LORD LINDLEY, LORD MACNAGHTEN, SIR ANDREW SCOBLE, SIR ARTHUR WILSON
body1903
DigiLaw.ai
Judgement Appeal from a decree of the High Court (Jan. 26, 1900) reversing a decree of the District Court of South Arcot (Nov. 8, 1898). To a suit brought under the circumstances stated in their Lordships judgment by the appellant to recover the amount of a decree (March 20, 1896) which he had obtained on a promissory note and for balance of an account in the Court at Pondicherry, and the costs of the execution proceedings thereon which had failed of effect, the first respondent pleaded (1.) that the District Court had no jurisdiction to entertain the suit as he did not reside within the jurisdiction of the said Court at Arcot, and had never carried on trade within the said jurisdiction, and, therefore, was not subject thereto ; (2.) that the appellant had obtained the promissory note by fraud, and had fraudulently instituted the suit in the Court at Pondicherry against him; (3.) that both the note and the decree Were invalid, and that the plaintiff was entitled under the French law only to a dividend like other creditors holding simple debt bonds. In a later written statement he alleged that the insolvency of the firm of which he was a partner was declared by the French Court to date from January 8, 1896 ; that according to the French law all transactions entered into by the insolvent debtor and all decrees obtained against him from a date ten days prior to January 8, 1896, became null and void. The receiver under the French Court of the first respondents firm in liquidation pleaded that the Pondicherry decree was null and void by reason of the fact that the said firm had been declared insolvent on July 20, 1896, and that by a subsequent decree of the French Court it was to have been considered to have become insolvent as from January 8, 1896. The District Court of South Arcot found that the first respondent was carrying on business at Cuddalore within the meaning of s. 17 at the date of suit, and that he was subject to the jurisdiction, and he decreed the full amount claimed with costs. The High Court reversed this finding.
The District Court of South Arcot found that the first respondent was carrying on business at Cuddalore within the meaning of s. 17 at the date of suit, and that he was subject to the jurisdiction, and he decreed the full amount claimed with costs. The High Court reversed this finding. They said " The ground on which the plaintiff contended that the District Court of South Arcot, at Cuddalore, had jurisdiction over the defendant was that he carried on business within its jurisdiction (s. 17 of the Code of Civil Procedure). The business carried on, according to the plaint, was a money-lending business, but at the trial no attempt was made to support this. The oil business on which the plaintiff relies was commenced in 1894, two years after the partial severance had been effected, and it is, therefore, unlikely that the defendant would have consented to such a business being carried on as a joint business. Nor is there any sort of evidence that he did. On the contrary, the conduct of the parties concerned is absolutely inconsistent with the view that the oil business was a business in which the defendant had a joint interest." The High Court also held that " so long as the adjudication of the insolvency remains in force, no suit could be brought against the first respondent in French territory. Such being the insolvents position in French territory, it must be held to be the same outside that territory, in a case such as this. The decision of the Privy Council in Quelin v. Moisson (1 Knapp, 265.), which was a case on all fours with this, is a direct authority in support of the above view." Cohen, K.C., and J. M. Parihhy for the appellant, contended that there was sufficient evidence to justify the District Judge in concluding that the conditions of s. 17 had been sufficiently satisfied to give the District Court jurisdiction over the defendant. They referred to ss. 17 and 20 of the Procedure Code; ss. 38 and 57 of the Indian Evidence Act; Muthaya Chetti v. Allan (( 1880) Ind. L. R. 4 Madr. 209.); Venkata Viraragavayyangar v. Krishnasami Ayyangar (( 1882) Ind. L. R. 6 Madr. 314, 349) ; Girdhar Damodar v. Kassigar Hiragar. (( 1893; Ind. L. R. 17 Bomb.
