CHATURBHUJ PIRAMAL Vs. CHUNILAL OOMKARMAL

JUDGEMENT

(1.) This is an appeal from a judgment of the High Court at Bombay, in its appellate jurisdiction reversing a judgment of Kemp J. who had made a decree in favour of the plaintiffs, the present appellants. The question is one of competing claims to a debt owed by the defendant in the action, the respondent Oomkarmal to one Shankarrao. The plaintiffs are judgment creditors of Shankarrao, and they claim to have effectively attached the debt; the defendant alleges that at the time of the attachment the debt had already been seized by the State of Indore. The plaintiffs do not claim that they acquired any right in respect of the debt until late on May 15, 1924, or the morning of May 16, 1924, when a warrant of attachment before judgment was served on the defendant. The material facts appear to be as follows, and have to be considered in reference to the date just mentioned.

(2.) Shankarrao was a Court official in the service of the Maharajah of Indore, a State which for the present purpose is to be considered a sovereign independent State. In March, 1924, he was arrested, charged with sedition and criminal breach of trust, and sentenced to seven years imprisonment. He was said to have applied large amounts of State funds to his private purposes. The Maharajah resolved to confiscate his property towards satisfaction of the amount due to the State. Delay was considered prejudicial, and it was determined to seize the property by executive act, or act of State as it was styled by the Prime Minister of Indore, who gave evidence for the defendant. Shankarrao was resident in and a national of Indore. He had had large dealings with Oomkarmal, also a resident in and a national of Indore. Oomkarmal was an ageut who bought and sold commodities on commission. His head office was in Indore. In 1930 he had traded forty to forty-five years in Indore, and about ten years in Bombay. For about two or three years before 1924 he had done business for Shankarrao through his Indore office, and for about one and a half years also through his Bombay office. The dealings appear to have been chiefly forward transactions in various commodities, cotton, linseed, wheat and gold. Separate accounts were kept at Indore and Bombay. The exact course of business must be considered in more detail later on. At present it is sufficient to say that Shankarrao opened two accounts at both Indore and Bombay one in his own name, the other in that of his wife, but both were in fact his own. At the time of Shankarrao's arrest, the accounts at Indore appear to have been even : but the accounts at Bombay showed a credit of Rs. 1,44,420 on his own account and Rs. 80,462 on his wife's account. There was an outstanding purchase of 1,000 tons of linseed for the May account which involved a purchase to the amount of nearly three lacs, and was closed on the instructions of the State by May 9 at a loss of Rs. 26,385. The net sum involved in this case is, therefore, Rs. 1,98,497. On April 12, 1924, the Prime Minister of Indore issued an order to the Inspector-General of Police to place under attachment certain house property in Indore and "any other properties funds and rights belonging to Mr. Shankarrao Gawde which after necessary inquiries may come to his knowledge." On April 17, a notice by the Inspector-General was served on the defendant as follows :- Notice is being given to you to the following effect :- As per order of Holkar Government in respect of the attachment of property and rights of Shankarrao Baburao Gawde an order of the Prima Minister was issued to that effect and consequently this notice is being given to you that in Khata (Account) of your shop at Bombay a sum of Rs. two lacs nearly is found claimable in the name of Shankerrao Baburao. Whereas several lacs of rupees are also claimable by the Government from Shankerrao Gawde, therefore you are being informed by this notice that you will produce the abovenamed amount of monies within eight days and full account of his dealings within four days before the Prime Minister Saheb and obtain a receipt in respect of monies, otherwise after the expiry of the (said) period steps will be taken according to law. This is all. The date the 17-4-24. GULAM MAHOMED Inspector General Commissioner. Indore State Police.

