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Alla Venkataramanna Vs. Palacherla Manqamma and ors. - Court Judgment

LegalCrystal Citation
Subjectcivil
CourtChennai
Decided On
Reported inAIR1944Mad457
AppellantAlla Venkataramanna
RespondentPalacherla Manqamma and ors.
Cases ReferredMadan Lal v. Gajendrapal
Excerpt:
- - 206 of 1936) repeating all the objections to the execution of the decree which they had unsuccessfully urged in the lower court. 2000 which she had drawn from the amount deposited in court by defendants 4 and 5, the balance of the deposit being withdrawn by them, that on such refund being made by the plaintiff defendants 4 and 5 should assign to her the indemnity bond executed in their favour by defendants 1 and 2, without recourse against themselves, and withdraw their appeal as well as their application for relief under the madras agriculturists' relief act. the lands charged under the indemnity bond as well as certain other lands were mortgaged by defendant 1, acting for himself and as the father and guardian of defendant 2, to defendant 3 on 30th march 1932 for a sum of rs. as.....patanjali sastri, j.1. this appeal arises out of a suit brought by respondent 1 for enforcement of an indemnity bond executed by defendant 1 for himself and as the father and guardian of defendant 2 in favour of defendants 4 and 5 who assigned it to respondent 1. the additional subordinate judge of coconada who tried the suit has passed a preliminary decree for payment of rs. 12,122-5-6 the sum claimed, with subsequent interest and costs, and, in default, for sale of the immovable properties charged under the bond. defendant 3 who purchased the rights of defendants 1 and 2 in the properties at an execution sale and was the sole contesting defendant in the court below has preferred this appeal. the litigation has a long antecedent history, and attempts at compromise have only served to.....
Judgment:

Patanjali Sastri, J.

1. This appeal arises out of a suit brought by respondent 1 for enforcement of an indemnity bond executed by defendant 1 for himself and as the father and guardian of defendant 2 in favour of defendants 4 and 5 who assigned it to respondent 1. The Additional Subordinate Judge of Coconada who tried the suit has passed a preliminary decree for payment of Rs. 12,122-5-6 the sum claimed, with subsequent interest and costs, and, in default, for sale of the immovable properties charged under the bond. Defendant 3 who purchased the rights of defendants 1 and 2 in the properties at an execution sale and was the sole contesting defendant in the Court below has preferred this appeal. The litigation has a long antecedent history, and attempts at compromise have only served to complicate it by giving rise to fresh technical pleas. Plaintiff's husband, who was the undivided younger brother of defendants 4 and 5, died in 1925 when she was yet a girl of ten years, and her father, defendant 1 herein, acting as her next friend instituted a suit against defendants 4 and 5 O.S. No. 12 of 1928 in the Court of the Subordinate Judge at Rajahmundry) for recovery of a sum of Rs. 10,000 alleged to have been paid to the plaintiffs husband as katnam at the time of her marriage and claimed to be returnable on the death of the husband. Before the suit proceeded to trial, it was compromised with the leave of the Court on the terms that defendants 4 and 5 should pay to the plaintiff us. 4500 for katnam and Rs. 185 per annum for her maintenance during her life, that the former sum should be paid to defendant 1, her next friend in that suit, before the registration officer at the time of the registration of an indemnity bond which defendant 1 was to execute on the security of certain immovable properties undertaking to indemnify defendants 4 and 5 against all losses resulting from the plaintiff raising disputes after attaining majority as to the katnam and maintenance amounts, and that defendants 4 and 5 should in their turn execute a maintenance deed charging the maintenance agreed to be paid on certain immovable properties belonging to their family. It is to be noted that though the claim in that suit related solely to the katnam, the compromise provided also for payment of a maintenance allowance to the plaintiff. The Court therefore directed that a decree should be passed in accordance with the compromise 'so far as it relates to suit,' as required by Order 23, Rule 3, Civil P.C. This distinction, however, does not appear to have been kept in view in drawing the compromise decree, for, it provided, inter alia,

that the defendants do pay Rs. 185 to the plaintiff on 13th August 1928 as and for her maintenance and do thereafter pay to the minor plaintiff maintenance at Rs. 185 on 13th August of each year throughout her lifetime, etc.

