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Madan theatres Ltd. Vs. Ramkissen Kapoor and anr. - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1943Cal172
AppellantMadan theatres Ltd.
RespondentRamkissen Kapoor and anr.
Cases ReferredFirm Nand Gopal Om Parkash v. Firm Mehnga Mal Kishori Lal
- 1-498 of 1935 in the court of the first class subordinate judge of lahore in favour of a joint family firm of the name of prohladdas bhagj wandas against the plaintiff company and defendant 3 is a nullity and unenforcible, (2) a declaration that the decree has been fully satisfied; (3) that an assignment of the balance due under the decree in favour of defendant 1 is void and should be set aside, and (4) an injunction restraining defendant 1 from proceeding with a winding-up petition against the plaintiff company on the basis of any claim under the decree. defendant 3 has neither filed a written statement nor appeared. defendants 1 and 2 have severally filed written statements and appeared by counsel. in substance, the defences of these f two defendants admit the allegations.....

Gentle, J.

1. The plaintiff is a limited company and it claims in this suit : (1) A declaration that a decree in suit No. 1-498 of 1935 in the Court of the First Class Subordinate Judge of Lahore in favour of a joint family firm of the name of Prohladdas Bhagj wandas against the plaintiff company and defendant 3 is a nullity and unenforcible, (2) A declaration that the decree has been fully satisfied; (3) That an assignment of the balance due under the decree in favour of defendant 1 is void and should be set aside, and (4) An injunction restraining defendant 1 from proceeding with a winding-up petition against the plaintiff company on the basis of any claim under the decree. Defendant 3 has neither filed a written statement nor appeared. Defendants 1 and 2 have severally filed written statements and appeared by counsel. In substance, the defences of these f two defendants admit the allegations regarding the decree being obtained in the Lahore Court and its assignment in favour of defendant l, the defendants however deny that it has been fully satisfied, and further, on behalf of defendant 1 it is pleaded that in any event by reason of the conduct of the plaintiff company it is estopped from denying the validity of the decree.

2. The firm of Prohladdas Bhagwandas is comprised of members of a joint Hindu family and is represented in this suit by Rajaram its karta. It is convenient hereafter to refer to this entity as the firm. The firm owned j the Elphinstone Theatre, Lahore, which it leased to the plaintiff, who in turn sublet to defendant 3. A receiver of the firm filed Suit No. 1-498 of 1935 in the Lahore Court seeking to recover from the plaintiff and defendant 3, arrears of rent. Pending the proceedings the receiver was discharged and the joint family firm, in its name, was brought upon the record or substituted for the receiver as the plaintiff in the suit. The record was not amended by including as plaintiffs each individual member of the coparcenary or that Rajaram the karta represented the firm but the name of the firm alone was added as plaintiff. The amount claimed in the suit was Rs. 14,370 and on 30th November 1937 an ex parte decree was passed for a sum of Rs. 15,662 including costs. By 11th July 1939 a total sum of Rs. 10,950 had been paid towards the decree and satisfaction for that sum was duly recorded. In the plaint the plaintiffs say that this sum of Rs. 10,950 was paid by the company. On 11th July 1939, the balance remaining was RS. 4412.5-0 due under the decree and on that date the firm assigned the decree and the balance remaining due, to defendant 1 in consideration of the payment of RS. 1000 in cash and giving a promissory note for a further sum of Rupees 850.

3. In November 1939 an order was passed by the Lahore Court bringing defendant 1 on; the record in substitution for defendant 2 as; the decree-holder. It is common ground that; no notice of this application was given to the plaintiff company, the judgment-debtors. One week after the assignment was executed in favour of defendant 1, his attorneys wrote to the plaintiff company a letter dated 18th July 1939, in which it is clearly stated that defendant 1 was the assignee of the decree in respect of which a sum of Rs. 4512-4-0 remained due and owing. This may be a typist's error for Rs. 4412-5-0. The plaintiff company were called upon by the letter to pay this sum, failing which proceedings to wind up the company would be taken. The letter expresses itself to be a notice under Section 163, Companies Act. No payment was made, and on 3ist August 1939, defendant 1 presented a petition in this Court to wind up the company on the ground that it was unable to pay its debts and non-compliance with the notice dated 18th July 1939 was relied upon to justify the allegations in the petition. On 4th March 1940 proceedings in the winding-up petition were stayed pending disposal of the present suit. It is to be noticed that the Elphinstone Theatre, the rent of which was the subject-matter of the Lahore suit, is situated at Lahore where all the defendants reside. The decree which it is now sought to set aside was passed by the Lahore Court. The plaintiff company has its registered office in Calcutta, and the presentation of the petition to wind it up took place in this Court. Before commencing the present suit, the company applied for and obtained leave to sue under Clause 12, Letters Patent of this Court on the ground that the presentation of the winding-up petition was part of the cause of action in the suit.

