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R.V. Rajarathna Chettiar Vs. Shari Shaick Mahboob Sahib and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1940Mad106
AppellantR.V. Rajarathna Chettiar
RespondentShari Shaick Mahboob Sahib and ors.
Cases ReferredKandaswamy Pillai v. Avayambal
Excerpt:
.....recover money which he has paid for another, not intending to do so gratuitously, and the other person has enjoyed the benefit of the payment. the respondents have failed in their contention that the appellant is not entitled to any interest, but have succeeded in part on their claim for the reopening of the account and on the question of limitation......for its restoration to the list.2. on 10th december 1926 the application was granted so far as the minor plaintiffs were concerned, but was dismissed as against the major plaintiffs, sakina bi and ?respondent 1. the major plaintiffs appealed, %ut the appeal was dismissed on 8th february 1929 on the undertaking that no objection would be taken by the defendant-respondent to the minor plaintiffs proceeding with the suit and recovering whatever they were entitled to as heirs of chidri ismail. on 11th december 1929, a preliminary decree was passed in favour of the minor plaintiffs and the official referee was directed to take the accounts. on 4th march 1929, the official referee submitted his report, but before it was taken into consideration by the court a compromise was agreed upon under.....
Judgment:

Leach, C.J.

1. In order to appreciate the questions which arise in this appeal it is necessary to trace the course of events for some eleven years before the institution of the suit. The grandfather of respondents 2, 3, 4 and 5, one Chidri Ismail, was a dealer in skins and hides and carried on business in partnership with another Mahomedan, named Dhabaywallay Manjalay. In 1921 Chidri Ismail instituted on the Original Side of this Court a suit (Civil Suit No. 697 of 1921) for the dissolution of the partnership and for the taking of accounts. He died before the suit came on for hearing and his heirs were made plaintiffs in his stead. Chidri Ismail had a son, Chidri Abdul Rahiman, and a daughter, Masum Bi. Chidri Abdul Rahiman married one Sakina Bi, by whom he had three children, respondents 3, 4 and 5 in this appeal. Masum Bi married respondent 1 and respondent 2 is the issue of that marriage. Chidri Ismail's son, daughter, son-in-law, daughter-in-law, and his four grand-children were all made plaintiffs in the suit. The grand-children were minors and were minors at all times material to the questions involved in this appeal. Masum Bi died in 1924 and Chidri Abdul Rahiman in 1925. On 16th August 1926 the partnership suit was dismissed for default and on 7th September 1926 an application was filed on behalf of the surviving plaintiffs asking for its restoration to the list.

2. On 10th December 1926 the application was granted so far as the minor plaintiffs were concerned, but was dismissed as against the major plaintiffs, Sakina Bi and ?respondent 1. The major plaintiffs appealed, %ut the appeal was dismissed on 8th February 1929 on the undertaking that no objection would be taken by the defendant-respondent to the minor plaintiffs proceeding with the suit and recovering whatever they were entitled to as heirs of Chidri Ismail. On 11th December 1929, a preliminary decree was passed in favour of the minor plaintiffs and the Official Referee was directed to take the accounts. On 4th March 1929, the Official Referee submitted his report, but before it was taken into consideration by the Court a compromise was agreed upon under which the defendant was to pay to the minor plaintiffs a sum of Rupees 50,000 in satisfaction of their claims, and a ?decree embodying the terms of the settlement was passed. The partnership assets included immovable properties and the receiver who had been appointed was authorized to realize sufficient of the properties to pay the amount to the minor plaintiffs. The minor plaintiffs were without funds to carry on the litigation and the appellant ?alleges that he financed the suit and also provided money for their maintenance. On 20th March 1928, an agreement was entered into under which the appellant was to provide Rs. 1000 for the expenses of the suit and of the appeal of the major plaintiffs against the order dismissing the application for restoration so far as they were concerned. For his financial help the appellant was to receive one-half of what was recovered as the result of the suit, after allowing for the repayment of the loan. There was no provision in the agreement for the payment of interest. In his plaint Chidri Ismail had valued the relief sought by him at Rs. 1,50,000. The agreement was signed by respondent 1 on his own behalf and as the guardian of respondent 2, and by Chidri Jehangir, the brother of Chidri Ismail, on behalf of himself and of respondents 3, 4 and 5. Chidri Jehangir was acting as the next friend of respondents 3, 4 and 5 in the partnership suit and at the most can only be regarded as a de facto guardian.