In pursuance of this decree, which was passed on 14th. August 1928, defendants 4 and 5 executed a maintenance deed on 15th September 1928, but the payment of Rs. 4500 was delayed as there was apparently some difference between the parties as to the sum for which the indemnity bond was to be given. Defendant 1 therefore proceeded to execute the decree for Rs. 4500 by filing execution petition (no. 65 of 1928) as the plaintiff's next friend on 20th November 1928. This resulted in the payment of Rs. 4500 by defendants 4 and 5 to defendant 1 and the execution by the latter of the indemnity bond (Ex. A) dated 17th January 1929 on which the present suit is based. The sum of Rs. 4500 having thus been paid, the execution petition was allowed to be dismissed as 'settled.' The maintenance allowance payable to the plaintiff under the compromise was also paid by defendants 4 and 5 to defendant 1 on her behalf every year during her minority. The attainment of majority by the plaintiff on 23rd December 1933 opens another chapter of the story. She gave notice to defendants 4 and 5 on 25th September 1934 repudiating the compromise entered into by her father defendant 1. She did not, however, persist in this attitude, for she filed, on 10th April 1935, an execution application (no. 333 of 1935) against defendants 4 and 5, claiming the sum of Rs. 4500 for katnam and arrears of maintenance for six years, as settled under the compromise decree, with interest as stipulated therein, amounting in all to Rs. 9566 on the ground that payments made to her father were invalid and not binding on her, as no leave of the Court was obtained as required by Order 32, Rule 6, Civil P. C, for the receipt of such payments by defendant 1 as the plaintiff's next friend. Neither defendant 1 who was adjudicated insolvent in December 1934 nor the receiver in insolvency was made a party to the execution proceeding aforesaid. Defendants 4 and 5 raised various objections to their being made to pay to the plaintiff over again amounts which they had already paid to her father on her behalf during her minority, alleging that the proceeding instituted by the plaintiff was the result of fraud and collusion, by which it was apparently meant that the plaintiff had already received the benefit of the payments made to her father. The Court, however, without going into the question of the alleged fraud, felt constrained by what it thought was the effect of certain provisions of the Code, as interpreted by the decisions of this Court, to hold that the defendants 4 and 5 were liable to pay the sum claimed, observing 'No doubt, it is a hardship to them to pay the amount over again but it cannot be helped.' It accordingly passed, on 24th February 1936, an order directing execution to proceed and transmitting the decree to another Court for that purpose. Defendants 4 and 5 thereupon preferred an appeal against the said order to this Court (A.A.O. No. 206 of 1936) repeating all the objections to the execution of the decree which they had unsuccessfully urged in the lower Court. They also deposited in Court the amount claimed by the plaintiff and got the further proceedings in execution stayed till the disposal of the appeal. While the appeal was pending, the Madras Agriculturists' Relief Act was passed in March 1938 providing for the scaling down of debts due by 'agriculturists' as defined in the Act, and defendants 4 and 5, claiming to be agriculturists entitled to the benefits of the Act, applied to the lower Court for scaling down the amount payable under the compromise decree which the plaintiff was seeking to execute as aforesaid.

2. At this stage there was another compromise whereby it was provided inter alia that the plaintiff should drop all further proceedings in the execution application (No. 333 of 1935) and refund the sum of Rs. 2000 which she had drawn from the amount deposited in Court by defendants 4 and 5, the balance of the deposit being withdrawn by them, that on such refund being made by the plaintiff defendants 4 and 5 should assign to her the indemnity bond executed in their favour by defendants 1 and 2, without recourse against themselves, and withdraw their appeal as well as their application for relief under the Madras Agriculturists' Relief Act. Both parties filed a petition in this Court (C. M. P. No. 3766 of 1938) setting out the terms of the compromise and praying that a decree be passed in accordance with such terms. This petition and the appeal already filed came on for hearing on 16th September 1938 and the Court recorded the compromise and adjourned the proceedings for final orders to be made after each party carried out its part of the agreement. The plaintiff accordingly paid back the sum of Rs. 2000 to defendants 4 and 5 who in their turn, executed and completed an assignment deed (ex. e) dated 21st October 1938 in favour of the plaintiff, transferring all their rights under the indemnity bond (ex. a) given by defendants 1 and 2. Final orders were made pursuant to this compromise arrangement on 5th December 1938.

