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Judgment
Ramakrishnan, J.—This is an appeal against the judgment and decree of the learned District Judge of Kanayakumari in O.S. No. 174 of
1950. The plaintiff and the first defendant were the owners of a rice mill known as the Janaki Mills, situated in Nagar-coil Town. The first
defendant filed a suit against the plaintiff in O.S. No. 994 of 1113 (M.E.) in the Nagar-coil Munsif''s Court, for dissolution of partnership and
accounts and that suit was compromised on 9-5-1124 (M.E.). The second defendant an Advocate, practising in Nagarcoil, was appointed
receiver during the pendency of the suit; and he was in possession of the above mentioned rice mill for a period of about six years until the plaintiff
obtained possession through Court on 6th March 1125 (M.E.). The plaintiff alleged that during the period when the aforesaid Receiver was in
possession of the mill, various materials were found missing. The plaintiff also alleged that defendants 1 and 2 colluded together and removed the
above materials with a view to obtain wrongful gain and cause wrongful loss to the plaintiff. The value of the parts thus found missing, was assessed
at Rs. 4592; and the plaintiff filed the suit against the first defendant and against the second defendant (Advocate-Receiver) for a decree for the
above sum of money as damages together with subsequent interest.
The first defendant alleged that as the plaintiff was unlawfully selling parts of the mill, he had applied for the appointment of a Receiver for the
mill. It was untrue that he colluded with the second defendant and removed any of the articles. The plaintiff without any cause of action against this
defendant attached his moveable before judgment. Therefore, the plaintiff should pay damages to the first defendant.
The second defendant admitted his taking possession of the mill as Receiver, in the prior suit in the Nagarcoil District Munsif''s Court. Until he
obtained possession, the plaintiff was in possession. He did his best as Receiver to see to the safe custody of the articles entrusted to him. On his
motion, a watcher was appointed to look after the premises. Due to the apathy of the plaintiff, and the first defendant, there were thefts in the mill,
and the second defendant made timely approach to the Court, and necessary action was taken therefore It was alleged that, in any event, the value
given to the missing articles was excessive.
The Learned District Judge who tried the suit found that the plaintiff had no cause of action against the first defendant and no proper grounds for
suing him. As regards the second defendant the finding of the learned District Judge was that though there was loss of the articles from the mills due
to theft, it had not been proved that such loss was caused by the willful default or gross negligence of the receiver, second defendant. Therefore,
the plaintiff could get no relief either against the first defendant or against the second defendant. The suit was dismissed. The learned District Judge
also found that since the plaintiff had filed the suit against the first defendant, without any proper reason, and had also obtained an order of
attachment of the first defendant''s properties before judgment without proper reason, the plaintiff was liable to pay Rs. 100 as damages to the first
defendant. In the result, the suit, as already stated, was dismissed with costs of the contesting defendants, and the plaintiff was also ordered to pay
Rs. 100 by way of damages to the first defendant for attachment before judgment on insufficient grounds.
From the above decision the appeal is filed by the plaintiff. The plaintiff urged two contentions. The first was that the finding of the lower Court
that there was no default or willful negligence on the part of the Receiver, second defendant, is incorrect and therefore, the plaintiff should be given
relief by way of damages against the second defendant. It was next urged that the direction of the Court below ordering the plaintiff to pay
damages to the first defendant was improper and should be set aside.
The points for determination in the appeal are : (1) What were the articles missing from the mills during the time when the second defendant had
possession of the mill as Receiver, and what is their value? (2) Is the second defendant responsible and liable to account for such loss ? (3) Is the
order of the Court below directing the plaintiff to pay damages to the first defendant, justified and, if so, what is the quantum of damages to be
awarded ? (4) To what relief?
Points 1 and 2 :
* * * *
I therefore find points (1) and (2) against the appellant.
As regards point (3), the learned District Judge has made the following observations at the end of paragraph 15 of his judgment:
In my opinion plaintiff will have to pay damages to defendant 1 for the attachment before judgment, as the plaintiff had absolutely no proper reason
to sue defendant 1 or to obtain an order of attachment before judgment. I would therefore award Rs. 100 as damages to defendant 1.
(16) In the result the suit is hereby dismissed with costs. Plaintiff will pay defendant 1 Rs. 100 by way of damages for the attachment before
judgment.
This direction was objected to by the learned Counsel for the appellant. He observed, in the first place, that attachment before judgment is
obtained under O. 38, R. 5, C. P. Code. The provision for giving compensation is found in S. 95, S. 95 contains two Clauses (a) where has been
an attachment before judgment, and it appears to the Court that the attachment (before judgment) was applied for on insufficient grounds; or (b)
when there has been an attachment before judgment and the suit of the plaintiff fails and it appears to the Court that there was no reasonable or
probable grounds for instituting the same. In either of these cases the defendant may apply to the Court and the Court may on such application,
award against the plaintiff, by its order, an amount not exceeding Rs. 1000 as compensation to the defendant. It is also clear from S. 104 (1) (g) of
the Code, that an order under S. 95 is appeal able and that the appeal is an appeal against an order.
The gist of the above provisions would indicate that an order under S. 95 has to be passed as an order collateral to the decree or decision in the
suit; and it is appeal able under S. 104, C. P. C. Such appeals are treated as appeals from orders and not appeals from decrees. No special
provisions are made for the procedure to be followed in dealing with an application under S. 95. But an application is necessary for the purpose,
but such application may form even part of a counter, but the Court has however to become seized of the matter before it could proceed [vide
Subraya v. Venkatarama AIR 1917 Mad. 885] But it is clear from the above provisions that the Court cannot provide for grant of compensation
under S. 95, as part of the suit, and embody its decision while passing the decree in the suit. Since it is a collateral proceeding leading to an order
independent of the decree in the suit, and from which an appeal as if from an order had been provided for in the Code it stands to reason, that after
the Court has been seized of this application (whether by way of an independent application or by way of claim in a counter as pointed out in the
above decision), a formal notice should be given to the aggrieved party, his objection heard, and then an order passed. But the learned District
Judge has not adopted this course, but has treated the proceeding as part of the suit itself, and made the direction for payment of compensation,
part of the decree in the suit. It appears to me that this procedure is open to objection, because it does not appear to comply with the relevant
provisions of the Code, which contemplate an independent enquiry followed by an order independent of the decree in the suit. The matter does not
appear to be merely one of form, but also of substance, because it was necessary to give an opportunity to the plaintiff to meet the claim for
damages in a proceeding, which though it arises out of the suit, appears to be also independent of the suit. I therefore allow the claim of the plaintiff
so far as it relates to the award of damages and direct that the order directing payment of damages be set aside. In the result the appeal is allowed
in part and the order of the Court below directing the award of damages to the first defendant is set aside. It is dismissed in other respects. The
parties will pay and receive proportionate costs in this appeal.