ALLA VENKATARAMANNA Vs. PALACHERLA MANQAMMA

JUDGEMENT

(1.) This appeal arises out of a suit brought by respondent 1 for enforcement of an indemnity bond executed by defendant 1 for himself and as the father and guardian of defendant 2 in favour of defendants 4 and 5 who assigned it to respondent 1. The Additional Subordinate Judge of Coconada who tried the suit has passed a preliminary decree for payment of Rs. 12,122-5-6 the sum claimed, with subsequent interest and costs, and, in default, for sale of the immovable properties charged under the bond. Defendant 3 who purchased the rights of defendants 1 and 2 in the properties at an execution sale and was the sole contesting defendant in the Court below has preferred this appeal. The litigation has a long antecedent history, and attempts at compromise have only served to complicate it by giving rise to fresh technical pleas. Plaintiff's husband, who was the undivided younger brother of defendants 4 and 5, died in 1925 when she was yet a girl of ten years, and her father, defendant 1 herein, acting as her next friend instituted a suit against defendants 4 and 5 O.S. No. 12 of 1928 in the Court of the Subordinate Judge at Rajahmundry) for recovery of a sum of Rs. 10,000 alleged to have been paid to the plaintiffs husband as katnam at the time of her marriage and claimed to be returnable on the death of the husband. Before the suit proceeded to trial, it was compromised with the leave of the Court on the terms that defendants 4 and 5 should pay to the plaintiff us. 4500 for katnam and Rs. 185 per annum for her maintenance during her life, that the former sum should be paid to defendant 1, her next friend in that suit, before the registration officer at the time of the registration of an indemnity bond which defendant 1 was to execute on the security of certain immovable properties undertaking to indemnify defendants 4 and 5 against all losses resulting from the plaintiff raising disputes after attaining majority as to the katnam and maintenance amounts, and that defendants 4 and 5 should in their turn execute a maintenance deed charging the maintenance agreed to be paid on certain immovable properties belonging to their family. It is to be noted that though the claim in that suit related solely to the katnam, the compromise provided also for payment of a maintenance allowance to the plaintiff. The Court therefore directed that a decree should be passed in accordance with the compromise "so far as it relates to suit," as required by Order 23, Rule 3, Civil P.C. This distinction, however, does not appear to have been kept in view in drawing the compromise decree, for, it provided, inter alia, that the defendants do pay Rs. 185 to the plaintiff on 13 August 1928 as and for her maintenance and do thereafter pay to the minor plaintiff maintenance at Rs. 185 on 13 August of each year throughout her lifetime, etc. In pursuance of this decree, which was passed on 14th. August 1928, defendants 4 and 5 executed a maintenance deed on 15 September 1928, but the payment of Rs. 4500 was delayed as there was apparently some difference between the parties as to the sum for which the indemnity bond was to be given. Defendant 1 therefore proceeded to execute the decree for Rs. 4500 by filing execution petition (no. 65 of 1928) as the plaintiff's next friend on 20 November 1928. This resulted in the payment of Rs. 4500 by defendants 4 and 5 to defendant 1 and the execution by the latter of the indemnity bond (Ex. A) dated 17 January 1929 on which the present suit is based. The sum of Rs. 4500 having thus been paid, the execution petition was allowed to be dismissed as "settled." The maintenance allowance payable to the plaintiff under the compromise was also paid by defendants 4 and 5 to defendant 1 on her behalf every year during her minority. The attainment of majority by the plaintiff on 23 December 1933 opens another chapter of the story. She gave notice to defendants 4 and 5 on 25 September 1934 repudiating the compromise entered into by her father defendant 1. She did not, however, persist in this attitude, for she filed, on 10 April 1935, an execution application (no. 333 of 1935) against defendants 4 and 5, claiming the sum of Rs. 4500 for katnam and arrears of maintenance for six years, as settled under the compromise decree, with interest as stipulated therein, amounting in all to Rs. 9566 on the ground that payments made to her father were invalid and not binding on her, as no leave of the Court was obtained as required by Order 32, Rule 6, Civil P. C, for the receipt of such payments by defendant 1 as the plaintiff's next friend. Neither defendant 1 who was adjudicated insolvent in December 1934 nor the receiver in insolvency was made a party to the execution proceeding aforesaid. Defendants 4 and 5 raised various objections to their being made to pay to the plaintiff over again amounts which they had already paid to her father on her behalf during her minority, alleging that the proceeding instituted by the plaintiff was the result of fraud and collusion, by which it was apparently meant that the plaintiff had already received the benefit of the payments made to her father. The Court, however, without going into the question of the alleged fraud, felt constrained by what it thought was the effect of certain provisions of the Code, as interpreted by the decisions of this Court, to hold that the defendants 4 and 5 were liable to pay the sum claimed, observing "No doubt, it is a hardship to them to pay the amount over again but it cannot be helped." It accordingly passed, on 24 February 1936, an order directing execution to proceed and transmitting the decree to another Court for that purpose. Defendants 4 and 5 thereupon preferred an appeal against the said order to this Court (A.A.O. No. 206 of 1936) repeating all the objections to the execution of the decree which they had unsuccessfully urged in the lower Court. They also deposited in Court the amount claimed by the plaintiff and got the further proceedings in execution stayed till the disposal of the appeal. While the appeal was pending, the Madras Agriculturists Relief Act was passed in March 1938 providing for the scaling down of debts due by "agriculturists" as defined in the Act, and defendants 4 and 5, claiming to be agriculturists entitled to the benefits of the Act, applied to the lower Court for scaling down the amount payable under the compromise decree which the plaintiff was seeking to execute as aforesaid.