3. It will now be convenient to refer to the transactions which bring defendant 3 on the scene. The lands charged under the indemnity bond as well as certain other lands were mortgaged by defendant 1, acting for himself and as the father and guardian of defendant 2, to defendant 3 on 30th March 1932 for a sum of Rs. 6000 borrowed from the latter for discharging an antecedent debt due from defendant 1 to one Padmaraju under a promissory note. On 8th March 1934 defendant 3 issued through his lawyer a notice to defendants 1 and 2 charging them with fraudulent misrepresentation and suppression of the earlier encumbrance under the indemnity bond and calling upon them to secure the cancellation of that bond by carrying out their undertaking therein, that is to say, by causing the plaintiff who had attained majority to execute a ratification deed in favour of defendants 4 and 5 affirming and ratifying the compromise decree in O.S. No 12 of 1928 and the payments received in pursuance thereof. As defendant l, however, failed to do so, defendant 3 brought a suit (No. 39 of 1934) in the lower Court against defendants 1 and 2 and another to enforce his mortgage. Defendants 4 and 5 were not made parties to this suit. A preliminary decree for sale for rupees 8000 odd was passed on 2nd October 1934 and a final decree followed on 18th January 1935. In execution of this decree the hypo-theca was brought to sale on 26th February 1936, and defendant 3 himself purchased the properties covered by the indemnity bond for Rs. 1085 subject to the encumbrance created thereunder and the rest of the hypotheca was sold to a third party for Rs. 4950. It would appear that no further sum was recovered towards the balance of the decree amount as defendant 1 was adjudicated insolvent in December 1934. The properties charged under the indemnity bond having thus become vested in defendant 3, he alone contested the plaintiff's claim in the Court below and has brought this appeal.

4. Numerous contentions have been raised by Mr. Satyanarayana Rao for the appellant but many of these points do not call for consideration in the view we are inclined to take on the main questions as to the true meaning and effect of the compromise entered into between the plaintiff and defendants 4 and 5 in the execution proceeding, E.A. NO. 333 of 1935, and its binding character with reference to the appellant. The compromise was attacked as fraudulent and brought about by defendant 1 and the plaintiff colluding with defendants 4 and 5 so as to cause loss to the appellant, as he has purchased the properties covered by the indemnity bond. While there may be some room for suspicion that the E.A. No. 333 of 1935 as well as the present suit was inspired by defendant 1 there is no basis for the suggestion that defendants 4 and 5 entered into the compromise with any fraudulent or improper motive. They had, as stated already, vigorously contested the plaintiff's claim to execute the compromise decree against them by raising all available pleas, and had also preferred an appeal to this Court (A.A.O. No. 206 of 1936) from the adverse order of the lower Court. It was at that stage that the compromise was effected, and there is nothing to suggest that, in withdrawing the appeal and the application for relief under the Madras Agriculturists' Relief Act in consideration of the plaintiff accepting an assignment of the indemnity bond in satisfaction of her claim, defendants 4 and 5 were influenced by any consideration other than a desire to protect themselves from a claim which one Court had upheld as well-founded. From the plaintiff's standpoint, apart from the questions of law involved in the appeal which were by no means free from doubt, the fact that defendants & and 5 were agriculturists and were entitled to the benefits of the Madras Agriculturists' Relief Act gave them considerable bargaining power, and, it may well be that in accepting the assignment of the indemnity bond she was influenced by the consideration that, the property charged under the bond having passed to the appellant who was not an agriculturist within the meaning of the Act, her claim based on the bond would be immune from any liability to be scaled down under the Act. It would thus appear that the compromise suited the interests of both parties, and we are unable to agree with the appellant's suggestion that it was the result of a collusive scheme to defraud him.

