Swaminatha Pillai vs Krishna Padayachi and Others

Alfred Henry Lionel Leach, C.J.—The question involved in this appeal is whether the appellant shall be allowed to profit by a ""scheme (for

which he himself was responsible) to defeat the provisions of Rule 16 of Order 21 of the Code of Civil Procedure. One Srinivasa Aiyangar

obtained a money decree against the appellant and one Idumban Chettiar. The appellant had become the surety for money owing by Idumban

Chettiar and the decree was obtained in a suit filed to enforce repayment of the loan. In order to avoid execution proceedings being instituted

against him the appellant paid the decree-holder, and naturally he desired to recover the amount from the principal debtor. Instead of adopting the

proper course, which was to file a suit against Idumban Chettiar, the appellant arranged with the decree-holder to transfer the decree to one

Murugesa Padayachi. The decree-holder, having been paid, raised no objection to this course. It has been established that Murugesa was acting as

the benamidar for the appellant, who hoped that with the decree standing in the name of a stranger to the suit he would be able to execute it against

Liumban Chettiar. The second proviso to Rule 16 of Order 21 of the CPC states that where a decree for the payment of money against two or

more persons has been transferred to one of them, it shall not be executed against the others. As Murtigesa was actually the appellant''s benamidar

the transfer of the decree meant the transfer to the appellant himself. The appellant was not entitled to do something in the name of a dummy which

the law does not allow him to do in his own name.

While Murugesa was the ostensible owner of the decree he sold it to Krishna Padayachi, the respondent. The respondent paid Rs. 1,000 as the

consideration. He had no inkling of the appellant''s claim and throughout acted in good faith. At any rate, that is the effect of the finding of the first

appellate Court and its decision on the question of fact is binding upon us. The respondent having become the transferee of the decree he wished

to execute it against the appellant and accordingly instituted execution proceedings in the Court of the District Munsif of Kumbakonam. The

District Munsif held that he was not entitled to an order in execution, but on appeal to the Subordinate Judge of Kumbakonam this decision was

reversed. The appellant then appealed to this Court, but King, J., agreed with the Subordinate Judge and dismissed the appeal. The present appeal

has been filed under the provisions of Clause 15 of the Letters Patent, the learned Judge having given the necessary certificate.

Mr. T.V. Muthukrishna Aiyar conceded that in obtaining a transfer of the decree in the name of Murugesa the appellant was guilty of what in

law amounts to a fraud. His object was no doubt to escape the payment of the court-fee which a suit to recover from the principal debtor would

involve, but in view of the very emphatic provision contained in the second proviso to Rule 16 of Order 21 the appellant was clearly not entitled to

do what he endeavoured to do. The reason given by King, J., for dismissing the appellant''s appeal was that he had allowed Murugesa to appear

as the owner of the decree and consequently the principle embodied in Section 41 of the Transfer of Property Act applied. That section only

relates to immovable property, but the principle has been applied where movable property has been sold to a bona fide purchaser for value by the

ostensible owner. The learned judge in the course of his judgment drew attention to the judgment in Gregg v. Wells (1839) 10 Ad. & E. 90 : 113

E.R. 35. That the principle can be applied to movable property as well as to immovable property cannot be doubted. In fact the principle is

embodied in Section 27 of the Sale of Goods Act.

Even if it were to be assumed that the appellant''s action in obtaining a transfer of the decree in the name of Murugesa was justifiable and that he

can be regarded as an innocent party this would not help the appellant. The principle stated in Lick-barrow v. Mason (1787) 2 T.R. 63 : 100 E.R.

35 would then apply. Wherever one of two innocent persons has to suffer by the act of a third person the person who has enabled the third person

to occasion the loss must sustain it. The appellant certainly allowed Murugesa to hold himself out as the holder of this decree and having done so

he cannot be preferred to the respondent who bought the decree for valuable consideration and in full good faith. The appellant has only himself to

blame for the position in which he finds himself. He could have avoided having to pay the decretal amount twice over, as he now has got to do, if

he had not attempted to get round the provisions of Order 21, Rule 16. We consider that the decision of King, J., is in accordance with law and

consequently this appeal must be dismissed with costs in favour of the first respondent.