3. On 3rd September 1932, the appellant instituted the suit out of which this appeal arises. He claimed to be entitled to Rupees 30,992-0-9 made up of Rupees 5992-0-9, the amount which he alleged he had advanced for the maintenance of the minors and for the expenses incurred in C.S. No. 697 of 1921, and Rs. 25,000 being one-half of the amount decreed in that suit. The case was tried by Wadsworth, J. who held that it had not been proved that any amount had been advanced by the appellant for the maintenance of the minors, but that the agreement of 20th March 1928 was binding on them subject to 'relief against harshness.' He considered that it would not be fair to allow the appellant to have the half of the decretal amount but he was of the opinion that he was entitled to recover all that he had advanced for the purposes of the litigation with interest at 20 per cent. On this basis, he directed the Official Referee to take an account of the moneys advanced for the expenses of the previous suit. The Official Referee took the account on the basis of actual expenditure and having received the report the learned Judge passed a decree against the respondents for Rupees 10,733-3-11. Of this sum, Rs. 4727-9-9 represented advances by the appellant for the expenses of the previous suit and Rupees 6005-10-2 interest thereon at 20 per cent. per annum. The appellant has appealed against the decree and the minor respondents have filed a memorandum of cross-objections. Before us the appellant has not pressed his claim that he should receive half the amount awarded to the minor plaintiffs in Civil Suit No. 697 of 1921, but has contended that he should be allowed interest at the rate of 75 per cent, per annum on the sums which he advanced for the purposes of the suit. He challenges the finding that he had advanced no money for maintenance and says that he should, be awarded in this connexion Rs. 1264-7-0, being the difference between Rs. 5992-0-9, the amount claimed for maintenance and litigation expenses, and Rs. 4727-9-9, the amount awarded for litigation expenses. Respondents 2, 3, 4 and 5 have raised the following contentions : (1) the agreement of 20th March 1928 is not binding upon them; (2) even if the appellant could have claimed relief under Section 68, Contract Act, he is barred from the benefit of that Section because the suit was based on the agreement and no alternative plea was advanced; (3) in any event, the appellant is not entitled to interest on the sums advanced by him; (4) the account had been taken on a wrong basis; and (5) Article 61, Limitation Act, applies in respect of all sums advanced by the appellant.

4. The plea advanced by the minor respondents that the appellant is not entitled, to claim recompense by way of interest on the ground that he had not advanced this plea in his plaint may be disposed of at once. An examination of the plaint shows that this objection cannot be sustained. In para. 19 of the plaint the appellant avers that the amounts advanced by him for the conduct of the litigation and for the maintenance of the minors were lent for necessary purposes and the minors are bound to repay him. No mention is made of interest, but if the appellant is in law entitled to interest on moneys advanced for necessaries, we think that he has sufficiently indicated his case to justify the award of interest. 'We consider that in holding that the appellant was entitled to sue on the agreement of 20th March 1928 the learned Judge erred. It is a well-settled principal of the general law that a guardian cannot impose a personal liability on his ward and therefore a minor cannot be bound by a personal covenant in a contract entered into by his guardian : Waghela Rajasanji v. Masaludin (1887) 11 Bom. 551 and Indur Chunder Singh v. Radhakrishore Ghose (1892) 19 Cal. 507. The minor's personal law may however affect the position. For instance, the natural guardian of a Hindu minor has power without the Court's sanction to mortgage or sell any part of the minor's estate in a case of need; or for the benefit of the estate : Hanoomanpersaud Panday v. Mt. Babooee Munraj Koonwaree (1854-57) 6 M.I.A. 393. In cases of necessity, the guardian of a Hindu minor may borrow money upon a promissory note and the minor's estate is liable for repayment with interest at a proper rate. The minor is not liable on the note, but on the debt evidenced by the note. His liability is created by his personal law. This question was fully discussed in the judgment of a Division Bench of which I was a member in Annamalai Chetty v. Muthuswami Maniagaran Reported in (1939) 26 A.I.A. Mad. 538. This judgment has not yet been reported, but it is not necessary to travel over the same ground. I have sufficiently indicated the effect of the personal law of a Hindu minor.