5. The question then arises whether the order in the execution application (E.A. No. 333 of 1935) and the compromise based thereon are conclusive against the appellant who was not a party thereto. It is settled law that a judgment obtained after bona fide contest against the party indemnified in respect of the matter to which a contract of indemnity applies is conclusive against the indemnifier although the latter was no party to it, not because such judgment binds him as res judicata, but because the claim against which indemnification has been promised has been conclusively established against the party indemnified. This is the principle on which Section 125(1), Contract Act, is based. It was, however, urged that a compromise stood on a different footing, and that, unless notice had been given to the indemnifier calling upon him to satisfy or contest the claim and he failed or refused to do so, he was not precluded from showing, in a suit to enforce the indemnity, that the claim was unsustainable. Neither the observations of Mellish L.J. in Parker v. Lewis (1873) 8 Ch. A. 1035 nor of Tenterden C.J. in Smith v. Compton (1832) 3 B. & A. 407 quoted in Durga Kunwar v. Kalicharan (1913) 35 All. 168, which were relied on by the Learned Counsel for the appellant, lend any support to the proposition in the broad terms contended for by him. All that the decisions establish is that, in the absence of such notice, it would be open to the indemnifier to impeach the compromise as an imprudent bargain and that if such notice had been given, he would be estopped from raising even such an objection. But the compromise will be treated as conclusive against the indemnifier subject only to its being attacked as an improvident transaction provided, of course, the compromise has been entered into bona fide and without collusion. This is also clear from Section 125(3), Contract Act. In the present case it could not be suggested that it was imprudent for defendants 4 and 5 to have entered into the compromise in question. As already stated, one Court had upheld the plaintiff's claim overruling all their objections, and though they had preferred an appeal the questions involved were not altogether free from doubt and difficulty. And the failure of their application for relief under the Madras Agriculturists' Relief Act was by no means problematical in view of the exemptions referred to in Section 4, Clauses (f) and (g) of the Act. In such circumstances, there is hardly any room for attack on the. compromise as an imprudent bargain. Indeed, the Learned Counsel for the appellant made no such attempt before us. His attempt rather was to show that the points raised by defendants 4 and 5 and decided against them in the execution proceeding (E.A. No. 333 of 1935) were wrongly decided and that the plaintiff's claim therein was really unsustainable, that is to say, to reopen the appeal A.A.O. No. 206 )of 1936 which was concluded by the compromise and argue it before us. This, we are clearly of opinion, the appellant is not entitled so do, and we hold, accordingly that the compromise entered into between the plaintiff on the one hand and defendants 4 and 5 on the other is conclusive against the appellant, and that he is not entitled to question the liability thereby established against the said defendants. We may also add in this connexion that the issue of a notice to defendant 1 would have been an empty formality, as the circumstances of the case irresistibly lead to the inference that he knew all about the plaintiff's claim against defendants 4 and 5 in the execution proceeding, if, indeed, he did not actually instigate it as alleged by them. No question of notice to the appellant could arise as he was only a purchaser of the property from defendant 1 subject to the charge for indemnity.

6. It was next contended that the plaintiff was not entitled to recover the sum now claimed without proving that her father, defendant 1, did not pay to her, or utilise for her benefit, the amounts received from defendants 4 and 5 under the compromise decree in O.S. No. 12 of 1928. This question was not gone into by the executing Court in E.A. No. 333 of 1935 as it took the view that the payments to defendant 1 did not operate as a valid discharge of the decree debt owing to non-compliance with the provisions of Order 32, Rule 6, Civil P.C. As regards the sum of Rs. 4500 received by defendant 1 as katnam payable to the plaintiff, it was now sought to establish that defendant 1 invested Rs. 3000 out of it in a mortgage, and that the balance was utilised for purchasing the house which originally belonged to defendants 1 and 2 and was sold by the Official Receiver in the insolvency of defendant 1, as well as some jewels for the plaintiff. We consider it unnecessary to review the evidence on this point as the learned Subordinate Judge has discussed it in detail and we entirely agree with his appreciation of the evidence and his conclusion that no portion of the sum of Rs. 4500 was utilised for the benefit of the plaintiff. As regards however the annual payments of Rs. 185 for the maintenance of the plaintiff during her minority we are unable to share the learned Subordinate Judge's view. It was not disputed that the plaintiff was all along living with her father and was maintained by him. But the learned Judge observed that it was only natural that a father should feed his daughter and that it was repugnant to Hindu sentiment to suppose that he should charge the plaintiff for food 'as if defendant 1's house is a hotel.' This reasoning does not commend itself to us. It is one thing to say that a father would not think of charging his widowed daughter for her maintenance if she had no other means of maintaining herself, but it is a different thing to suppose that he would not utilise for her maintenance sums expressly paid to him periodically by persons who were bound in law to maintain her for the very purpose of her maintenance. Defendant 1 himself did not go into the box and say that he did not so utilise the sums received by him, though it is fairly clear that he was supporting her in this litigation. We are therefore of opinion that so far as these sums are concerned they must be deemed to have been utilised by defendant 1 for the benefit of the plaintiff. Whether any portion of the plaintiff's claim in the present suit should fail on this account is another matter.

