O A NARAYANASWAMI AYYAR Vs. SANARAYANA IYENGAR

JUDGEMENT

(1.) These two appeals have been filed against the orders of the District judge of West Tanjore dismissing two execution petitions in both of which the receiver appointed in E. P. No. 82 of 1934 was the petitioner. In O.S. No. 26 of 1912 which was an interpleader suit on the file of the Sub-Court, Tanjore, instituted to determine the rights of the several claimants to the Tanjore Palace estate, the first defendant, the senior prince, obtained a decree for a one- eighth share and his younger brother, the second defendant, for another one-eighth share. The balance of the estate, namely, three-fourths was decreed to the illegitimate sons of the late Maharajah, compendiously referred to as the Mangalavilas group. There were appeals preferred to this Court against the decision of the Sub-Court, Tanjore. The result was that the shares of defendants 1 and 2 were enhanced from one-eighth to two-sevenths and the shares of the Mangalavilas group, were correspondingly reduced. These latter consisted of six branches and each branch got an one-fourteenth share. The sum total of the shares of these branches amounted to three-sevenths. The estate under litigation consisted not only of extensive immovable properties but also comprised a sum of 20 lakhs of rupees collected and deposited into Court by a receiver appointed pending the disposal of O.S. No. 2 6 of 1912. When the appeals were pending in this Court the successful parties were permitted by order dated 7 November, 1919, to draw their respective shares in the fund in Court deposit, on their furnishing sufficient security. Under this order the Mangalavilas group consisting of defendants 5, 8 to 11, 25,26, 27, 28 and 29 applied for and obtained their shares of the money in Court as determined by the decree of the trial Court. As a consequence of the modification introduced by the decree of this Court on appeal which reduced the quantum of their share to three-sevenths instead of three-fourths, the Mangalavilas group became liable to refund the difference. Each of the six branches had accordingly to bring back into Court an amount represented by the difference between the one-eighth and one-fourteenth shares and this liability was ascertained and embodied in the final decree passed by the District Court, West Taniore, to which Court O.S. No. 26 of 1912 was withdrawn, the suit being thereupon re- numbered as O.S. No. 3 of 1919. It may be mentioned that the decree of the High Court was confirmed by the Privy Council. The rights of the parties were thereby finally determined to be those declared by the High Court.

(2.) The appellant before us was appointed receiver in E. P. No. 82 of 1934 at the instance of a creditor of the first defendant. It would seem that the first defendant became heavily indebted and his rights under the decree had not only been mortgaged by him but had also been attached by creditors who had obtained decrees against him. It was on the application of one of such decree-holders, namely, the decree-holder in O.S. No. 126 of 1933 on the file of the District Munsiff's Court, Tanjore, that the appellant was appointed receiver to realise the estate and assets of the first defendant by an order made in E. P. No. 82 of 1934. In E. P. No. 48 of 1938 the order on which is now under appeal before us the receiver is seeking to enforce a security bond executed by the first respondent for enabling the respondents belonging to the Mangalavilas group to draw out from Court the share of the monies decreed to them by the Sub-Court, Tanjore, in the first instance. He claims recovery of Rs. 2,48,090-3-7 which according to him represents the amount to which the first defendant became entitled by way of restitution from defendants 5, ii to 11, 25, 26, 27, 28 and 29. The appeal against the order rejecting this petition is C. M. A. No. 161 of 1940. E. P. No. 50 of 1938 is another petition by the same receiver seeking to enforce another security bond executed by the first respondent therein for the same purpose as that for which the security bond in E. P. No. 48 of 1938 had been executed. The appeal against the order dismissing this execution petition is C. M. A. No. 162 of 1940.

(3.) Before proceeding further it is necessary to mention one other fact in order to appreciate the contentions raised in these appeals. On an application made on 7 July, 1930, by the surety S. A. Narayana Iyengar who is the first respondent in E. P. No. 48 of 1938, the District Court, West Tanjore, passed an order on 13 December, 1930, cancelling the security bond executed by him. A similar order of cancellation was passed in favour of the surety in E. P. No. 50 of 1938 on 12 April, 1931. It is to be observed that these orders were passed long before the institution of O.S. No. 126 of 1933 on the file of the District Munsiff's Court, Tanjore. It was at the instance of the decree-holder in this suit and in execution of the decree passed therein that the appellant was appointed receiver. When the District Court, West Tanjore, passed its orders cancelling the security bonds aforesaid, it presumably followed the decision of this Court in C. M. A. No. 263 of 1926 where it was held that the bonds enured only to the benefit of the party on whose application the receiver appointed in the interpleader suit was continued during the pendency of the appeals therefrom and permission was granted to the successful claimants to withdraw the money from the Court. The judgment in this Civil Miscellaneous Appeal was pronounced on 24 April, 1928. On 29 March, 1933, however a different Bench of this Court held in C. M. A. No. 127 of 1933 that the earlier decision was erroneous and declared that the security bonds enured to the benefit of all persons who might be affected by the subsequent decisions in the appeals then pending, though the application for the continuation of the receiver was made at the instance of one alone of the appellants. This difference of opinion was finally resolved by a Full Bench on 27 November, 1936 and it was held that the decision of the learned Judges in C. M. A. No. 127 of 1933 laid down the correct law on the point. It thus turns out that the cancellation orders were made on what has since been declared to be an erroneous view of the effect of security bonds. But unfortunately the orders themselves were allowed to become final without being challenged by appeals, or otherwise. If these orders stand and are not to be treated as nullities, the appellant is faced with an insuperable obstacle inasmuch as the very bonds that are sought to be enforced had been cancelled and declared to be inoperative. This was exactly the contention raised by the respondent in the Court below. The learned District Judge went into the matter and held that the orders of cancellation were valid and accordingly dismissed both the petitions, K. P. No. 48 and E. P. No. 50 of 1938. The learned advocate for the appellant has advanced the same contention before us and has rested it upon two grounds, (1) that the orders of cancellation were passed without notice to all the parties interested and therefore they are void, and (2) that the Court which passed the orders had no jurisdiction whatever to pass them.