KANTO MOHAN MULLICK Vs. JOHN CARAPIET GALSTAUN

JUDGEMENT

(1.) In this case we are concerned with the ascertainment of the amounts for which Mr. Galstaun is entitled to proof in the insolvency of one Kanko Mohan Mullick. I propose that we should give our decision upon the questions of law which are involved and what is said with reference to the particular figures and amounts will be subjected to correction hereafter on the representation of the parties. The intention is that at the conclusion of this judgment the parties should have an opportunity of checking whether the figures mentioned in it are correct in accordance with the true working out of the principle which is to be applied. Now it appears that the insolvent Kanto Mohan Mullick and four of his brothers-entered into a transaction represented by a mortgage deed dated 28 June 1903. It appears that at this time a certain will was being propounded by the persons named as executors therein as the true will of their uncle, one Gopal Lal Seal, and although the contents and effect of that will have not; been properly brought before us it is common ground that if that will were established the five brothers would be entitled to the enjoyment of the assets left by their uncle at a period of time long before they would be likely to succeed as mere reversioners expectant upon the determination of the rights of their uncle's two widows. In point of: fact at the date of the mortgage transaction the probate suit was being tried. The ultimate result of that suit was that the will was held to be a forgery. The true nature of the transaction represented by the instrument of 28 June 1903 is not in doubt.

(2.) It appears that the will case was being conducted, if not nominally, at all events really, on behalf of the five brothers by an Attorney one N.C. Bose and it appears that after certain amounts of money had been spent upon-it, it was necessary to obtain more money for the same purpose. Accordingly the attorney, with the assistance to use a neutral phrase, of a gentleman called Mumford, approached Galstaun and ultimately it was arranged that a, loan of one lac should be obtained from him upon the terms that he was to get in six months two lacs for the loan and that the sum of two lacs was to carry interest at the rate of 12 per cent per, annum. A loan of half a lac was at the same time being made by one Harirdhone Dutt and upon similar terms, namely that at the end of six months double the amount was to be payable These two transactions are put into the same deed and that deed proceeds upon the basis that the brothers are borrowing from Galstaun sums of money aggregating the sum of three lacs which have been advanced to them by Galstaun out of his own moneys and of moneys contributed by Haridhone Dutt. These advances are said to have been made upon the security of certain hundis mentioned in the schedule. The actual covenant for repayment is in these words: Now this indenture witnesseth that in pursuance of the said agreement and in consideration of the said sum of Rupees three lacs already advanced by the mortgagee to the mortgagors as aforesaid (the receipt whereof the mortgagors do hereby admit and acknowledge) the mortgagors do hereby covenant with the mortgagee that they the mortgagors shall and will on 20 December 1903 pay to the mortgagee at Calcutta the said principal sum of Rupees three lacs without any deduction or abatement whatsoever and will in the meantime and until full payment and satisfaction of the said sum of Rupees three lacs pay interest thereon or on such part thereof as shall for the time being remain owing and unpaid at the rate of 12 par cent, per annum computed from the date of these presents by equal monthly payments.

(3.) We are concerned with this transaction in the following circumstances: It appears that the money which was borrowed was expended and that when the time came to repay in December 1903 no part was repaid. Until events long afterwards, which I shall come to in due course, neither principal nor interest nor any part of either was repaid to Galstaun. In 1905 Haridhone Dutt died and on 11 November 1907, "Kanto Mohan Mulliok was adjudicated an insolvent under the old Act which then obtained in India, namely, the Indian Insolvency Act, 1848, 11 and 12 Vic. Cap. 21. In 1909 a suit was brought by Galstaun against all the five brothers upon the covenant in the mortgage, In March 1915 the Official Assignee was substituted in the place of the insolvent. In 1917 the plaint in this suit was amended, converting it from a mere suit upon a covenant in the mortgage to a suit to enforce a security. In 1920 Galstaun withdrew his suit so far as the Official Assignee was concerned without prejudice to his rights to prove in the insolvency if any. In February 1920 this mortgage suit came on for hearing and the plaintiff proceeded with it on the basis of a suit upon the covenant only. He got a decree against the then defendants, that is to say, the insolvent's four brothers for a sum apparently of Rs. 5,23,500.