7. This brings us to the consideration of the true basis of the plaintiff's claim as laid in her plaint. Appellant's Learned Counsel drew attention to paras. 6 and 11 as showing that the claim was based entirely on the plaintiff's right to recover from defendants 1 and 2 the katnam and the maintenance amounts paid to defendant 1 on her behalf during her minority on the footing that defendant 1 failed to pay over those sums to her or utilise them for her benefit; while Learned Counsel for the respondent-plaintiff, Mr. Rajah Aiyer, suggested that, on a proper construction of the plaint read with the reply statement filed on 15th March 1940, the suit must be regarded as one brought by the plaintiff as an assignee to enforce the indemnity given to defendants 4 and 5 for the amount of loss as determined in the execution proceeding (E.A. No. 333 of 1935) and the compromise which followed. The plaint is by no means conspicuous for its clarity and it must be admitted that para. 6, and in particular, para. 11 do lend support to the appellant's view. But para. 7, read with para. 4 of the reply statement which insists on the conclusiveness of the compromise in E.A. No. 333 of 1935, would seem to indicate that the claim was based on the assignment to the plaintiff of the right of defendants 4 and 5 to recover, on foot of the security bond (Ex. a), the sum agreed upon, (viz., Rs. 12,000) as their liability to the plaintiff under the compromise read with the assignment deed which forms part of the same transaction. It was perhaps intended to base the plaintiff's right to relief alternatively on both the grounds, though this is not clearly stated. The fact that the amount payable on the one or the other basis is very nearly the same has served to minimise the importance of clarity on the point. We consider therefore that the plaintiff should be allowed such relief as she may be found entitled to on the facts of the case without being pinned to any particular allegations in the plaint. In this view, our finding that the plain-tiff must be taken to have had the benefit of the amounts received by defendant 1 for her maintenance would not preclude her from claiming the full amount settled under the compromise as payable to her by defendants 4 and 5 in respect of which they assigned to her their rights under the indemnity bond, provided of course, they were entitled under the terms of the bond to recover such sum from their indemnifiers defendants 1 and 2 and from the properties charged under the bond, in the events that had happened.

8. It will be convenient here to refer to the material terms and covenants of the indemnity bond (ex. a). After reciting the compromise of the suit O.S. No. 12 of 1928, the execution of the maintenance deed and the payment of Rs. 4500 by defendants 4 and 5 and describing the properties given as security 'in order that no disputes whatever might be raised by the minor plaintiff in respect of the said compromise or in respect of the said amount or in respect of the said maintenance' it provides as follows:

If in respect of the said amount or of an amount in excess thereof, or in respect of the said maintenance of the plaintiff, the minor-plaintiff, Palacherla Mangamma, raises any disputes, whatever, at any time, against you or your representatives, all the losses that may be sustained by you in that behalf, that is, the sum of Rs. 10,633 and if the plaintiff claims maintenance in excess of the aforesaid maintenance, the sum of Rs. 2000 being the loss that may be sustained by you in that behalf, in all, twelve thousand six hundred and thirty three rupees you may recover from the aforesaid security properties, from our other moveable and immovable properties, from us and from our representatives.

It has been settled that when a document on proper stamp paper is caused to be executed, at our expense, by the plaintiff after the minor-plaintiff ceases to be a minor, stating that she has agreed according to the compromise petition filed after effecting a compromise, on 14th August 1928, in respect of O.S. No. 12 of 1928, on the file of the Court of the Principal Subordinate Judge, Rajahmundry and the same got registered and delivered to you, this security bond shall become cancelled.