They referred to ss. 17 and 20 of the Procedure Code; ss. 38 and 57 of the Indian Evidence Act; Muthaya Chetti v. Allan (( 1880) Ind. L. R. 4 Madr. 209.); Venkata Viraragavayyangar v. Krishnasami Ayyangar (( 1882) Ind. L. R. 6 Madr. 314, 349) ; Girdhar Damodar v. Kassigar Hiragar. (( 1893; Ind. L. R. 17 Bomb. 602.) Under s. 12 of the letters patent of the High Court the business might be carried on by the defendants agent and still the jurisdiction arise over the defendant. Kandasami was shewn to be manager of a business in which the respondent had a share, and he carried on business in the local limits. There ought to have been additional evidence admitted under s. 568 of the Code; or a remand under s. 562. They further contended that the French adjudication of insolvency under the provisions of the Code de Commerce of 1838, as amended by the law of 1889, which was the law governing in Pondicherry, does not operate as a discharge of the insolvents debts, but only temporarily suspends the creditors right of action against the debtor. Upon this point they referred to Diceys Conflict of Laws, p. 451; Storys Conflict of Laws, ss. 337, 338, and 339; Ellis v. MHenry (( 1871) L R. 6 C. P. 228, 234.); Phillips v. Eyre. (( 1870; L R. 6 Q. B. 1, 2s.) The burden of proof was on the defendant, and no evidence at all was given to shew that the insolvency of the defendant operated as a discharge of his debts. Moreover, the question whether it did so operate was a question of fact raised for the first time before the High Court, which ought not to have entertained it until the District Court had first investi gated and decided it. According to the French law applicable it was contended that the insolvents debts could only be discharged and creditors remedies taken away in the event of a concordat—that is, a composition agreed upon by the creditors and confirmed by the Court; of which no evidence had been given and no such concordat had been made. They referred to Dalloz, Jurisp. generale, supplement, vol. viii. p. 254, art. 8, p. 327, art. 398, and p. 498, art. 1073; Goirands French Commercial Law, p. 645, art.
They referred to Dalloz, Jurisp. generale, supplement, vol. viii. p. 254, art. 8, p. 327, art. 398, and p. 498, art. 1073; Goirands French Commercial Law, p. 645, art. 443, as to the effect of the judgment declaring bankruptcy, and see pp. 416, 424, 668, and the law of 1838, arts. 438-441; Masses Droit Commercial, vol. ii. pp. 347, 394-396. The decision in Quelin v. Moisson (1 Knapp, 265.), on which the High Court had founded its judgment, was based entirely on the view that an insolvency under the French law prevailing at the time of the decision operated as a discharge of the insolvents debts a view which is not in accordance with the existing law. Reference was also made to MCormick v. Garnett (( 1854) 5 D. M. & G. 278.); Gibbs v. Societe Industrielle des Metaux, (( 1890) 25 Q. B. D. 399, 411.) Dicey, K.C., and Bonnerjee, for the respondent (the first defendant), contended that there was no evidence to shew that he was subject to the jurisdiction of the District Court of South Arcot at the time of the institution of the suit brought in 1896. For even assuming the business at Cuddalore was joint family business, the respondent cannot be said to have carried it on within the meaning of s. 17 of the Procedure Code. It was at that date carried on by the syndics in bankruptcy. The respondent was a French subject domiciled in Pondicherry, and s. 17 was not intended to apply to him. Westlakes International Law, 3rd ed. p. 152, s. 134; Folliott v. Ogden ((1789) 1 H. Bl. 124, 131 ; 2 R. R. 730); Solomons v. Ross ((1704) 1 H. Bl. 131, n.) ; Jollet v. Deponthieu ((1769) 1 H. Bl. 132, n) ; Alivon v. Furnival ((1834) 1 C. M. & R. 277; 40 R. R. 561) were referred to as to proof of French law of procedure. See Maxwells Interpretation of Statutes, 3rd ed. p. 204; Ex parte Blain. (( 1879) 12 Ch. D. 522, 520,528.) Though the language of the Act includes " debtor," the word may nevertheless have a more limited meaning than at first sight appears, and must not be so construed with respect to foreigners as to give a jurisdiction more than ordinarily extensive see Ex parte Pearson ([ 1892] 2 Q. B. 263, 268.); Cook v. Vogeler Co.
D. 522, 520,528.) Though the language of the Act includes " debtor," the word may nevertheless have a more limited meaning than at first sight appears, and must not be so construed with respect to foreigners as to give a jurisdiction more than ordinarily extensive see Ex parte Pearson ([ 1892] 2 Q. B. 263, 268.); Cook v. Vogeler Co. ([ 1901] A. C. 102, 110.); Russell v. Cambefort (( 1889) 23 Q. B. D. 526, 528.); St. Gobain Chauny Co. v. Hoyermanns Agency (fs22[ 1893] 2 Q. B. 96, 101); Girdhar Damodar v. Kassigar Hiragar (Ind. L. R. 17 Bomb. 662, 666.); Kessowji Damodar Jairam v. Khimji Jairam (( 1888) Ind. L. R. 12 Bomb. 507.); Ilberts Government of India, p. 451, as to whom Government of India can legislate for. Reference was made to the General Clauses Consolidation Acts I. of 1868 and X. of 1897. As to the effect of the insolvency in Pondicherry, it was contended that it operated under French law as a discharge in respect of all the respondents liabilities, and that the appellant, who is also a French subject domiciled in Pondicherry, is not entitled to maintain any suit against him, but that he was bound to come in under the insolvency proceedings, which, as a matter of fact, he had done. Quelin v. Moisson (1 Knapp, 205.) was cited as deciding this point under the French bankruptcy law, which was founded on an enactment of 1807. No doubt that law had been altered in 1838 and 1889. .Reference was made to Code Francais Commercial, 1838, c. 1, ss. .443, 446. To shew the existing French law on the subject, French statutes and law books were admissible, and could be taken judicial notice of by the Court see ss. 38, 57, and 84 of the Evidence Act. By his appearance the respondent did not consent to the jurisdiction, and moreover his consent was inoperative to give jurisdiction see Ledgard v. Bull. (( 1886) L. R. 12 Ind. Ap. 134.) Cohen, K.C. replied. The judgment of their Lordships was delivered by LORD LINDLEY. The plaintiff and the defendant in the action which has given rise to this appeal are French subjects living and trading in Pondicherry.