5. It has been argued on behalf of the appellant that the Mahomedan law is very much the same as the Hindu law and that the agreement of 20th March 1928 can be enforced under Mahomedan law. The basis for this statement is the rule that a de facto guardian has power to sell the goods and chattel of his ward for the ward's imperative necessities. The power to sell or pledge moveables cannot confer a right to bind minors to a covenant to transfer their property even in part. The learned advocate subsequently had to concede that this was so and that his client could not base his claim on the agreement, but inconsequentially he asked the Court to hold that the appellant was entitled to interest because a Court of Equity in setting aside an unconscionable bargain could impose terms. I cannot imagine a Court of Equity awarding against minor's interest at the rate of 75 per cent, per annum whatever the risk, but it is not a question of setting aside an unconscionable bargain on terms. The agreement was void ab initio so far as the minors were concerned. As there is no agreement in law and as the personal law of the minors does not impose upon them any obligation to pay interest - in fact Mahomedan law is against the charging of interest - the appellant is confined to his remedy under the provisions of Section 68, Contract Act.

6. Section 68, Contract Act, entitles a person who has supplied necessaries to a minor to reimburse himself from the minor's property. On behalf of the respondents it was conceded that the money which was advanced for the expenses of the partnership suit would come within the Section, provided that the money was properly expended for the purposes of the suit. They however contended that all that the appellant was entitled to was the recovery of the amounts which had been properly expended without interest. In this connexion our attention was drawn to the decision in (1801-12) 8 East Fisher v. Mowbray (1801-12) 8 East. 330 where it was held that an infant cannot bind himself in a bond with a penalty conditioned for payment of interest as well as principal and to the judgment in Baylis v. Dineley (1844) 3 M. & S. 476 which was to the same effect. The English law and the Indian law with regard to contracts by minors are not the same. Under the English law the contract of a minor is voidable. In this country it is void and we have to consider the position in the light of the Contract Act, rather than in the light of English cases. While by reason of Section 11 of that Act a minor is incapable of contracting, Section 68 allows a person who has supplied a minor with necessaries to reimburse himself from the minor's property. The appellant has contended that reimbursement must include the payment of interest, as otherwise a person who lends money to a minor and is not repaid for an appreciable period of time suffers loss. He could, it is said, only be reimbursed if he were repaid the principal together with the amount he would have received if he had use of the money. Section 32, Trusts Act, was here referred to. That Section allows a trustee to reimburse himself out of the trust property all moneys expended by him inter alia for the support of the beneficiary. The Section expressly provides that where he has paid the expenses out of his own pocket he has a first charge upon the trust property for such expenses and interest. The learned advocate for the appellant also drew our attention to three cases in which interest had been, allowed in respect of claims falling within Section 68, Contract Act : Phalram v. Aiyub Khan : AIR1927All55 , Sri Nath v. Jagannath : AIR1930All292 , and Watkins v. Dhunnoo Baboo (1881) 7 Cal. 140. In none of these cases however was the question of the right to interest raised. It was granted apparently as a matter of course.

7. The question whether the word 'reimburse' should be given the meaning which the appellant would have is one of some difficulty, but in order to decide whether the appellant is entitled to interest it is not necessary to decide this particular question. We consider that he is entitled to interest on the ground that interest would be allowed by a Court of equity. The proviso contained in the Interest Act leaves it open a the Court to allow interest in any case in which interest would be allowed by a Court of equity : B.N. Ry. Co. Ltd. v. Ruttanji Ramji . That a Court of equity would allow interest in a case like the one now before us is to be gathered from the decision in Martin v. Gale (1876) 4 Ch. D. 428. There a minor executed a deed to secure the repayment of monyes advanced to him for necessaries. When he came of age the lender sued to enforce his security. Jessell M.R. held that he was not entitled to do so, but that he was entitled to have an account (1) for all moneys advanced to the minor before he attained majority and expended by him on necessaries or in paying debts incurred for necessaries; (2) for an inquiry whether any such sums had been repaid, and (3) for an order for repayment of the amounts found due with interest at 4 per cent. That case is analogous to the case now before us and we hold that the appellant is entitled to recover moneys advanced by him for the purposes of the litigation with interest, but at a fair rate. A fair rate we consider would be the Court rate which is six per cent, per annum.