4. The managing agents of the plaintiff company are Messrs. J.F. Madan. Mr. B.J. Madan is a director of the company and a partner of the managing agents' firm. In the plaint it is alleged that the plaintiff company and defendant 3 (the defendants in the Lahore suit) before and after the decree paid various sums exceeding the amount decreed, and since the decree defendant 3 had paid approximately Rs. 5000 towards the amount due. All payments made were not recorded or certified towards satisfaction, and by reason of such payments the decree was completely satisfied and adjusted and nothing remained due by the plaintiff company. Further, at the date of the assignment of the decree to defendant l, credit had been given for rupees 10,950 paid by the plaintiff company towards the amount due for rent, but credit was not given for the sum of Rs. 8000 mentioned, paid by defendant 3, and other unspecified sums paid by the plaintiff company. Upon all these sums being taken into consideration, no monies would be due and payable by the company or by defendant 3 under the decrees. The plaint further alleges that, as notice was not given to the plaintiff company of the application to substitute the name of defendant 1 in place of defendant 2 as the decree, holder, the ex parte order directing such substitution was not binding upon the company. Further, it is alleged that as the decree was obtained in the name of the joint family firm as plaintiffs, without its being represented by its karta, or without each member of the family being made plaintiff to the suit, the decree is without jurisdiction and is void and unenforcible against the plaintiff, either by the original decree holders or by defendant 1 as the assignee.

5. Having received from the attorney for defendant 1 the letter of 18th July 1939 intimating that the writer's client was the assignee of the decree and calling upon the plaintiff company to pay the balance, the company replied by its letter of 1st August 1939 stating that the suit had already been compromised under an arbitration by a Mr. H. J. Eustomji, Bar-at-law, of Lahore, and there was nothing outstanding from the company. A little later the plaintiff company, having received a letter from defendant 2, replied on 15th August 1939 complaining that the firm had compromised a claim due to the company from a third party who was their debtor for a sum of Rs. 5000 the claim being for Rs. 18,000. This settlement was effected without any authority, and that the plaintiff company had previously arranged with the debtor for payment of Rs. 10,000. The letter proceeds, that the sum of Rs. 5000 being the difference between the sum for which defendarit 2 effected a compromise and Rs. 10,000 which the plaintiff company state had previously been agreed to be given would be debited against defendant 2 in respect of the decretal sum due to defendant 2 from the plaintiff company, and there can be no doubt that this decretal sum refers to the decree in the Lahore Court, which is the subject-matter of this suit.

6. It is now convenient to deal with the oral evidence which was given. Mr. B.J. Madan, to whom reference has been made already, said that there were two decrees in the year 1935 which defendant 2 has obtained against the plaintiff company, both in the Lahore Court, one of which is the decree, the subject-matter of this suit. Various payments were made towards the decretal debts. Between October and December 1939, he said he went to Lahore in order to settle these two decrees. In the first part of his evidence he said he took with him a sum of Rupees 7000 for this purpose, which he had obtained from the coffers of the managing agents' company and not from the company itself. In Lahore he saw Mr. Rajaram and agreed with him that both decrees would be satisfied by the payment of Rs. 5000 of which Mr. Madan said Rs. 1000 was paid at once. At one part of his evidence he said that the balance of Rs. 4000 was paid to Mr. Rajaram the following day. Mr. Madan's evidence was interrupted by an adjournment at the end of the first day he was in the witness box. When he re-entered the witness box the second day the witness said that the remaining Rs. 4000 was not paid by him as he had previously stated, but was remitted to Mr. Rustomji at Lahore, who was acting in the capacity of legal adviser for Mr. Madan, to pay to Mr. Rajaram. He said that no receipt was obtained from Mr. Rustomji, nor was any receipt supplied by defendant 2 firm nor by Mr. Rajaram who promised to send one but did not do so, and who said also that he would enter up full satisfaction for the payment. Witness said that he took it for granted that this would be done by Mr. Rajaram, as Mr. Madan had had dealings with him for 20 years. He said the non-delivery of the receipt did not worry him, and he assumed that satisfaction for the payments made had been entered up.

