Indian Kanoon - Search engine for Indian Law

1. The subject-matter of the litigation which has given rise to this appeal, is the estate of Manraj Puri, a Dasnami Gossain of the monastery of Budhauli in the District of Gya, who died on the 16th June 1897, possessed of considerable movable and immovable properties. Immediately upon his death, disputes broke out as to the right of succession to these. The defendant, who is the head of the monastery at Budhauli, took possession of all the properties left by Manraj, while one Hetlal Puri, as well as the plain tiff Ramdhan Puri, set up a claim to the properties as chelas entitled to succeed by law and custom. The first stage of the struggle for possession of the properties was represented by a criminal case under Section 107, Cr. P. C., which was instituted by a petition presented on the 16th July, 1897. On the 2nd August 1897, the Sub-divisional Magistrate delivered judgment with the result that he discharged the respondent Dalmir Puri and made the rule absolute against Hetlal Puri directing him to execute a bond, and to find sureties to keep the peace for one year. On the 19th August 1897, Hetlal Puri presented an application for letters of administration to the estate of Manraj Puri. At one stage of the proceedings thus initiated, one Mander Lal was appointed administrator pendente lite, but subsequently on the 13th September 1897, Dalmir himself was appointed administrator during the pendency of the proceedings. On the 21st September 1897, the application of Hetlal for letters of administration was refused. Hetlal then appealed to this Court, and on the 5th January 1900, the older of the District Judge was set aside, and the case was remitted to him for retrial. On the 30th April, 1900, the District Judge after a careful examination of the evidence in the case, came to the conclusion that Hetlal was not the validity appointed chela of Mauraj and refused the application. As Dalmir had himself put in an application for a certificate under the Succession Certificate Act, the District Judge observed that there was no difficulty as to the collection of the outstanding debts. Meanwhile Ramdhan, the present appellant, applied to intervene in the proceedings for letters of administration. The District Judge held that he had no locus standi in the matter and refused his application. Hetlal subsequently appealed to this Court against the order of dismissal of his application for letters of administration by the District Judge, and Ramdhan also applied to this Court to set aside the order of refusal of the District Judge to make him a party to the proceedings. A Divisional Bench of this Court on the 20th July 1900, dismissed the appeal of Hetlal on the ground that he had failed to establish that he had been validly taken as a chela by Manraj, and that what was described as the Biraja Home had been performed in his case: The application of Ramdhan was at the same time dismissed on the ground that, as the appeal of Hetlal had failed on the merits, there were no pending proceedings to which Ramdhan might claim to be made a party. Subsequently, on the 19th May 1900, the District Judge made an order for the issue of a Succession Certificate to the present respondent-Dalmir Puri, inspite of the objection of Ramdhan, who claimed to be entitled to the certificate as the chela of Manraj. Ramdhan then made an infructuous attempt to have this order reviewed, his application for the re-opening of the proceedings being dismissed by the District Judge on the 22nd February 1901. The claims of Hetlal and Ramdhan in the usual preliminary proceedings under the Criminal Procedure Code, the Probate Act and the Succession Certificate Act having thus proved ineffectual, Dalmir continued to be in possession of the entire estate of Manraj which he had seized immediately upon the death of the latter. On the 29th February 1904, Ramdhan executed two deeds, one in favour of Madhusudan Singh, the second plaintiff in this suit, and another in favour of Doman Singh, the third plaintiff. Under each of these two deeds, the terms of which we shall examine later, Ramdhan purported to convey to the transferee a one-fourth share of what he alleged to be his interest in the estate of Manraj. The consideration for each conveyance was Rs. 45,000 out of which the sum of Rs. 2,000 was paid in cash to the transferor and the balance of Rs. 