8. It follows that the account which has been taken of the advances will have to be reopened. The respondents have asked that in the course of the further inquiry the trial Court should be directed to examine the sums provided by the appellant for litigation expenses and reject all amounts not shown to have been reasonably required for the purposes of the litigation. When the matter was before the Official Referee all that the appellant was called upon to prove was that he had provided the amounts claimed by him. It was not suggested that the amounts provided had not been properly spent. This was accepted. Therefore, it is too late in the day for the respondents to say that the account should be taken on a new basis. Subject to what is said in the appeals against the final decree (Original Side Appeal No. 8 of 1938 and Original Side Appeal No. 24 of 1938) and to the law of limitation which I will deal with in a moment, the account as settled by the trial Court will stand and interest will be calculated at six per cent, on the various amounts supplied from the dates of advancement.

9. The respondents have contended that this suit falls within Article 61, Limitation Act, and therefore the appellant cannot recover sums which were advanced more than three years before suit. The appellant contends that the proper Article is Article 120. We are of the opinion that the Article which applies is Article 61. This Article fixes a period of limitation of three years for money payable to the plaintiff for money paid for the defendant. The moneys which the appellant mid were paid for necessaries of the minors. Support for the opinion that Article 61 applies is to be found in the judgment of the Lahore High Court in Piare Lal v. Lajja Ram (1935) 22 A.I.R. Lah. 437. Further support is to be obtained from the decision of this Court in Kandaswamy Pillai v. Avayambal (1911) 34 Mad. 167. That case related to a claim under Section 70, Contract Act, which entitles a person to recover money which he has paid for another, not intending to do so gratuitously, and the other person has enjoyed the benefit of the payment. There is no difference in principle between Section 70 and Section 68, Contract Act, and if Article 61 applies to Section 70, it must apply to Section 68. In the taking of the new account, regard must therefore be had to the provisions of Article 61, Limitation Act. So far as respondents 3, 4 and 5 are concerned the law of limitation will apply to all payments made three years before the date of the institution of the suit, namely 3rd September 1932. This date, however, does not apply to respondent 1. The appellant has asked the Court to hold that all payments made three years before 2nd March 1931 can be recovered proportionately against respondent 2, because on that date respondent 1, his lawful guardian, signed an acknowledgment of the amount due in respect of the advances for maintenance and litigation expenses. The Official Referee refused to accept the statement that respondent 1 signed the acknowledgment on 2nd March 1931 and held that he must have signed at some date subsequent to 11th July 1932. The report of the Official Referee was accepted by the learned Judge and we see no reason to come to a contrary conclusion. Therefore so far as respondent 2 is concerned, he will be liable for his share of the money paid for litigation expenses after 11th July 1929.

10. The only question which remains to be considered is the appellant's claim that he should be allowed the sum of Rs. 1264-7-0 for maintenance. We consider that the learned trial Judge should have directed the Official Referee to take an account in respect of the maintenance claim as there was sufficient evidence on the record to justify this course. In addition to the oral testimony of the appellant, there were his account books and a letter (Ex. C) from the mother of respondents 3, 4 and 5 asking respondent 1 to raise money from the appellant for the maintenance of the minors. The learned Judge refused to order an account because there was no evidence that any particular sum had been utilized for the support of any particular minor. What had been utilized for the respective minors had, however, never been inquired into. All that the appellant was required to do was to satisfy the Court that monies had been provided. How much had been provided and how much had been spent on the minors respectively were matters to be inquired into by the Official Referee. The maintenance claim can only be decided after an investigation in the first place by the Official Referee and he will be directed to take the account. The appellant will be entitled to interest at the rate of six per cent, per annum on any amounts found due. Article 61, Limitation Act, also applies here.

11. The result is that the appellant fails on his claim to interest at the rate of 75 per cent., but is awarded interest on his payments at the rate of six per cent., and. ha succeeds on his claim for an account of the monies advanced for maintenance. The respondents have failed in their contention that the appellant is not entitled to any interest, but have succeeded in part on their claim for the reopening of the account and on the question of limitation. The decree of the Original Side will be set aside so far as-respondents 2, 3, 4 and 5 are concerned, but it will stand against respondent 1, who has not appealed. The case will be remanded to the Original Side to be disposed of in accordance with this judgment so far as, respondents 2, 3, 4 and 5 are concerned. The decree under appeal provides for a personal decree against the minors. There can! be no personal decree against them. The decree which is passed will be against their properties only. In drawing up the final decree, care will be taken to allocate liability to the minor respondents according to the respective shares in the estate. In dealing with the question of costs, Wadsworth J. allowed two sets for the respondents. This has been objected to and we consider that there should only be one set. The parties will pay and receive, here and below, proportionate costs, one set, but there will be a certificate for two counsel on each side.


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