SINNAN CHETTY Vs. GSALAGIRI AIYER

JUDGEMENT

(1.) This suit having been dismissed on the ground that on the facts stated by the plaintiff there was no cause of action, we must assume for the purpose of this appeal that those facts are correct. On this assumption the plaintiff was the owner of a ring of the value of Rs. 1,000 and lent it to the first defendant. The plaintiff was liable to the first defendant on a promissory note for Rs. 2,500 and the first defendant was liable to the plaintiff for Rs. 2,072-8-0 being the first defendant's contribution in respect of a joint bond which the plaintiff had discharged. The first defendant assigned the promissory note to one Mikka Pillai who brought an action on it, Original Suit No. 21 of 1915 in the Salem District Court against the plaintiff. On the 7 of March 1913 the plaintiff presented an insolvency petition against the first defendant. In that petition he alleged that the first defendant was indebted to him for Rs. 3,072-8-0 made up of the Rs. 2,072-8-0 and Rs. 1,000, the value of the ring which he alleged the first defendant refused to return. He alleged that there was no consideration for the assignment of the promissory note to Mikka Pillai and that it was a fraud on the creditors and he proposed to set it off against his claim, which would thereby be reduced to Rs. 572-8-0. Three days after the presentation of the petition the first defendant pledged the ring with the second defendant, who is now represented by the fifth and sixth defendants, it is said, for Rs. 725. The second defendant took it without notice of any claim to it by the plaintiff. In Original Suit No. 21 of 1915 the plaintiff set up against Mikka Pillai's claim on the promissory note the Rs. 2,072 due by the first defendant and also Rs. 1,000 the value of the ring, no doubt on the basis that Mikka Pillai was not a holder in due course of the note.

(2.) The insolvency petition was heard, the first defendant not appearing; and he was on the 2 December, 1915 adjudicated insolvent, the District Judge holding that the assignment of the promissory note to Mikka Pillai was fraudulent and also holding, though he gave no reasons, that the plaintiff was entitled to Rs. 1,000 in respect of his ring with the result that he became a creditor of the insolvent for Rs. 572-8-0 instead of being his debtor in Rs. 427-8-0, the difference against him in respect of the two other cross claims for Rs. 2,500 and Rs. 2,072-8- 0.

(3.) In due course the plaintiff put in his proof for Rs. 572-8-0 and it has been admitted. Subsequently he alleges that he discovered that the ring was in possession of the second defendant and brings this suit for its recovery. Owing to certain criminal proceedings the ring is in fact in the custody of the Magistrate's Court at Attur, but for the purpose of this suit it must be treated as still in the possession of the pledgee, the second defendant. The second defendant contends that the plaintiff has definitely elected to treat the ring as the property of the first defendant---first by his petition in insolvency and subsequent proof whereby he has treated the value of it as a debt due to him and used part of it as a set off against the balance of the insolvent's claim against him, and on the other part has filed his insolvency petition, and that the Court by allowing the petition and subsequently admitting the proof has accepted his contention, and that this involves a decision that the property in the ring has passed to the first defendant from which it follows that the plaintiff has no longer any claim to it. Secondly reliance was placed on the plaintiff having in the suit by Mikka Pillai used the Rs. 1,000 or part of it as a debt due from the first defendant and therefore available for him as an answer to Mikka Pillai's claim on the promissory note. I think there is nothing in the latter contention. Apparently Mikka Pillai had no claim at all and no such set off has, in fact, been allowed against him, it being unnecessary to consider the question in view of the fact that the negotiation to Mikka Pillai has been held to be fraudulent. We have not got the full facts as to this before us. But I assume this to be the position from the fact that the plaintiff has only been allowed to prove on the basis that he is indebted on the promissory note to the first defendant and not to Mikka Pillai. But the use that the plaintiff has made of his right against the first defendant in respect of the ring in the insolvency petition stands on a different footing and gives rise to a difficult question in respect of which there is little authority.