43,000 was retained by the transferee to enable him to carry on litigation for the recovery of the estate of Manraj out of the hands of Dalmir. The effect of these two conveyances was that the plaintiff retained one-half of his alleged right by inheritance in the estate of Manraj and the remaining half was vested equally in the two transferees. On the 5th March 1904, the three plaintiffs commenced the litigation out of which the present appeal arises for declaration of their title to the estate of Manraj and for recovery of possession of the properties, movable and immovable, together with mesne profits. The defendant resisted the claim on the following amongst other grounds, which need not be referred to. He questioned the validity of the transfers to the second and third plaintiffs, on the ground that the second plaintiff was the benamidar of the heirs of one Lokenath Singh and the third plaintiff the benamidar of one Takonarain Puri, the mohant of the monastery at Mandra. He further contended (hat the transfers were without consideration and were in the nature of champerty and made for the purpose of spoil and litigation. He also alleged that, in so far as the claim, related to properties other than immovable, it was barred by limitation. On the merits he asserted that the first plaintiff Ramdhan was merely a nominal chela of Manraj, that the. essential ceremonies necessary to constitute a sanyasi and entitle a chela to claim by inheritance the properties of his guru, had never been performed, and that, in any event, according to well established custom and usage upon the death of Manraj, the properties left by him had passed not to any possible chela of his, but to the monastery at Budhauli, of which Manraj was a subordinate gossain and the defendant Dalmir was the spiritual head. Upon these pleadings the Subordinate Judge framed nineteen issues which exhaustively raised every possible question in controversy between the parties. After a prolonged trial, which, extended over fifty-four days, and upon an examination of the voluminous evidence in the case, the Subordinate Judge dismissed the suit on the 17th April 1906. He held, so far as the second plaintiff was concerned, that he had been proved to be the person beneficially interested under the conveyance from the first plaintiff. He farther held as regards the third plaintiff that he was the benamidar for mohant Tokenarain of Mandra and was consequently not entitled to maintain the action in respect of the one-fourth share transferred by the conveyance executed nominally for his benefit. As regards the properties other than immovable and other than the debts collected by Dalmir, he held that the claim was barred by limitation. As regards the first plaintiff he held that he had been taken as a chela by Manraj, but that he was not entitled to succeed to his estate by inheritance under the law and custom applicable, inasmuch as the ceremonies essential to make a valid chela of a sanyasi had not been performed in his case. As regards the custom set up by the defendants, that upon the death of a gossain his estate is not taken by his chela, but passes to the monastery, the Subordinate Judge did not came to any definite conclusion. The plaintiff appealed to this Court on the 2nd July 1906. During the pendency of the appeal on the 2nd December 1906, the first plaintiff made an application to this Court, in which he alleged that the second and third plaintiffs had not properly managed the litigation, that he himself had upon subsequent enquiry into the custom and usage of the monastery ascertained that the doctrine of lapse alleged by the defendant was true, and that consequently he has come to the conclusion that his claim was unfounded and ought not to be further pressed. He prayed accordingly that the appeal might be dismissed and the judgment of the Court below,, affirmed. This application was resisted by the other plaintiff, who denied the allegation that they had not deligently prosecuted the litigation and contended that the first plaintiff had no right by a fraudulent compromise with the defendant to prejudice the rights they had acquired for valuable consideration under the conveyances executed in their favour. The Division Beach to which this application was presented directed that it should be considered at the time of the hearing of the appeal and this has accordingly been done.

