AI Structured Summary
Not yet generated for this judgment
Judgment
M. Natesan, J.—This is an appeal under the Letters Patent from the decision of our learned brother Venkatadri, J., confirming the judgment
of the Court of the first instance. Plaintiffs 1 and 2 are the appellants. The facts of the case are within a narrow compass. The suit statedly one for
partition is in fact and substance an attempt by a Hindu son to free his share in the family properties from a debt incurred by his father. Defendants
1 and 2 in the suit are brothers and members of a joint Hindu family. The first plaintiff is the son and the second plaintiff, the daughter of the second
defendant. The third plaintiff is the wife of the second defendant while the fourth plaintiff is the wife of the first defendant. A daughter of the first
plaintiff figures as the fifth plaintiff. The tenth defendant in the suit is the Official Receiver in the insolvency of defendants 1 and 2 and the remaining
defendants are creditors and decree-holders. The only debt that is really under challenge is the decree debt in O.S. No. 392 of 1955 on the file of
the Subordinate Judge''s Court, Coimbatore, for a sum of Rs. 18,000 in favour of defendants 3 to 5. These defendants are the sons of one
Rangaswami Naicker, brother of the mother of defendants 1 and 2. ''It emerges-from the evidence that on the death of Rangaswami Naicker in or
about 1946 leaving defendants 3 to 5 minors defendants 1 and 2, in view of their close relationship, assumed the management of the properties of
defendants 3 to 5 but-failed duly to account for the income and profits from the properties of defendants 3 to 5. It is common ground that
defendants 1 and 2 were in possession of the properties, of defendants 3 to 5 for about six years. It is stated for these defendants that by
unauthorised application of their funds defendants 1 and 2 added to their own'' wealth and acquired the suit house and improved their dry lands,
sinking a well at a heavy cost. Later on defendants 3 to 5 coming of age and insisting upon an accounting for the assets handled by defendants 1
and 2 at a mediation it was decided that defendants 1 and 2 should take all the then standing crops, retain the cattle and moveables in their
possession and pay defendants 3 to 5 a sum of Rs. 20,000. It is this liability that formed the consideration of a promissory note which resulted in
the decree of Court in O.S. No. 392 of 1955. In the suit on the promissory note defendants 1 and 2 raised Various contentions; but eventually
settled the claim for a sum of Rs. 16,000 taking three months'' time to pay. The mediation was on 1st June, 1952 and the promissory note for the
sum of Rs. 20,000 which defendants 1 and 2 had to pay was executed on 9th July, 1952. It transpires that shortly after the mediation there was a
criminal complaint by the third defendant charging the present second defendant with offences under Sections 324,325, 404 and 384, Indian Penal
Code. Actually the complaint was taken on file only under Sections 404 and 384, Indian Penal Code. In his sworn statement then recorded the
third defendant stated that the accused, the present second defendant, was managing his affairs and properties after the death of his father, and that
he took over the stock of timber the deceased had left and made use of it for construction of his own house. The complaint set out that at a
panchayat held on 1st June, 1952 the accused had agreed to execute a security bond over his terraced house and dry land in a sum of Rs. 20,000
the amount being payable to defendants 3 to 5 within a year. From the calendar and judgment of the criminal case C.C. No. 837 of 1952 on the
file of the Third City Sub-Magistrate, Coimbatore, it is seen that the case was taken up for trial on nth October, 1952 and the accused discharged
u/s 253(1), Criminal Procedure Code, finding that no case was made out. The accused is shown to have been apprehended only on that date i.e.,
on nth October, 1952. The order shows that the complainant examined himself as P.W. 1 and deposed that the accused was his uncle, and that
the matter being a family dispute the relatives were unwilling to take part in the case. The complainant deposed also about the panchayat. He stated
that the panchayatdars were refusing to depose in the matter, and that he had no other witnesses to examine. It is in this background that the
appellants question the validity of the debt under two counts: first, it is contended that the promissory note came into existence while a prosecution
had been launched against the second defendant, that the promissory note Was intended to stifle the pending criminal prosecution, and that so it