(( 1886) L. R. 12 Ind. Ap. 134.) Cohen, K.C. replied. The judgment of their Lordships was delivered by LORD LINDLEY. The plaintiff and the defendant in the action which has given rise to this appeal are French subjects living and trading in Pondicherry. The plaintiff sued the defendant Murugasa Chetty in Pondicherry on a promissory note, and on March 20, 1896, the plaintiff obtained judgment by default for Rs.13,968 with interest and costs. Execution proceedings were taken in Pondicherry on this judgment, but nothing was recovered. On July 20, 1896, the defendants firm was declared insolvent, at the instance of other creditors, by the Pondicherry Court; and on September 23 the insolvency was declared to have effect retrospectively from January 8, 1896, which was anterior to the plaintiffs judgment, and indeed to the commencement of the action in which it was obtained. In the insolvency proceedings syndics were appointed as usual, and the plaintiff applied for payment out of the estate ; but it does not appear that he obtained payment of any dividend. On October 8, 1896, this action was commenced in the District Court of South Arcot, which is in the Madras Presidency, and near Pondicherry. The action was by the same plaintiff against the same defendant, Murugasa Chetty, and was based on the judgment already obtained against him in Pondicherry. The receiver appointed by the Court in Pondicherry was also made a defendant to represent the syndics. In order to get over any difficulty which might arise as to the jurisdiction of the Arcot Court to entertain the action, the plaintiff described the defendant Murugasa Chetty as residing in British Indian territory, i.e., Cuddalore and other places, and as having houses of business and carrying on business there. The defendant put in an appearance to this action and a statement and supplemental statement of defence, denying these allegations and denying the jurisdiction of the Court to entertain the action. He also impeached the validity of the promissory note and judgment by default, and, lastly, he relied on the insolvency proceedings as a defence to the action even if the Court had jurisdiction to entertain it. The receiver was also allowed to appear and put in a defence, which he did.
He also impeached the validity of the promissory note and judgment by default, and, lastly, he relied on the insolvency proceedings as a defence to the action even if the Court had jurisdiction to entertain it. The receiver was also allowed to appear and put in a defence, which he did. He denied the jurisdiction of the Court to entertain the action; and he further relied on the insolvency proceedings as invalidating the judgment, and also as furnishing a defence to the action upon it, if still in force, and if the Arcot Court had any jurisdiction to entertain the action. The following issues were settled— I. Is this Court prevented from entertaining the suit by reason of the cause of action not having arisen and defendant not being resident or carrying on business within its jurisdiction ? II. Did or did not the defendant reside or carry on business within the jurisdiction of this Court on the date when cause of action arose? III. Was the French judgment on which the suit has been brought according to French law null and void on the date of suit, and is the present claim based on the French judgment, therefore, not sustainable in this Court? IV. Is it open to the defendant to raise the contention in this suit that the promissory note on which the French judgment was passed was obtained from the defendant by the plaintiff fraudulently? V. And, if so, was the promissory note obtained by the plaintiff from the defendant fraudulently? VI. What is the relief, if any, that the plaintiff is entitled to ? The parties were directed to file all the documents they relied on; and French law books might be filed at the hearing. Considerable evidence was adduced on both sides upon the question of carrying on business in British Indian territory, but there was no evidence worth mentioning that the defendant ever resided in British India; nor was there any evidence that the cause of action arose from any transaction which took place therein. It was proved that the defendant had relatives and a share of property in British India, and that a cousin named Kandasami Chetty managed this property and paid money to the defendant.
