MATHAI GEORGE Vs. MATHEW CHACKO

JUDGEMENT

(1.) The short question for determination is, whether an agreement to withdraw the proceedings under the Insolvency Act is unenforceable in law.

(2.) We shall briefly refer to the factual backdrop, to bring into sharp focus, the question for consideration. One Joseph Mariamma, was a subscriber to chitties conducted by the respondent plaintiff. She had executed Exts. Al to A15 bonds on her behalf, and on behalf of the firm of which she was a partner. Rs. 33,496.95 was outstanding from her. On 6-11-1971, she executed a simple mortgage of her properties, in favour of the appellants for a consideration of Rs. 56,300/-. Upon this, the respondent initiated proceedings, in I.P. 9/71 to adjudge the said Mariamma an insolvent, alleging fradu-lent preference and act of insolvency. The appellants were impleaded to the proceedings, with a prayer to annul the hypothecation bond. In the meantime, one Thomas Chacko moved the Land Tribunal, claiming tenancy right, in respect of the mortgaged properties. While so. on 10-12-1973, the appellants and respondent, entered into an agreement (Ext. A19), the respondent agreeing to withdraw I. P. No. 9/71 and the appellants agreeing to file a suit to enforce the mortgage and satisfy the claim of the respondent. I.P. 9/71 was dismissed and thus came to an end. But, the appellants did not file a suit for over three years. Later they filed a suit without the knowledge of the respondent. Nor did they pay the plaintiff. Shorn of the details, the respondent plaintiff, then filed the suit for damages, from which arises the appeal.

(3.) The appellants-defendants contested the suit on various grounds. The central issue was the enforceability of Ext. A19 agreement. The suit was decreed as prayed for, and hence the appeal.