The appellant contends that, on the true construction of this document, it only contemplates and provides for losses arising from the repudiation by the plaintiff, after attaining majority, of the compromise entered into by defendant 1 as her next friend and her claiming amounts for katnam or maintenance in excess of the sums agreed upon, but the plaintiff having affirmed and ratified such compromise in her execution application by claiming against defendants 4 and 5 only the sums settled as payable thereunder and no more, no liability could arise under the bond merely because defendant 1 did not pay over the amounts received by him to the plaintiff or use them for the plaintiff's benefit as alleged by her. We cannot agree. The words of the covenant quoted above are very wide and are apt to cover a claim by the plaintiff grounded on the misappropriation or dishonest withholding of the moneys received by defendant 1 on her account under the compromise decree-It was said that, even so, the bond provided for indemnity only against the 'losses that may be sustained by you,' and that, inasmuch as defendants 4 and 5 did not have to pay anything to the plaintiff under the later compromise in E.A. NO. 333 of 1935 but merely assigned to her their right to indemnity under Ex. A in satisfaction of her claim, they did not actually sustain any ' loss ' and were not en-titled to any payment under the bond whose assignment was, therefore, of no avail to the plaintiff.

9. A number of cases have been cited before us, but it is unnecessary to refer to many of them as we think that the position as regards the rights of a promisee in a contract of indemnity is fairly well settled. It is, of course, material in such cases to consider the terms of the particular contract but, subject to such variations as might arise from any special terms the position generally speaking seems to be this : the promisee is entitled not only to recover from the indemnifier what he has been required to pay to the creditor to whose demand or claim the indemnity relates, but he is also entitled, as soon as such creditor makes a demand or obtains judgment and before paying him off, that is to say, as soon as loss is imminent and before it is actually sustained, to require the indemnifier to carry out the promise to save him from such demand or judgment by paying the debt either to the creditor or to himself. The former relief corresponds to damages for breach of contract by the indemnifier, while the latter is in the nature of specific performance of the promise to indemnify. Both reliefs are now generally recognised to be admissible. In Lindley's work on Partnership it is laid down:

Where one person has covenanted to indemnify another, an action for specific performance may be sustained before the plaintiff has actually been damnified; and the limit of the defendant's liability to the plaintiff is the full amount for which he is liable.

This statement of the law was adopted in Wolmarshausen v. Gulliok (1893) 2 Ch. 514 and has since been followed in numerous cases. At one time there was some difference of opinion as to whether, before actual payment by himself to the creditor, the party to be indemnified was entitled to have the amount of his liability paid over to himself. Jessel, M.R. in Lacey v. Hill (1874) 18 Eq. 182 was inclined to think that he was, where the creditor was not a party to the action. This view was questioned in In re Richardson (1911) 2 K.B. 705 (Per Fletcher-Moulton L. J.). More recent decisions, however, recognise such a right in the promisee. Buckley L. J. observed, in In re Law Guarantee Trust and Accident Society (1914) 2 Ch. 617:

The equitable doctrine is that the party to be indemnified can call upon the party bound to indemnify him specifically to perform his obligation and to pay him the full amount which the creditor is entitled to receive and that whether, having received it, he applies it in payment of that creditor or not, is a matter with which the party giving the indemnity is not concerned.

See also In re Harrington Motor Co. Ltd. (1928) 1928 Ch. l05 and Hood's Trustee v. Southern Union General Insurance Co., Australasia 1928 Ch. 793. This form of relief, however, is not allowable in cases where the indemnifier is himself under an obligation to pay the creditor, for then, the party seeking indemnity would not be in a position to give a discharge to the indemnifier unless he has himself paid the creditor. See (1893) 2 Ch. 514. Cf. the observations of the Privy Council in Veerappa v. Arunachalam A.I.R. 1924 P.C. 192. Reference may also be made to two decisions which not only afford striking illustrations of the principles abovementioned, but are particularly apposite here : In re Parkins (1898) 2 Ch. 182 and British Union & National Insurance Co. v. Rawson (1916) 2 Ch. 476. In both of them, ,he person indemnified being unable to pay the creditor, assigned his right of indemnity in satisfaction of the claim, and it was held that the creditor was entitled to recover from the indemnifier the full amount for which the indemnifier was liable though the latter had paid nothing in respect of that liability. It will be seen that in those cases, as in the present case, the assignee of the indemnity was the original creditor and he released the indemnified in consideration of the assignment of the indemnity, so that the latter had, in the result, suffered no 'loss.' Nevertheless, the original creditor was held entitled, not qua creditor, for, his debt was satisfied by the assignment, but as assignee of the indemnity, to call upon the indemnifier to discharge the liability of the indemnified, though, in effect, he was obtaining payment of his debt. It was observed that:

The measure of the liability of the indemnifier is not the capacity of the indemnified to pay but his liability to pay. To adopt the words of Sir George Jessel M.R. in Lacey v. Hill (1874) 18 Eq. 182, the indemnifier is certainly liable in equity to indemnify and liable to indemnify to the extent of the liability incurred by the indemnified.' (Per Warrington L. J. in British Union & National Insurance Co. v. Rawson (1916) 2 Ch. 476.)

Applying these principles to the facts of the present case, it will be seen that defendant 1, while under an obligation to indemnify defendants 4 and 5 against the claim of the plaintiff from whom he undertook to get a release of her claim, was also liable to pay over the moneys received from defendants i and 5 under the compromise decree to the plaintiff. These defendants could not therefore have called upon him to pay the amount of their liability, as settled under the later compromise with the plaintiff, to themselves. But they had the right to call upon him to discharge their liability to the plaintiff which must, for the reasons already indicated, be taken to have been conclusively established against defendant 1 also at Sections 12,000. It is this right which defendants 4 and 5 assigned to the plaintiff in satisfaction of her claim under the compromise decree and which the plaintiff seeks to enforce in this suit. As defendant 1 could not resist the demand of defendants 4 and 5 by showing that the amounts received from the latter had been paid over to the plaintiff or otherwise duly accounted for, for that would be challenging the conclusiveness of the compromise in the execution proceeding (E.A. No. 333 of 1935), the plea would be equally unavailable against the plaintiff suing as the assignee of those defendants, and the appellant who, as already stated, has purchased the properties at Court auction in execution of his mortgage decree can be in no better position. The Court below has found that the appellant was not a bona fide transferee for value without notice, as he was aware of the charge created under the indemnity bond from the beginning, having been an identifying witness at the registration of the bond. It has found, too, that, having regard to the value of the properties in question and the disproportionately low price for which he purchased them in Court auction, he must be taken to have purchased them subject to the indemnity charge. These findings have not been challenged before us and must be accepted as correct, as indeed they seem to be amply supported by the evidence in the case. It follows that the plaintiff will be entitled 'to enforce the indemnity charge against the properties in the hands of the appellant.

10. There remains only the question whether the charge created under the indemnity bond binds defendant 2's interest in the properties which are joint family properties. The learned Subordinate Judge was inclined to think that it was binding on defendant 2 and that, in any case, defendant 2 not having challenged its binding character after attaining his majority in 1935, it was not open to the appellant to raise the question. The learned Judge held that the charge was binding on defendant 2's share in the properties because the sum of Rs. 4500 received by defendant 1 from defendants 4 and 5 was utilised for the benefit of the family, and defendant 2 must be deemed to have also been benefited thereby. There is no very clear evidence as to how defendant 1 utilised the money after he received it from defendants 4 and 5, but assuming that it was subsequently utilised for the benefit of the joint family of himself and his son defendant 2, this can have no bearing on the issue, as the binding character of the transaction must be tested with reference to its object and purpose. Was it entered into for family necessity or benefit? The answer must be in the negative, as defendant 1 effected the charge on the family properties not for any purpose connected with the family at all, but with a view to enable him, as the guardian of the plaintiff, to receive the moneys payable to her under the compromise decree in O.S. NO. 12 of 1928. He was accountable to the plaintiff for the moneys thus received, and any subsequent application of the moneys for family purposes in breach of his fiduciary obligation cannot validate the alienation of family property effected for the purpose of facilitating the receipt of such moneys on the plaintiff's account.