was vitiated as opposed to public policy. Secondly it is contended that the debt incurred was an auyavdharika one and that therefore the debt
cannot bind the son. The plaint, of course, contains the usual reckless and meaningless allegations particularly in the context of the case that
defendants 1 and 2 neglected their family, that they colluded with defendants 3 and 4, and that the suit O.S. No. 392 of 1955 was itself a collusive
suit on a promissory note without any consideration. The Subordinate Judge found that the promissory note was binding on the plaintiffs, that the
suit was not collusive, and that the decree was not vitiated in any manner. Our learned brother Venkatadri, J., has on an elaborate consideration of
the law applicable in the matter and in the light of the facts that emerged from the record, affirmed the decree of the trial Court and dismissed the
appeal. It is held that there is absolutely no evidence to connect the criminal prosecution with the execution of the promissory note. The only
Witness for the plaintiff in the suit, the mother of the plaintiffs, as P.W. 1 does not even whisper a Word about the circumstances under which the
promissory note came into existence. It is pointed out by the learned Judge that she does not depose to any coercion, undue influence or pressure
being brought upon the second defendant to get him execute the promissory note. The fourth defendant has spoken in detail about the management
of the estate by defendants 1 and 2, the circumstances under which the promissory note came to be executed, the suit thereon and the compromise
decree. One of the panchayatdars had been examined as D.W. 4. Defendants 1 and 2 have not gone into the witness-box. In these circumstances
our learned brother remarked that there was no direct evidence to connect the promissory note With the criminal prosecution.
Before us learned Counsel for the appellants the son and daughter of the second defendant, strenuously contended that as it has been made out
that a criminal prosecution was pending against the second defendant and the promissory note had been Executed pending the criminal
prosecution, it was not only a legitimate but a necessary inference that the promissory note Was executed in consideration of dropping the criminal
prosecution, scuttling it by not prosecuting it. Learned Counsel contended that the proper inference in this case should be that the launching of the
prosecution and the execution of the promissory note Were related to each other as cause and effect. According to learned Counsel the fact that
the complainant had appeared at the trial of the criminal case and examined himself as P.W. 1 Was not of much significance; nor the fact that the
Sub-Magistrate had discharged the accused-holding that no case was made out a material factor in the examination of the question whether the
promissory note was given in consideration of withdrawal of the prosecution. Learned Counsel points out that in the very nature of things there will
not be direct evidence, and that it is a matter for inference from circumstantial evidence. According to learned Counsel the sequence of events and
the blind admission of the complainant in the criminal Court that his witnesses would not help him are telltale and indicative that the prosecution was
not pressed for the reason that the complainant had had consideration for the same.
Agreements for stifling prosecutions are well-known classes of agreements which the Court refuses to enforce as falling u/s 23 of the Contract
Act. It is based on the principle that no man shall trade on felony, If the accused person is innocent, the law is abused for the purpose of Extortion,
and if he is guilty in fact, the law is eluded by a corrupt compromise screening the criminal for a consideration. The offences for which the complaint
was taken on file are under Sections 384 and 404, Indian Penal Code, which are not compoundable and an agreement made for the purpose of
stifling the prosecution in the case, if made out; would certainly invalidate the promissory note. But, for Section 23 of the Contract Act to apply, the
dropping of the criminal prosecution must be at least a part of the consideration for the promissory note. It is pointed out by Venkataramana Rao,
j., in Veerayya v. Sobhanadri ILR (1937) Mad. 471:
But I think the true rule is that where there is an existing debt or an obligation, a creditor is not precluded from taking any security therefore by
threat of a criminal prosecution and the security is not vitiated by the fact that he Was induced to abstain from prosecuting the debtor. But if it is a
part of the bargain that the creditor should not prosecute the debtor, the security taken for the debt Will be invalid.