7. The company's books were not disclosed in the affidavit of documents, and Mr. Madan was asked on the first day he gave evidence to I produce them, which he did on the second day. One cannot say that they are kept in a way which one would expect to find with a public limited company which is the position of the plaintiffs. A book called the cash book, according to the evidence of Mr. Madan, is made up every four or five months, no date appearing against each entry. This, the witness said, was prepared from a book known as the rough book, in which also the entries are not made from day to day, or as the transactions took place. Again, there are no dates when the transactions reflected by the entries took place. The cash book purports to refer to two vouchers, but these were no produced, and Mr. Madan was uncertain whether there were two vouchers in respect of the payments of Rs. 1000 and Rs. 4000 which appear in the books and which Mr. Madan said took place when the two decrees were settled. I cannot place any reliance upon the entries in the books. According to the plaint, full payments of all monies due under the decree had been made by the date when the assignment by defendant 2 in favour of defendant 1 took place on 11th July 1939. According to Mr. Madan's evidence, the interview at which a settlement was effected occurred between October and December 1939, which would be at least three months after the assignment of the decree in favour of defendant 1.

8. There have been four modes by which the plaintiff company has alleged or suggested that the decree was fully satisfied, (1) In the plaint, a payment of Rs. 5000 by defendant 3 and other unspecified payments by the plaintiff company were made before the assignment took place (in addition to the sum of Rs. 10,950), for which satisfaction was not entered, (2) In its letter dated 1st August 1939 the plaintiff company stated that the decree was compromised under the arbitration of Mr. H. J. Rustomji, (3) In its letter of 15th August 1939 a sum of Rs. 5000 is purported to be debited against defendant 2 by { reason of a loss occasioned to the plaintiff company, which debit was in respect of the monies due under the decree, and (4) The settlement of which Mr. Madan gave evidence when he was in the witness box. Satisfaction has not been entered up by defendant 2, nor has the plaintiff company taken any step to do this, and, according to the record, at the date of the assignment the sum of Rs. 4412 remained due. Mr. Madan was not a reliable witness, and his evidence was unsatisfactory. He contradicted himself upon vital matters on more than one occasion. He did not answer questions in a frank; and straightforward manner, was hesitant, and frequently endeavoured to avoid giving an answer. In his story of the settlement of the amounts due under the two decrees for Rs. 5000 he gave two different versions of how the payment of Rupees 4000, part of the above amount, was made, and the method of settlement to which he testified is at variance with three other suggested modes by which the indebtedness of the plaintiff company was discharged. I have no hesitation in rejecting his testimony, and I hold that the decree has not been satisfied, and that payment has been made under it only to the extent for which satisfaction has been entered. In any event, the onus is upon the plaintiff company to establish that the decree has been fully discharged, and this the company has completely failed to do.

9. Learned Counsel who appears for the plain, tiff company placed considerable reliance upon a letter dated 27th March 1940 written by Mr. Rajaram to Mr. B.J. Madan, in which he says: 'No doubt the two decrees have been fully discharged.' There is no doubt that there was an arbitration which took place before Mr. Rustomji, by which the settlement of one and possibly two decrees was effected and to which reference is made in the company's letter of 1st August 1939. In his evidence, Mr. Madan said the two decrees in the Lahore Court, including the decree arising in this suit, were not the subject of the arbitration before Mr. Bus. tomji. The evidence is far from clear regarding the arbitration and the matters that were considered or decided thereat. But, in any event, I am satisfied that the letter of 27th March 1940 does not refer to the decree which is the subject-matter of the present suit. It is to be noticed, it was written about 8 months after the assignment in favour of defendant 1 was made. The leave which was granted in this suit under Clause 12, Letters Patent of this Court for this suit to be prosecuted was accorded on the grounds, which the application alleged, that part of the cause of action arose within the jurisdiction. The part of the cause of action is alleged to be the presentation by defendant 1 of the winding-up petition against the plaintiff company which was presented in this Court. A definition of 'cause of action' has been given as every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court, and does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved.