11. It was, however, urged by the plaintiff's Learned Counsel that apart from any family necessity or benefit, it was competent for defendant 1 as a Hindu father to charge family property so as to bind his son, to secure an obligation incurred by him as a surety, though such obligation was not antecedent to the creation of the charge. It was said that suretyship debts of the father formed a special class of debts which need not be antecedent in order to support the father's alienation of family property for discharging them. No texts of Hindu law attaching any special sanctity to such debts were brought to our notice. Indeed, such discussion regarding them as one finds in the books would rather seem to show that it was not without some doubt that they were recognised as debts to which the pious obligation of the son would at all extend. Our attention was called, however, to two decisions, C. Venkataehalam v. Venkatachala (1905) 28 Mad. 377 and The Maharajah of Benares v. Ramkumar (1904) 26 All. 611, as supporting the proposition contended for. The latter case was overruled by a Pull Bench in Bharatpur State v. Sri Kishen Das : AIR1936All327 as being inconsistent with the principles elucidated by the Privy Council in Brij Narain v. Mangla Prasad A.I.R. 1924 P.C. 50. In the former case, the discussion related only to the liability of the son's share in the family property for the discharge of such obligation. It is only from the decretal portion of the judgment and the statement of facts in the report that one is able to gather that the father in that case had effected a mortgage to secure his obligation as a surety incurred only at the time of such mortgage, and that the mortgage as such was upheld even in respect of the son's share in the property. The case is not referred to as a decision on this point in any of the leading text-books on Hindu law to which our attention was drawn, and the assumption underlying the concluding part of the judgment cannot, in our opinion, be regarded as authority in support of the proposition now contended for. Sulaiman C.J. observed in Bharatpur State v. Sri Kishen Das : AIR1936All327 :

Now the validity of an alienation in discharge of an antecedent debt has been characterised by their Lordships of the Privy Council in Sahu Ram v. Bhup Singh A.I.R. 1917 P.C. 61, as an exception to the general rule of want of authority in the father to transfer property without legal necessity or when there is no benefit to the estate, and their Lordships have observed that the exception should not be extended. I would, therefore, hesitate to apply the exception to the case of a suretyship where no antecedency in point of time exists.

12. We respectfully agree with this observation. The other branch of the contention is that it is not open to the appellant to question the validity of the indemnity charge as affecting defendant 2's share as the latter did not himself impugn it after attaining majority. It was urged by Mr. Rajah Aiyer that an unauthorised alienation of family property by the manager was only voidable at the in-stance of junior members of the family so far as it related to their interests in the property, and until it was avoided by them by some act of repudiation it was valid and operative and could not be challenged by any other person. It is necessary to bear in mind in this connection that the mortgage, Ex. V, was granted to the appellant for discharging antecedent debts of defendant 1 and was therefore binding on defendant 2's interest in hypotheca. As already stated, the appellant obtained a decree on the mortgage and in execution of the decree purchased the property in 19S6. Defendant 2's interest in the property mortgaged thus validly passed to the appellant in that year, and it was not suggested that defendant 2, who attained majority only in the previous year, did anything by way of affirming or ratifying the prior charge under the indemnity bond before he lost his interest in the property by the execution sale. Obviously, the only person interested in impeaching the validity of the earlier encumbrance on the property after such sale was the appellant, and it would indeed be odd if he were to be denied the right to do so. It was said that the right of avoiding an alienation by the manager of a joint family is a right restricted to the coparceners and cannot pass at an involuntary sale though a voluntary sale by the person having such right might itself be regarded as a sufficient repudiation of the unauthorised alienation so as to entitle the alienee thereafter to question it. No authority, however, was cited in support of this proposition. On the other hand, direct authority against it is to be found in Madan Lal v. Gajendrapal : AIR1929All243 . We agree with this decision and hold that the appellant is entitled to set up the invalidity of the charge created under the indemnity bond so far as defendant 2's interest in the property is concerned.

13. In the result, the appeal fails except with reference to defendant 2's half share in the properties covered by the indemnity bond, Ex. A. The decree of the Court below will be modified by the exoneration of the said share. Time for payment extended till 4-1-1944. In other respects the decree will stand. Bach party will bear the costs of this appeal.


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