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Showing contexts for: composition deed in Mahadulal And Anr. vs Chironji Lal And Ors. on 2 May, 1962Matching Fragments
4. The defendants admitted signing the Bahi-Khata. But the main ground on which they resisted the suit was that subsequent to the signing of the Bahi-Khata, an agreement dated 15-3-34 was concluded between the defendants on one hand, and the plaintiffs and other creditors of the defendants on the other, whereby it was agreed that the present plaintiffs and other creditors would in satisfaction of their debts accept the movable and immovable properties of the defendants as shown in Ex. D. 1, that the property entered in Ex. D. 1 shall be sold and that the sale proceeds shall be rateably distributed among all the creditors and in this way all the debts, including the one due of the plaintiffs, shall stand discharged. The defendants contended that in view of this composition-deed, the plaintiffs were not entitled to maintain this suit on the basis of the entry in the Bahi-Khata referred to above.
11. The first is, as suggested by the trial Court, that the case should be treated as one for specific performance. The agreement Ex. D. 1 is a composition deed of debts and there is no impediment in holding it to be a valid contract, enforceable at law. It being so, the plaintiff-firm is justified in bringing this suit to enforce It (Ex. D. 1) and in asking the defendant-firm to sell the properties indicated in it and to give the plaintiffs his share of money on the basis of rateable distribution. No reason has been advanced by the defendant-firm why a suit for this purpose does not lie. It is admitted that after the execution of the composition-deed (Ex. D. 1), the defendants as a matter of fact rateably distributed the Kattha (cashew), a property mentioned in. Ex. D. 1 among all creditors, including the plaintiffs. Furthermore it appears that the defendant-firm sold some other property mentioned in Ex. D. 1 and disposed of the sale-proceeds according to the wishes of the creditors. But the rest of the property has remained with the defendants without being sold and this has necessitated the institution of the present suit. The defendants are indulging in masterly inactivity and this has forced the plaintiffs to institute this suit.
13. In para 5 of the written statement, it is stated that the defendants were according to composition deed ready to transfer the properties by a registered deed and that they have been always ready to fulfil their part of the contract.
14. In Ex. D. 3 (Page 167 line No. 34 of the Paper Book} the defendants on 9-7-34 in reply to a notice of Seth Mathra Dashi Mahadulalji (one of the creditors) said :
^^cewthc rfLQ;k mu reku fptksa dk ftudk rfLQ;k eSa vkidks ysuk o jkj ik;k gS nsus dks rS;kj gwa uksfVl Hkh ns pqdk gwa vkSj vc Hkh rS;kj gwwaA** The defendants after narrating all the above facts, resisted the suit on the ground that after the composition deed, the plaintiffs were not entitled to bring the suit on the basis of Kattha. It is true that in view of Ex. D. 1, the composition deed, the plaintiffs cannot maintain this suit on the basis of a signed entry prior to the composition deed. But why should a decree not be passed against the defendants on the basis of the composition deed (Ex. D. 1), which the defendants have themselves produced? In this connection I would like to re.fer to Firm Sriniwas Ram Kumar v. Mahabir Prasad AIR 1951 SC 177 in which their Lordships of the Supreme Court at page 179 have observed :
15. Another way of looking at this suit is this :
The debtor has executed a composition, deed, has earmarked the property for the payment of debts and has also named the persons to whom the payment is to be made. If the document had been registered, it would have been a trust according to Indian Trusts Act. Excluding the lack of registration, the composition deed possesses all the features of a trust. To me it seems that in the present circumstances, it is what is known in Equity a constructive trust. A constructive trust is one "which the court elicits by a construction put upon the acts of the parties". According to Halsbury's Laws of England page 89 (Lord Halsham 11 Edition Vol. 33) a constructive trust arises, when property, to which no express trust is for the time being attached, is acquired or held by a person in circumstances which render him bound in Equity to hold it in trust for the benefit of some other person or object or beneficiary.