See (1888) 22 Q.B.D. 128 (1888) 22 Q.B.D. 128 : 58 L.J.Q.B. 120 : 60 L.T. 250 : 37 W.R. 131 Read v. Brown and (1873) L.E. 8 C.P. 107 (1873) L.R. 8 C.P. 107 : 42 L.J.C.P. 98 : 28 L.T. 32 : 21 W.R. 334, Cooke v. Gill, These two decisions of the English Courts were '.referred to with approval in : AIR1933Cal706 Aleander Brault v. Indrakrishna Kaul. In 25 ALL. 48 (02) 25 All. 48 : 1902 A.W.N. 179 Banke Behari Lal v. Pokhe Ram a decree was obtained in the High Court of Calcutta and execution was issued upon it in the Cawnpore Court. A suit was filed in the latter Court claiming, inter alia, a declaration that the decree was null and void. In the course of the judgment it is observed at p. 54 that the injury arising from the enforcement of the decree was that it constitutes a cause of action, and as that was done in the Cawnpore district, a substantial portion of the cause of action arose in that district, and the Court had jurisdiction to entertain the suit. 87 ALL. 189 (15) 2 A.I.R. 1915 All. 163 : 28 I.C. 502 : 37 All. 189 : 13 A.L.J. 190, Jawahir v. Neki Ram is a decision to the same effect. In 27 C.w.N. 359 (23) 10 A.I.R. 1923 Cal. 425 : 65 I.C. 318 : 27 C.W.N. 359, Indian Provident Co. Ltd. v. Govinda Chandra Das a decree in one Court was remitted to another Court in which the decree-holder applied for execution. The judgment-debtor filed a suit in the Court to which the decree had been remitted to set it aside. It was held there was jurisdiction for / such Court to entertain the suit, and after referring to the two Allahabad decisions quoted above, it was observed at page 364 as follows:

In this case it is true that no property of the plaintiffs had been attached within the jurisdiction of the Sylhet Court, but the defendant applied for execution of the decree and it was against the threatened execution that the suit was brought and an injunotion was asked for. The Sylhet Court was entitled to issue an injunction and in order to grant that relief, it had the power to go into the question whether the ex parte decree was obtained by fraud in which case it would be inoperative. In these circumstances we are of opinion that the Sylhet Court had jurisdiction to entertain this suit.

10. In the present suit, execution was not issued, but the judgment debt, which has been assigned, was the subject-matter of a petition to wind up the plaintiff company. The petition was a method by which the decree was sought to be enforced against the company. There is authority both in this and in the Allahabad Court that the issue of, or an application for, execution proceedings upon a decree of another Court is part of the cause of action in a suit to set the original decree aside. I can see no difference in principle between the issue of an application for execution upon a decree and utilising; another method by which it is sought to enforce it. Further, there is in this suit a claim for an injunction to restrain the continuance of the winding-up petition on the basis of any claim under the decree, the winding-up petition having been presented in this Court. I hold that the leave granted under Clause 12, Letters Patent, to institute this suit should not be revoked, and there is jurisdiction in this Court to entertain this suit, that is to say, a suit to set aside a decree of another Court, provided of course that a suit lies in any Court to obtain the declaration that the decree is a nullity or is null and void. Learned Counsel on behalf of defendant 2 did not pursue the contention that this Court has no jurisdiction, except that he argued that in this case the plaintiff company has no right to sue at all either in this or in any other Court. Learned Counsel on behalf of defendant 1 propounded the proposition that the suit is not maintainable in this Court. The next matter requiring consideration is whether the decree in favour of the firm of Prohlad Das Bhagwan Das is a nullity by reason of the fact that the Joint family firm came upon the record in the suit as plaintiffs and in whose favour the decree was passed. As pointed out, the karta of the family was not upon the record as representing all members of the joint family, nor were the names of each member of the family added as plaintiffs.

11. The argument that the decree is a nullity was made by reference to Order 30, Civil P.C., which enables two or more persons claiming or being liable as partners and carrying on business in British India to sue or to be sued in the firm name. It was argued that this provision of the Code applied only to a contractual partnership and does not apply to a joint family carrying on business as a firm and not as a contractual partnership. Reference was made by learned Counsel on behalf of the plaintiff company to a number of authorities in support of his contention, his argument being that the joint family firm is in the same position as a minor who sues or is sued in his own name, without being represented either by a next friend or a guardian ad litem. This question can be shortly decided. Under the rules of the Lahore High Court, which apply to the Courts of subordinate jurisdiction in the Punjab, an explanation has been added to Order 30, Civil P.C., that the rule applies to a (joint Hindu family trading partnership. In A.I.R. 1940 Lah. 256 (40) 27 A.I.R. 1940 Lah. 256 : 190 I.C. 78 : I.L.R. (1941) Lah. 39 : 42 P.L.R. 278, Atma Ram v. Umar Ali and A.I.R. 1940 Lah. 425 (40) 27 A.I.R. 1940 Lah. 425 : 192 I.C. 383 : 42 P.L.R. 418 Firm Nand Gopal Om Parkash v. Firm Mehnga Mal Kishori Lal it was held that in the Punjab a joint jHindu family trading firm may sue and be sued in the name of the firm. It follows that the decree in Suit No. 1/489 of 1935 which defendant 2 firm obtained against the plaintiff company is in accordance with the rules 'of the Code of Civil Procedure prevailing in the Court by which the decree was passed, e The decree therefore is valid and enforceable and is not a nullity.

