thus becomes a complete assignment.' As for the contention that such assignment is recognized neither by the Transfer of Property Act nor by the Contract Act, the transaction is not invalidated by either of those enactments, and it falls under the rule of Equity which the Courts have to administer in this country. This is also the view taken by the High Courts at Calcutta and Allahabad, Misri Lal v. Moshar Hossain I.L.R. 13 Cal.

262 at p, 264) and Bansidhar v. Sant Lal I.L.R. 10 All. 133 at p. 136. It is, therefore, sufficient to observe that when Father Laberthere paid into Court Rs. 44,000 and odd, the fund indicated by the agreement B-1 came into existence and the charge created by it became enforcible as against respondents 4 to 6.

5. As observed by the Subordinate Judge, respondents 1 to 3 had notice of appellant's claim under Exhibits C and L, and the charge created by B-1 became, therefore, enforcible against them also when they took Rs. 28,600. Though they claimed a priority by reason of attachment, the Subordinate Judge adhered to the opinion which he expressed in C-2, viz., that they had no proper lien, and his decision on this point is not seriously questioned before us. The Subordinate Judge considers, however, that Rs. 28,600 represented a charity-fund, and that it was not open to the appellant to question its transfer to respondents 1 to 3 by respondents 4 to 6, the trustees of that fund, and that after such transfer, he could only proceed against the property substituted for it by the compromise II. To this compromise the appellant was not a party, and it was made against his will and to his prejudice. Such being the case, the Subordinate Judge is clearly in error in holding that the transfer is binding on the appellant and defeats his prior charge on the amount in deposit. The Subordinate Judge observes further that Rs. 28,600 was judicially recognized as charity money There was no specific issue raised on this point, and if we considered it necessary to determine that question for the purposes of this suit, we would remit an issue for trial. But we are of opinion that even assuming that Rs. 28,600 represented a charity-fund, the charge created by document B-1 is not inoperative. The Subordinate Judge himself considers that but for the advance made under B-1 by the appellant and the prosecution of Appeal No. 84 of 1886, Father Laberthere would not have had to pay into Court Rs. 44,000 and odd and that the fund out of which Rs. 28,600 was paid out for charity could not have come into existence. He, therefore, holds that the appellant might have had a lien by analogy to salvage lien, but refuses to enforce it on the ground that the appellant made his advance as a matter of speculation and had no interest in making it and that his claim was restricted to the property substituted for it under Exhibit II. In his order C-2, he discussed the question whether agreement B-1 was champertous and came to the conclusion that it was not, and to that conclusion he adheres in his judgment in the present suit. This being so, we do not consider that he is warranted in holding that the transaction is inoperative for the purpose of creating a lien on a fund which might never have been recovered but for that transaction. Neither do we see our way to support his conclusion that the property substituted for Rs. 28,600 by Exhibit II is the one against which the appellant ought to have proceeded. The appellant was no party to that document; it was entered into with the knowledge of his claim against his will and to his prejudice, and it cannot, therefore, defeat any prior claim which he had on Rs. 28,600 and transfer it to some other property. There is nothing to show that the one-third share in the Achampattu village which respondents 4 to 6 released from the charge they had upon it for the amount of the decree in their favour in Original Suit No. 12 of 1882 was as good a security as the fund in Court. It was not a band fide investment of a trust fund for the benefit of the charity but it was the appropriation of a charity-fund to the payment of the private debts of respondents 4 to 6. There is no analogy between such appropriation and the investment of a charity-fund in a bank. The appellant's claim to a charge upon the fund paid into Court by Father Laberthere and paid out to the first three respondents at the instance of the others, must be upheld.

6. For the respondents it is next contended that out of the amount paid into Court by Father Laberthere, the appellant himself was paid Rs. 3,000 and that he is not entitled to charge the whole of the balance due under B-1 upon Rs. 28,600. This contention appears to us to be entitled to weight. Under Exhibit B-1, the amount due under it was a first charge upon the thirteen-fifteenths share of the amount paid into Court by Father Laberthere. Out of that amount Rs. 28,600 was paid to respondents 1 to 3, Rs. 7,000 and odd to the appellant himself and Rs. 2,000 and odd to the decree-holder in Original Suit No. 13 of 1887, and the appellant is entitled to a refund of what was due to him under B-1 from each of those who shared in the amount deposited in Court in proportion to the amount drawn by them. The fund, on which the appellant had a charge, was intercepted by them all, and each is liable to replace it only in proportion to the extent to which he intercepted it.

7. The appellant is, therefore, entitled to a decree for refund of Rs. 1,938-13-6 and four-fifths of the costs incurred in the lower Court and in this Court, the respondent being entitled to one-fifth the costs. The decree of the Subordinate Judge will be set aside, and a decree will be passed in appellant's favor for the amount indicated above with interest at 6 per cent, per annum from date of this decree, inclusive of costs.


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