1. This appeal arises out of a suit to recover a sum of Rs. 1,300 (together with interest thereon) deposited by the plaintiffs with the defendants under the following circumstances
2. The plaintiffs and certain other persons had a business in cloth, and their firm used to take cloth from the defendants' firm. The plaintiffs' business failed, and it was in debt to the defendants to the extent of Rs. 8,000, for which an instalment bond was executed by the plaintiff and his co-partners in favour of the defendants. As the plaintiffs were wealthy, and as the defendants could realize the debt due to them from the plaintiffs alone, the co-partners of the plaintiffs did not interest themselves in the discharge of the debt. The plaintiffs realised some of the debts due to their firm and paid Rs. 3,665 towards the instalment bond, and the balance remained due to the defendants.
3. The plaintiffs' case is that they deposited Rs. 1,800 with the defendants on the understanding that the amount would be refunded to the plaintiffs if the defendants succeeded in realizing the debt from the plaintiffs' co-sharers, the plaintiffs undertaking to help the defendants in realizing the whole debt from the plaintiffs' co sharers.
4. The defendants then brought a suit upon the instalment bond and obtained a decree against the plaintiffs and their co-sharers, and with the help of the plaintiffs realized various turns from the other partners by execution proceedings. In the last execution case, the property of one of the partners Dole Govind was put up to sale and was purchased by one Hem Chandra. The sale, however, was set aside by Dole Gobind depositing the balance of the amount which then remained due under the decree, viz., Rs. 3,700 in Court, and the decree was satisfied. It is the defendants' case that the plaintiffs withdrew the sum of Rs. 1,300 which was in deposit with the former and paid it as part of the said sum of Rs. 3,700 into Court. The Courts below held that the defendants had failed to prove that the plaintiffs withdrew the Said sum of Rs. 1,300. It appears, however, that the defendants paid the sum to Dole Govinda, and the same was deposited in Court as part of Rs. 3,700 in satisfaction of the decree.
5. The Court of first instance, having found that the defendants had failed to prove payment of the sum of Rs. 1,300 to the plaintiffs, decreed the suit. On appeal that decree was confirmed, and the defendants have appealed to this Court.
6. We think the suit must fail. It appears that the agreement relied on, in pursuance of which the sum of Rs. 1,300 was deposited with the defendant, was entered into before the suit upon the instalment bond was instituted by the defendant. The defendant did not give credit for the sum of Rs. 1,303 and obtained a decree for a sum of money jointly against the plaintiffs and their co-partners. As the decree stands, the defendant was entitled to payment from any one of his debtors, and the plaintiffs were not entitled to say that the defendant could not proceed against them because of a secret agreement made before the suit. The plaintiffs ought to have set up the transaction in the suit when they were sued along with their co partners, but they did not, and the defendant got a decree against all the partners jointly.
7. The learned District Judge observes: 'The law permits a creditor getting a decree against judgment-debtors jointly liable to him to realize the whole of the dues out of one of the joint debtors, leaving him to sue the others for contribution. When the law permits this, a contract for this purpose cannot be said to be a contract for an unlawful purpose.' No doubt the creditor is at liberty to realize the whole of his dues from one of the joint judgment debtors, but it does not follow that he can bind himself not to proceed against one in consideration of his helping him to realise his dues from his co-partners.
8. The plaintiff No. 1, referring to the agreement with the defendant states as follows:-- 'As a result of the conversation between him and me, it was settled that the bond should be sued upon and I should help the creditors to realise the money. I also proposed that an agreement might be taken from me that I undertook to have the money realised. I was, however, directed to deposit Rs. 1,300 as costs of the suit, and I complied with the direction on the understanding that I should get back the money in case I succeeded in having the decretal money realised in fall, and that on my failure the unrealised portion of the money should be recouped from the money deposited and the decree would be conveyed to me by a written document.' The plaintiff thus set up a secret arrangement that plaintiff would help the defendant not only in getting a decree but also in recovering the decree from his co-partners: in other words, that the defendant should realize the whole of his dues out of the plaintiffs' partners instead of realizing fair shares from the plaintiffs and their partners.
9. We do not think that an agreement between one of the debtors and the creditor, that the latter would proceed against the other co-debtors and absolve him from liability on condition of his helping the creditor to recover his dues from the others and refund the sum of money deposited with the creditor by the debtor, is one that should be enforced by the Court. In the present case the sum of Rs. 1,300 deposited with the defendant by the plaintiffs was actually devoted to the payment of the amount due under the decree to the defendant, and the effect of the decision of the lower Court is that the plaintiffs would escape the liability to pay any share of the debt, while the defendant would lose the sum of Rs. 1,300. We do not think that this would be consistent with the principles of justice, equity and good conscience.
10. It is true that this question was not raised in the Court of first instance where the case proceeded only upon the question of fact, viz., 'whether the sum of Rs. 1,300 was paid over to the plaintiffs. That has been found against the defendant but the question was raised in the lower Appellate Court, and there is no dispute that the money was paid by the defendant and appropriated in part payment of the decree, though without the consent of the plaintiffs. In these circumstances we think that the decrees of the Courts below should be set aside and the suit dismissed but that each party will bear its own costs in all the Courts.