12. Learned Counsel on behalf of the plaintiff company did not contend that, assuming the decree was valid and enforcible, the assignment in favour of defendant 1 was irregular and of no effect. It follows therefore that defendant 1 is entitled to enforce the decree which was assigned to him by defendant 2 by whom it was obtained. Defendant 1 has pleaded estoppel. If it were necessary to do so, I should have been inclined to accede to the view that this plea must prevail. There is no doubt that the plaintiff company was aware of the decree and that it was obtained in the name of the joint family firm. They have made payments under the decree towards its satisfaction, and according to the letters (to which I have referred) and the evidence of Mr. Madan, negotiations took place to settle the amount remaining due under this decree as well as under another decree. No step was ever taken by the plaintiff company to have the decree set aside; defendant 1 took an assignment of it and paid consideration for his purchase. He has, therefore, by reason of the conduct of the plaintiff company to which I have referred, been caused to change his position to his detriment. Therefore, the plaintiff company are estopped from asserting as against de. fendant 1 that the decree was a nullity and unenforeible against it. A plea of limitation has been raised, but in the light of the conclusion to which I have already arrived, it is not necessary for me to discuss and consider such plea.

13. A further argument was directed by learned Counsel on behalf of defendant 2 in regard to the maintainability of the suit. I have already said that, assuming a suit could be filed, it is maintainable in this h Court. The argument which was directed to the maintainability was shortly as follows: There is no allegation in the plaint that the decree in the Lahore Court was obtained by fraud which is the ordinary ground upon which a suit is filed to set aside a decree. If there was any irregularity or any reason which the plaintiff company could have utilised to have the decree set aside, it is not by way of a suit without alleging fraud. The remedies open to the plaintiff company were several, none of which were availed: (1) an appeal under Section 96 of the Code as being an ex parte decree, (2) an application for a review under Order 47, Rule 1 of the Code, (3) an application under Order 9, Rule 13, to set aside the, decree; the time for which the proceeding under this rule should be taken is 30 days from the date of executing any process to enforce the decree, or from the time of knowledge, and (i) a suit alleging the decree was obtained by fraud. I am not satisfied that the present suit lies at all in the absence of an allegation of fraud, but having come to the conclusion that the suit fails for the reasons which I have already expressed, it is not necessary for me to record any finding in regard to the matters to which I have just referred.

14. There were 8 issues settled, which are as follows:

(1) Is the suit maintainable in this Court?

(2) Is the decree in favour of Prahladdas Bhugwanclas a nullity?

(3) If the answer to (2) be 'No' - Is the assignment of the said decree in favour of Kapoor inoperative or invalid in law?

(4) Was the decree completely satisfied or adjusted before such assignment?

(5) Is the substitution of Kapoor in execution proceedings invalid?

(6) Is the plaintiff's claim barred by estoppel or principles analogous thereto?

(7) Is the suit barr'ed by limitation?

(8) What relief, if any, is the plaintiff entitled to?

I find the following:

(1) The suit is maintainable, assuming that there is a right to sue.

(2) The decree in favour of Prohladdas Bhagwandas is not a nullity.

(3) The assignment in favour of defendant 1 is operative and valid, and indeed there was no argument to the contrary.

(4) The decree was not satisfied or adjusted before assignment.

(5) The substitution of defendant 1 in execution proceedings, was not argued as being invalid, and was abandoned.

(6) Whilst not so holding, I am inclined to the view that the claim as against defendant 1 is barred by the principles of estoppel.

(7) Unnecessary to record any finding, and

(8) The plaintiff is entitled to no relief.

15. The consequence is that this suit is dismissed with costs two sets, one each for defendants 1 and 2. Defendant 3 not having appeared or been represented, no order for costs against him is made. The order staying the winding-up proceedings made on 4th March 1940 has now spent itself.

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