3. The first question which calls for decision is whether, in spite of the withdrawal of the first plaintiff from the appeal, it is competent to the other plaintiffs-appellants to proceed thereunder in respect of their shares in the disputed properties. The answer to this question must depend upon the true construction of the two conveyances executed by Ramdhan in favour of Madhusudan and Do-man on the 29th February 1904. It was suggested on behalf of the first plaintiff that under these conveyances he was entitled to effect the compromise so as to prejudice the rights of his transferees. In our opinion there is no foundation for this contention. The contingency which has happened was contemplated by the parties. The conveyances expressly recite that it will not be competent to the transferor to confess judgment in favour of the defendant or to enter into any compromise with him, or to abandon or withdraw the claim in respect of the whole or any part of the subject-matter of any suit instituted for the recovery of the properties of Manraj. This is followed by the covenant that if, Ramdhan entered into such a compromise in contravention of the terms of the deed, the transferees would be entitled to prosecute the suits and might also recover damages resulting from the action of the first plaintiff. In the face of an agreement like this it is difficult to appreciate how it can be seriously maintained that it was open to the first plaintiff to enter into a settlement with the defendant, so as to make it impossible for the second and third plaintiffs to enforce any rights acquired by their purchases. That an agreement of this nature for the protection of the purchasers is valid in law is clear from the decision of their Lordships of the Judicial Committee in Lal Achalram v. Raja Kazim Husain 32 I.A. 113 : 27 A. 271 : 9 C.W.N. 477 : 15 M L.J. I97 : 8 O.C. 155. There one Ardowan, who claimed to be entitled to a taluk in Oudh, transferred his half-share in the property to Raja Kazim Husain. The suit was then jointly brought by the transferor and the transferee for recovery of the property, but during the pendency of the action Ardowan withdrew from the suit on a petition of compromise. The transferee Kazim Hosain was then allowed to continue the suit on the ground that there was a valid transfer in presenti of a moiety of the estate to him which gave him a good title on the basis of which it was competent for him to sue. We must consequently hold that the only effect of the petition of the first plaintiff presented to this Court on the 2nd December 1906, is that the appeal in respect of his share must be dismissed. But this does not in any way affect the title of the other plaintiffs, who are consequently entitled to have the appeal heard on the merits so far as their claim to a-half share of the estate of Manraj is concerned. The second question which calls for decision on the appeal is whether the second and third plaintiffs are entitled to maintain the action, or whether as champertors their suit is liable to be dismissed. It has been contended on behalf of the respondent that although the English law of Champerty and Maintenance is not in force in this country, yet the transactions under which the second and third plaintiffs claimed to have derived title to the estate of Manraj are of such a character that no Court of Justice ought to assist them in the enforcement of their rights. The validity of the contention of the respondent must be determined with reference to the principles laid down by their Lordships of the Judicial Committee in a long series of decisions. In the case of Fischer v. Kamala Nicker 8 M.I.A. 170, at p. 187 : 3 W.R. (P.C.) 33 Sir John Coleridge observed that the champerty or maintenance to be open to objection must have the qualities attributed to it by the English law, that is, it must be something against good policy and justice, something tending to promote unnecessary litigation, something that in a legal sense is immoral and to the constitution of which a bad motive in the same sense is necessary. To determine this, it is necessary, therefore, to look at the substance of the transaction and not merely the language of the instrument. Again in Chedambara Chetty v. Renga Krishna Muthu Vira Puchaiya Naicker 1 I.A. 241 at p. 264 : 22 W.R. 148 : 1 B.L.R. 509. Sir James Colvile stated that although the English law of champerty had not been extended to India, the test that would be applied is-whether the transaction is merely the acquisition of her interest in the subject of litigation bona, fide entered into or whether it is an unfair or illegitimate transaction got up for the purpose merely of spoil or litigation, disturbing the peace of families and carried on for a corrupt or improper motive. It was further laid down that : "it would be contrary to every sound principle of justice and policy to permit a person who had acquired an irregular interest in a suit and a power which cannot be safely conceded to any speculator to make his power of preventing a family arrangement so: just and proper the means of extorting large, sums of money from the person whose title has been unjustly challenged." The same question was elaborately examined in Ram Coomar Coondoo v. Chunder Canto Mookerjee 4 I.A. 23 : 2 C. 233 where Sir M. Smith reviewed the earlier decisions on the subject and came to the conclusion that, although the English law of Maintenance and Champerty had not been introduced into India, contracts of this character might, under certain circumstances, be held invalid as against public policy. It was -pointed out that a fair agreement to supply funds to carry on a suit in consideration of having a share in