It was proved that the defendant had relatives and a share of property in British India, and that a cousin named Kandasami Chetty managed this property and paid money to the defendant. On the other hand, there was no evidence worth mentioning to support the defendants charges of fraud by which he sought to impeach the promissory note and judgment sued upon, and this part of the case was subsequently abandoned by the defendants counsel. The insolvency proceedings in Pondicherry were all put in evidence, but no opinion appears to have been obtained from any expert in French law as to the legal effect of those proceedings cither on the judgment recovered by the plaintiff in Pondicherry before they in fact commenced, or on the discharge of the defendant from liability to pay the judgment debt. The District Judge states that the only issues really contested before him were the first and second ; no argument was put forward on the third ; but he looked up the French law as best he could in the Code Napoleon, and he came to the conclusion that the judgment sued upon was not null and void when the action in the Arcot Court was commenced, and he therefore found the third issue for the plaintiff. He decided that it was not competent for him to go behind the French judgment, and this disposed of the fourth and fifth issues. He found, however, as a fact that the defendant did carry on business in British India, namely, in Cuddalore, where the action was commenced, and he accordingly gave judgment for the plaintiff with costs. The defendant appealed from this decision to the High Court at Madras, which reversed the judgment and dismissed the action with costs, on the ground, first, that it was not proved that the defendant did in fact carry on business in British India when the action was commenced; and on the further ground that the insolvency proceedings were a bar to the action. They came to this conclusion on the authority of a decision of this board in 1827, namely, Quelin v. Moisson.
They came to this conclusion on the authority of a decision of this board in 1827, namely, Quelin v. Moisson. (1 Knapp, 205.) In both Courts in India it was apparently assumed that the question of jurisdiction turned on s. 17 of the Code of Civil Procedure, and that although the defendant was a foreigner, and although the cause of action arose in a foreign country, and although the defendant did not personally reside within the local limits of the jurisdiction of any Court in British India, and was not even temporarily in Arcot when sued there, yet he could be sued in the Arcot Court if he carried on business through an agent in the local limits of that Courts jurisdiction. This assumption appears to their Lordships to require more attention than it has received. Their Lordships see no reason for doubting the correctness of the decision of the case of Girdhar Damodar v. Kassigar Hiragar (Ind. L. R 17 Bomb. 662.), where the defendant was a native of Cutch, and the cause of action arose within the local limits of the jurisdiction of the British Indian Court, in which the action was brought. But that case does not cover the present one. It is not, however, necessary to pursue this matter, for it is admitted by all parties, and it is plain that this appeal must fail unless their Lordships agree with the District Judge in coming to the conclusion that at the time of the commencement of this suit, namely, October 8, 1896, the defendant was by his agent carrying on business in Cuddalore or some other place within the jurisdiction of the Court. The burden of proving this is clearly on the plaintiff; he has given evidence himself and called witnesses, and his and their evidence, until carefully examined, seems sufficient to establish such trading, and especially as the defendant was within reach and was not called to deny or explain their statements. This omission was naturally made the most of by the appellants counsel. But it must be remembered that the defendant was a bankrupt and in great difficulties, and was naturally very reluctant to expose himself to a long and hostile cross-examination. After carefully considering the evidence their Lordships have come to the conclusion that the District Judge fell into the error of treating Kandasami Chetty as the agent of the defendant.
But it must be remembered that the defendant was a bankrupt and in great difficulties, and was naturally very reluctant to expose himself to a long and hostile cross-examination. After carefully considering the evidence their Lordships have come to the conclusion that the District Judge fell into the error of treating Kandasami Chetty as the agent of the defendant. This mistake is clearly pointed out by the High Court. Kandasami Chettys acts and his payments to the defendant are all attributable to his being the manager of joint family property, of which the defendant had a share; and their Lordships entirely concur with the High Court in holding that such, a person is not the agent of the members of the family so as to make them liable to be sued as if they were the principals of the manager. The relation of such persons is not that of principal or agent, or of partners; it is much more like that of trustee and cestui que trust. Those witnesses who say they saw the defendant trading in Cuddalore do not speak of the critical time. An attempt was made to shew that the joint property was divided long ago, and that Kandasami Chetty was not acting as manager of family property in which the defendant had an interest. But this attempt failed, for although some money was divided, the rest of the joint property was not decreed to be partitioned until 1897. In short, the moment the error of treating Kandasami Chetty as the defendants agent is corrected, the rest of the evidence all crumbles away. This conclusion renders it unnecessary to consider the effect of the defendants insolvency either on the validity of the judgment sued on or of the insolvency affording a defence to the action if the judgment is still in force. Quelin v. Moisson (1 Knapp, 265.) goes far to shew that the insolvency would afford a defence; but their Lordships might have thought it right not to decide this point in the absence of evidence of persons skilled in French law. Their Lordships will humbly advise His Majesty to dismiss the appeal, and the appellant must pay the costs of the respondent Murugasa Chetty, the other respondent not having appeared.