The test is, did the dropping of the criminal prosecution form a part of the bargain for the agreement or giving of the promissory note. The giving up
of the prosecution need not necessarily be the sole consideration. There may be an antecedent obligation. It is enough if while giving security for the
antecedent obligation the dropping of the criminal prosecution is made a part of the bargain. In Kamini Kumar Basu v. Birendra Nath Basu where
there was a dispute as to title to a property and there Was also a pending criminal prosecution relating to the same, the Judicial Committee in
invalidating a reference to arbitration observed thus:
The real question involved in this appeal on this part of the case is whether any part of the consideration of the reference or the ekrarnama was
unlawful and... if it was an implied term of the reference, or the ekrarnama that the complaint would not be further proceeded with, then in their
Lordships'' opinion the consideration of the reference or the ekrarnama, as the case may be, is unlawful.
When there is no pre-existing obligation, the inference that the security or note was given in consideration of dropping the prosecution may in a
given case be patent-But when there is a pre-existing legal obligation and the security or note is given for it, it must be made out from the evidence;
true, the evidence will normally be circumstantial and it may be by necessary implication that it is a part of the consideration to drop the criminal
proceedings. In Jones V. Merionethshire Permanent Benefit Building Society (1892) 1 Ch. 173 , Bowen, L.J., points out that reparation for an
obligation is a duty which the offender owes quite independently of his fear of prosecution or otherwise and that it would be absurd to lay down as
an impossible Counsel of perfection that the obligee or the relatives of an Offender and his friends are not justified in making reparation to the party
injured. The learned Lord Justice emphasises that the abstention from or the dropping of the criminal prosecution should not be made a matter of
bargain. If reparation takes the form of a bargain the bargain is one which the Court will not enforce. Lord Atkin refers again to this principle in
AIR 1941 95 (Privy Council) and points out:
But it is also of course necessary that each party should understand that the one is making his promise in exchange or part exchange for the
promise of the other not to prosecute or continue prosecuting.
Lord Atkins also points out that undue weight should not be given to the fact of the existence of a real obligation. It is observed:
In this class of case that fact seems irrelevant if the agreement to abandon a prosecution is part of the consideration for payment of the debt. In
most cases of this kind there is a debt or a liability. Indeed if there were not, a demand and receipt of money in consideration of refraining from or
withholding a prosecution would apparently in itself be a criminal offence.
These principles are again the subject of detailed re-statement in the Supreme Court by Gajendragadkar, J. (as he then was) in V. Narasimha Raju
Vs. V. Gurumurthy Raju and Others, where it has been pointed out that all that is required of the parties to impeach the validity of an agreement to
settle the criminal proceedings is to give evidence from Which the inference necessarily arises that part of the consideration was unlawful, and that
the consideration for the agreement was withdrawal and non-prosecution of a criminal complaint.
Learned Counsel for the appellants has not made out in this case circumstances So clinching as to necessarily warrant the inference that it is a
part of the bargain When the promissory note was executed that the criminal prosecution should not be proceeded with. True the criminal
complaint was filed on 10th June, 19582 and the promissory note Was executed on 9th July, 1952. The case was heard only on nth October,
1952; The record shows that the accused was apprehended only on that date. It is not made out in the evidence that the second defendant was
even aware of the fact that criminal complaint had been filed and was pending when he executed the promissory note. To avoid the promissory
note, it has to be established that it is a part of consideration that the criminal proceeding should be discontinued. That cannot be made out and
there can be no consensus ad idem for a bargain if the second defendant had no knowledge of the pendency of the criminal proceedings. Unless he
is aware of the pendency of the criminal proceedings, withdrawal of the same cannot be held to form part of the consideration for the promissory
note. In the present case defendants 1 and 2 have remained ex parte and have not been examined. No attempt has been made to show that the
second defendant was aware of the pendency of the criminal proceedings when the promissory note was executed. There is another aspect of the
matter and it has a material bearing on the question under consideration. The defence that the promissory note was unenforceable as secured in
consideration at least partly for stifling a criminal prosecution was as much available to the second defendant as to the plaintiffs. It would have
been, if tenable on the merits, a strong and powerful plea in defence to the action on the promissory note in the suit, O.S. No. 392 of 1955. The