(2.) At this stage there was another compromise whereby it was provided inter alia that the plaintiff should drop all further proceedings in the execution application (No. 333 of 1935) and refund the sum of Rs. 2000 which she had drawn from the amount deposited in Court by defendants 4 and 5, the balance of the deposit being withdrawn by them, that on such refund being made by the plaintiff defendants 4 and 5 should assign to her the indemnity bond executed in their favour by defendants 1 and 2, without recourse against themselves, and withdraw their appeal as well as their application for relief under the Madras Agriculturists Relief Act. Both parties filed a petition in this Court (C. M. P. No. 3766 of 1938) setting out the terms of the compromise and praying that a decree be passed in accordance with such terms. This petition and the appeal already filed came on for hearing on 16 September 1938 and the Court recorded the compromise and adjourned the proceedings for final orders to be made after each party carried out its part of the agreement. The plaintiff accordingly paid back the sum of Rs. 2000 to defendants 4 and 5 who in their turn, executed and completed an assignment deed (ex. e) dated 21 October 1938 in favour of the plaintiff, transferring all their rights under the indemnity bond (ex. a) given by defendants 1 and 2. Final orders were made pursuant to this compromise arrangement on 5 December 1938.

(3.) It will now be convenient to refer to the transactions which bring defendant 3 on the scene. The lands charged under the indemnity bond as well as certain other lands were mortgaged by defendant 1, acting for himself and as the father and guardian of defendant 2, to defendant 3 on 30 March 1932 for a sum of Rs. 6000 borrowed from the latter for discharging an antecedent debt due from defendant 1 to one Padmaraju under a promissory note. On 8 March 1934 defendant 3 issued through his lawyer a notice to defendants 1 and 2 charging them with fraudulent misrepresentation and suppression of the earlier encumbrance under the indemnity bond and calling upon them to secure the cancellation of that bond by carrying out their undertaking therein, that is to say, by causing the plaintiff who had attained majority to execute a ratification deed in favour of defendants 4 and 5 affirming and ratifying the compromise decree in O.S. No 12 of 1928 and the payments received in pursuance thereof. As defendant l, however, failed to do so, defendant 3 brought a suit (No. 39 of 1934) in the lower Court against defendants 1 and 2 and another to enforce his mortgage. Defendants 4 and 5 were not made parties to this suit. A preliminary decree for sale for rupees 8000 odd was passed on 2 October, 1934 and a final decree followed on 18th January 1935. In execution of this decree the hypo-theca was brought to sale on 26th February 1936, and defendant 3 himself purchased the properties covered by the indemnity bond for Rs. 1085 subject to the encumbrance created thereunder and the rest of the hypotheca was sold to a third party for Rs. 4950. It would appear that no further sum was recovered towards the balance of the decree amount as defendant 1 was adjudicated insolvent in December 1934. The properties charged under the indemnity bond having thus become vested in defendant 3, he alone contested the plaintiff's claim in the Court below and has brought this appeal.