the property, if recovered, ought not to be regarded as per se opposed to public policy for cases may be easily supposed in which it would be, in furtherance of right and justice, necessary to resist oppression that a suitor who had a just title to property and no means except the property itself should be assisted in this manner. But agreements of this kind ought to be carefully watched and when found to be extortionate and unconscionable so as to be inequitable or to be made not with the bona fide object of assisting a claim believed to be just and of, obtaining a reasonable recompense therefor, but for improper objects, as for the purpose of gambling in litigation or of injuring or oppressing others by encouraging unrighteous suits so as to be contrary to public policy-effect ought not to be given to them. To the same effect are the decisions of their Lordships in Raghunath v. Nil Kanth 20 I.A. 112 : 20 C. 843 and Baja Mokham Singh v. Raja Rup Singh 20 I.A. 127 : 15 A. 352. In both these cases the question of the validity of an agreement of the description now before us arose as between the transferee and the transfer. In the first of these cases it was found by the Court of Appeal below that the value of the property agreed to be transferred was much in excess of the amount spent in litigation for the recovery thereof. A decree was consequently made, not for the specific performance of the agreement which was found extortionate and inequitable, but only for payment of compensation to cover the legitimate expenses incurred in the litigation. This view was affirmed by the Judicial Committee. In the second case, it was found that the consideration for the transfer was considerably less than the true value of the property dealt with. The transferor who succeeded in the litigation with the aid of the champertor declined to give him either the property convoyed or damages sufficient to cover the costs of the litigation. The Court of Appeal below held that the chanipertor was entitled to a decree for the amount of money actually advanced with interest thereon, but not to the reward actually stipulated for, which in the circumstances was excessive and unconscionable. This view was affirmed by the Judicial Committee. The question arose again in the case of Lala Achalram v. Kazim Husain 32 I.A. 113 : 27 A. 271 : 9 C.W.N. 477 : 15 M L.J. 197 : 8 O.C. 155 to which we have already referred. In that case the claimant to the estate transferred a moiety share to the champertor ostensibly for a sum of a lakh and a-half rupees. In the conveyance he acknowledged receipt of one lakh; the balance of rupees fifty thousand, it was decided, was to remain on deposit with the champertor to be expended in prosecuting a proposed suit and in paying a monthly stipend to the transferor and his mukhlear. The title upon which the litigation was commenced was established by the evidence. The transferor, however, compromised the matter and withdrew from the suit which was carried on in respect of the half share of the estate by the champertor alone. The person in possession resisted the claim of the champertor on the ground, amongst others, that the consideration recited in the conveyance was untrue and that a substantial portion of it still remained unpaid. This objection was overruled. The Judicial Committee held that, though the consideration had not been paid to the transferor as recited in the conveyance, and although, therefore, the transferor might have a grievance against the champertor, the champertor was entitled to succeed. It was observed that, apart from the untrue recital in the sale-deed, there was no fraud in the transaction. Without his assistance the transferor could not have prosecuted his claim. There was nothing extortionate or unreasonable in the terms of the bargain; there was no gambling in litigation; there was nothing contrary to public policy. The transaction was, in essence, a present transfer by the person ultimately found to be the true owner of a a-half share of his interest in the estate, which vested in the transferee a good title and made it competent for him to sue. Substantially the same view was affirmed by the Judicial Committee in Bhagabat Doyal v. Debt Dayal 35 L.A. 48 : 35 C. 420 : 12 C.W.N. 393 : 10 Bom. L.R. 230 : 7 C.L.J. 335 : 5 A.L.J. 184 : 18 M.L.J. 100 : 3 M.L.T. 344 : 14 Bom.L.R. 49. In that case the purchase money was fixed at Rs. 52,600 of which only Rs. 600 was paid down and the balance was payable only on the event of the vendee's success in recovering the property in suit. The transferor and the transferee jointly sued to recover possession. On behalf of the person in possession an objection was taken that the transfers were inoperative in law as they were champertous and contrary to public policy. This contention was upheld by this Court, but overruled by the Judicial Committee. Their Lordships referred to the case of Lala Achalram v. Kazim Hosain 32 I.A. 113 : 27 A. 271 : 9 C.W.N. 477 : 15 M L.J. I97 : 8 O.C. 155 and held that the transaction was not contrary to public policy and not void on that ground. As regards the further objection that the transaction was an unfair and unconscionable bargain for an inadequate price, their Lordships. held that that was entirely a question between the assignor and the assignee and that it was consequently unnecessary to consider what the decision ought to have been in a litigation between the assignor and the assignee in which the former might seek to repudiate the assignment. Their Lordships held that the attack upon the title of the champertor on the ground that the transaction was opposed to public policy and was an unconscionable bargain could not be supported.