plaintiffs have attempted in the plaint to get round the reasonable inference following from the decree on the promissory note by pleading inter alia
that defendants 1 and 2 had been prevented by defendants 3 to 5 in substantiating their defence in that suit by using wrongful means and pressure
and threatening defendants 1 and to consent to a decree. But these charges have not been made out in the evidence, and even the written
statement in that case has not been placed on record now. Learned Counsel strongly relied on an observation in the judgment of the Subordinate
Judge that it was clear that the complainant did not prosecute the complaint. The learned Subordinate Judge rejected the evidence of the 4th
defendant as D.W. 1 that the complaint was dismissed because the complainant was not able to prove the same. For one thing the inference of the
learned Subordinate Judge is not a necessary inference on the facts. No doubt the complainant had pleaded his inability to let in further evidence. It
does not necesarily follow that the complainant abstained from proceeding further in the matter as a part 6f the bargain he had with the second
defendant. Even assuming that the third defendant was lukewarm in the prosecution after having secured the promissory note, that would not be
Sufficient to vitiate the promissory note. His subsequent attitude or his motive in not proceeding further with the prosecution after launching it will
not render the promissory note unenforceable if withdrawal of the prosecution was not a part of the bargain. In V. Narasimha Raju Vs. V.
Gurumurthy Raju and Others, , this distinction is noticed. It is observed:
This is not a case where it can be reasonably said that the withdrawal-of the criminal case may have been a motive and not the consideration by the
impugned transaction.
The sequence of events in the present case is not so close nor is the withdrawal of the prosecution so interlinked with the execution of the
promissory note as to lead to a reasonable inference that one must have been the consideration at least in part of the other. The first point therefore
fails.
Coming to the plea that the debt is an Avyavaharika debt and therefore not binding on the son, here again We see no reason to differ from the
conclusion of our learned brother. When the father of defendants 3 to 5 died leaving them minors, defendants 1 and 2 took possession of the
properties for the purposes of management. It has not been made out in the evidence nor is such a case pleaded in the plaint that the original entry
on the properties by the defendants was unlawful and in trespass. They entered on the properties to manage the same on behalf of and for the
benefit of the minors. Only they have failed to duly account for the proceeds from the properties and it is this liability that was settled at the
Panchayat in a sum of Rs. 20,000. The promissory note was for this amount of Rs. 20,000. We can see nothing Avyavaharika in this liability.
Colebrooke''s translation of the expression ""Avyavaharika"" as meaning ""debts for a cause repugnant to good morals,"" has been generally accepted
as the nearest approach to the true conception of the term. Under the Hindu Law a son is under a pious obligation to discharge his father''s, debts
out of his ancestral property even if he had not been benefited by the debts, provided the debts are not Avyavaharika. The sons get exonerated
from their obligation to discharge the debt of their father from the family assets only if the debt was one tainted with immorality or illegality. The
duty that is cast upon the son being religious and moral, the liability of the son for the debt must be examined With reference to its character when
the debt was first incurred. If at the origin there was nothing illegal or repugnant to good morals, the subsequent dishonesty of the father in not
discharging his obligation will not absolve the son from his liability for the debt. In AIR 1943 142 (Privy Council) the Judicial Committee observes:
It also appears to be clear on principle and on authority, that examination of the nature or character of the debt should be made with reference to
the time when it originated, in other words, when the liability was first incurred by the father. If, on such examination, it is found that at the inception
the debt was not tarnished or tainted with immorality or illegality, then it must. be held that it would be binding on the son.
In Natasayyan and Another Vs. Ponnusami Nadan, , which finds approval in AIR 1943 142 (Privy Council) , a decree was passed against a
Hindu for money dishonestly retained by him from ""the plaintiff''s family to which he was accountable in respect of it. The judgment-debtor having
died, the decree-holder sought to attach in execution, property of the family which had passed into the hands of his sons by survivorship. The sons
objected to the attachment challenging the debt as immoral and illegal in the suit to which the creditor was referred. While terming the action of the
father in not accounting for the sums which he had collected as dishonest, it is observed in that case that the dishonesty was not of such a nature as
to absolve the defendants, that is, the sons, from their pious obligation to discharge their father''s debts. The learned Judges observe in Natasayyan
and Another Vs. Ponnusami Nadan, .