(3.) Oomkarmal on receipt wrote to the Prime Minister that he had written to Bombay for the account, and that it would take ten or twelve days to have it copied and sent and immediately on receipt he would make his submission "in connection with the payment of the account which may be found due by me." By May 2, the account had been received in Indore, and on that day, in pursuance of a written direction from the Prime Minister, the Inspector of Police addressed the following order to Oomkarmal: With reference to the schedule of accounts submitted by you on April 30, 1924, in connection with Mr. Shankarrao Gawde's dealings with your firm, I have the honour to request you under order of His Highness's Government to kindly remit to the Huzur Treasury through this office a sum of Rs. 1,44,420-9-6, which your firm owes to Mr. Shankarrao Gawde as soon as possible. On May 5, Oomkarmal wrote to the Inspector-General that the amount was very large and asked him to convey to His Highness a request for a year's time "to pay up the amount you have asked me to pay in the State Treasury." On May 9, the Inspector-General, acting on instructions, wrote to Oomkarmal that the Government did not think it expedient to grant his request. "Kindly, therefore, see that you remit to the Huzur Khajana the above sum at once, and send me the Treasury receipt." In the meantime the State had discovered the account at Bombay in the name of Shankarrao's wife. They had obtained a copy of the account from Oomkarmal and on May 9 they served him with a similar notice to that relating to the account in his name. On May 7, Oomkarmal had received orders from the Inspector-General to close the linseed purchase, and on May 9, the loss on this transaction was reported by telegram from Bombay, amounting to Rs. 26,385. On May 12, Oomkarmal wrote again pressing for time, and undertaking not to deal with his immoveable property within the State until he had paid off the amount. On the 14th, the Inspector of Police had an interview with Oomkarmal and asked him to transfer the Bombay account to the Indore office, and to credit the balance in the name of the Government. This was done, and on May 15, an entry was made in Oomkarmal's books crediting the Maharajah of Indore with Rs. 1,98,497 the balance of Shankarrao's account. It is necessary to state that according to the evidence of the Inspector-General and Oomkarmal, Shankarrao had agreed in March that his Bombay account should be transferred to the books at Indore, though it is not suggested that the agreement provided for a further transfer of the balance to the Maharajah. Shankarrao denied the agreement, and the trial judge decided against it. This finding was accepted by the appellate Court and must be treated as correct. Except that it shows that all the acts done at Indore were as regards Shankarrao in invitum, and is a further illustration of the tendency of some people both in India and elsewhere to seek to support, by false evidence, what may be a good case, it appears to their Lordships, as it did to the appellate Court, not to affect the result. On May 14, the present appellants commenced a suit in the Bombay Court against Shankarrao to recover the sum of over two lakhs which was apparently due on similar transactions to those with Oomkarmal. On May 15, they obtained an order under Order XXI, Rule 46, and Order XXXVIII, Rule 5, of the Civil P. C., for the attachment before judgment of the debt due from Oomkarmal to Shankarrao, and on the same day a warrant of attachment of the debt was issued and served at Oomkarmal's place of business at Bombay on May 16. Written notice of the order and the warrant was given to Oomkarmal's office about 5-30 on the evening of May 15, Oomkarmal's solicitors replied that there was no amount due as the account had been squared up. On September 8, 1924, the plaintiffs recovered a decree against Shankarrao who made no appearances for Rs. 2,37,064 and costs, and on September 25, 1924, obtained an order continuing the order of May 15, prohibiting Oomkarmal from giving over the debt to Shankarrao, and giving leave to the plaintiffs to file a suit against Oomkarmal for a declaration that the alleged payment of the debt was collusive and fraudulent, and that the debt still remained payable to Shankarrao. In what must be supposed to be pursuance of that order, the present suit was brought by the plaintiffs against Oomkarmal, asking not merely for a declaration as stated in the order, but that the plaintiffs were entitled to payment of the debt and for an order upon the defendants to pay the amount of it to the plaintiffs, The suit was not brought to trial until 1930, probably because Shankarrao was a material witness for the plaintiffs, and had not been released until 1928. Mr. Justice Kemp was of opinion that Shankarrao dealt directly with the Bombay shop, that Shankarrao could have sued Oomkarmal's Bombay shop in Bombay : and that a liability due to Shankarrao in British India could not be affected by a transfer in Indore not sanctioned by Shankarrao. He thought that the situs of the debt was in Bombay, as it was properly recoverable there. He also thought that the Court could determine the validity of any act of a foreign State affecting the rights of a subject of that State in British India. Accordingly by decree of February 4, 1931, he declared that the defendants were indebted to Shankarrao in Rs. 1,98,497, at the date of the warrant of attachment and ordered that the defendant pay to the plaintiffs the said sum by agreed instalments. On appeal the appellate Court, Beaumont C.J. and Rangnekar J. came to the conclusion that the debt was situated in Indore, that by May 15, the debt had been seized by the Government of Indore, and that it was not open to the Bombay Court to question the legality of acts done by a foreign Government against its own subjects in respect of property situate in its own territory. They, therefore, allowed the appeal and dismissed the action.