Upon any intelligible principles of morality a debt due by the father by reason of his haying retained for himself money which he was bound to pay
to another would be a debt of the most sacred obligation and for the non-discharge of which punishment in a future state might be expected to be
inflicted, if in any. The son is not bound to do anything to relieve his father from the consequences of his own vicious indulgences, but he is surely
bound to do that which his father himself would do were it possible, viz., to restore to those lawfully entitled money he has unlawfully retained.
In AIR 1943 142 (Privy Council) , above cited the Judicial Committee expressed their concurrence with the aforesaid view and with reference to
the case before them their Lordships observe:
The subsequent dishonest conduct of Danpal, which led to the suit and the decree so much relied upon by the Courts in India and made the basis
of their decision, cannot in their Lordships'' View affect the nature of the father''s debt which at its inception was a just and true debt. As no such
immorality or illegality in the nature of the original debt as would absolve them from the obligation to discharge it has been shown by the
respondents, the debt sought to be realised is not an Avyavaharika debt...
In Gurunathan Chetty v. Raghavdu Chetty ILR (1908) Mad. 472, a Bench consisting of Sir Arnold White, C.J. and Wallis, J., with reference to a
case where an undivided Hindu father acted as the administrator of an estate and was made liable for moneys received by him and not properly
accounted for, affirming the liability of the son for the debt it is observed:
The evidence is not in our opinion sufficient to warrant us in holding that the failure by the third defendant to account as an administrator amounted
to a criminal offence.
The question has received a detailed consideration by a Full Bench of the Andhra Pradesh High Court in Venkateswara Tentple v. Rddhakrishna
(1963) 1 A. W.R. 308 : AIR 19636 A.P. 425, Chandra Reddy, C.J., who delivered the judgment of the Bench, summarised the position thus:
What emerges from these rulings is that a son could claim immunity only where the debt in its origin was immoral by reason of the money having
been obtained by the commission of an offence, but not where the father came by the money lawfully but subsequently misappropriated it. It is only
in the former case that the debt answers the description of an Avyavaharika debt. If originally the taking was not immoral, i.e., if it did not have a
corrupt beginning or founded upon fraud, it could not be characterised as an Avyavaharika debt and the son could not be exempted from satisfying
that debt. The supervening event, namely, the misappropriation later on would not change the nature of the debt. The vices should be inherent in
the debt itself.
When examined in the light of the abovesaid principles, it is impossible to hold that the liability evidenced by the decree debt in O.S. No. 392 of
1955 is Avyavaharika in character. It is not even pleaded in the plaint that the original entry by defendants 1 and 2 on the properties of defendants
3 to 5 was trespass or otherwise unlawful and illegal. They had taken up management of the properties for all appearances and ostensibly bona
fide in the interests of defendants 3 to 5 who were minors, and closely related. They had been in management of the properties for over six years
and their accountability for the management Was settled at a panchayat. They were found liable to account for a sum of Rs. 20,000. Ex facie it is a
civil liability to account, which was quantified and settled by a panchayat. The origin of the liability is not repugnant to good morals. The second
defendant appears to have acted as a de facto guardian for the minors. As and when the second defendant assisted by the first defendant realised
money from the estate, his obligation to account to the minors arose. His later failure to account may be dishonest, but that cannot alter the original
character of the obligation and made it criminal even initially. We agree in the circumstances with the conclusion of our learned brother confirming
the judgment of the trial Court that the promissory note was Executed for amounts lawfully due and payable by defendants 1 and 2 to defendants 3
to 5, that the debt at its inception Was lawful and therefore binding on the plaintiffs.
In the result the appeal fails and is dismissed with costs.