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1948 DIGILAW 190 (CAL)

Durga Charan Gangopadhaya v. Akkari Das

1948-09-08

body1948
JUDGMENT Chakravartti, J. - The question involved in this appeal is a short one, but the facts make a rather long history. 2. The plaintiff brought a suit for accounts against the defendants on the basis of a compromise decree to which fuller reference will presently be made. It appears that there was one Bahir Das Das who resided at Serampore and carried on a business in dyeing and printing. He died in 1333 B.S., leaving five sons, three of whom, defendants 1, 2 and 3 of the present suit, were majors and the remaining two defendants 4 and 5 were minors. After the death of Bahir Das Das the business is said to have practically collapsed when the plaintiff came forward with an offer of assistance and thereupon the business was, as it were, reconstructed. It was agreed between the parties that the business would be re-started under the name and style of Pioneer Calico Printing Works, Ltd., the plaintiff contributing Rs. 1000 towards its working capital and the defendants jointly another Rs. 1000 to the same fund. It was further agreed between the parties that the services of one Mr. K. Chatterjee would be availed of as he was an expert in the line. A further term of the agreement was that the plaintiff would be the owner of a half share of the business and the defendants jointly between themselves the owner of the other half. 3. The business seems to have been carried on for a few years without any trouble arising, but about the year 1932, by which time the expert had left, some disagreement seems to have arisen between the parties. It was composed by an agreement entered into on 11th August 1932, whereby a partnership was formed. That was an agreement between the plaintiff on one part and the defendants on the other part, defendants 4 and 5 still being minors and being represented by their guardian, defendant 1. The material terms of this agreement were that the plaintiff would be the owner of a half share of the business as before and the defendants between themselves would be the owners of the remaining half share, that defendant 1 would be in charge of the cash and accounts, and that if it was found impossible to carry on the business, the parties would dissolve the partnership amicably and settle the accounts between themselves. This agreement was followed by a further agreement executed on 1st December 1932. By that agreement the partnership was dissolved and it was decided that the parties would settle the accounts between themselves and if they failed to do so amicably, they would refer their dispute to arbitration. The plaintiff in due course gave notice to the defendants to settle the accounts, but inasmuch as there was no compliance on the part of the latter, he brought a suit which was Title Suit No. 1216 of 1935 for accounts. 4. At the time that suit was brought, defendants 4 and 5 were still minors. At the inception of the suit, both the defendants were represented by defendant 1 as their guardian ad litem, but it appears that subsequently, during the pendency of the suit one Bhagabati Dasi was appointed their guardian in a certain guardianship proceeding, and thereupon that lady was substituted as the guardian ad litem of the minors in Suit No. 1216 of 1935. The suit failed both in the trial Court and in the Court of first appeal on the ground that the agreement of 1st December 1932 by which the partnership had been sought to be dissolved, was not binding on the minors, and consequently, the suit for accounts, being based on that agreement, could not succeed. A second appeal from the decision of the lower appellate Court was disposed of by Edgley J. on compromise. The terms of the compromise decree were as follows: By consent this appeal is disposed of in the following terms. It is agreed that the plaintiff will be regarded by all the parties concerned as a partner to the extent of 8 annas in the Pioneer Calico Printing Works. It is also agreed that the document Ex. 8(a) dated 1st December 1932, must be regarded as ineffective. The plaintiff will, therefore, be at liberty to institute a suit for dissolution of partnership against the defendants on the basis that the partnership still exists between him and the other defendants, in which he has an eight annas interest and in that suit ha will also be at liberty to sue for accounts in respect of the working of the business up to date. 5. It is not necessary to quote the remaining clauses of the compromise decree. 6. 5. It is not necessary to quote the remaining clauses of the compromise decree. 6. On the basis of this compromise decree, the plaintiff served a notice of dissolution on 18th April 1940 and thereafter brought the present suit on 3rd July following. 7. Of the various defences taken in the suit, it is necessary for the purposes of this appeal to mention only one. It was contended that inasmuch as both defendants 4 and 5 were minors on 1st December 1932, the alleged contract of dissolution of the partnership was not binding on or effective against them. It was contended in the nest place that inasmuch as defendant 4 had attained majority before the compromise decree had been passed, but had nevertheless been treated as a minor in the compromise petition and the decree following thereupon, the decree was not binding upon him. As regards defendant 5 it was contended that inasmuch as he continued to be a minor even at the date of the compromise decree, it was not binding on him at all inasmuch as the learned Judge did not give any leave to the guardian to enter into the compromise on his behalf. 8. These contentions have been given effect to by the lower appellate Court and it has been contended in support of the appeal that the finding of the lower appellate Court with regard to defendant 4 is erroneous in law and that the finding with regard to defendant 5, so far as the compromise decree is concerned, is also erroneous inasmuch as although the decree might be voidable at his instance if he sought to have it set aside as a plaintiff in an appropriate suit brought for the purpose, he could not question it as a defendant in a suit. It has been argued in the third place that assuming that the contract of 1st December 1932 was not binding on defendants 4 and 5 inasmuch as they were minors at that date and could not enter into a contract of partnership, it was still a good and valid contract so far as the remaining parties were concerned. 9. It has been argued in the third place that assuming that the contract of 1st December 1932 was not binding on defendants 4 and 5 inasmuch as they were minors at that date and could not enter into a contract of partnership, it was still a good and valid contract so far as the remaining parties were concerned. 9. Having regard to the view we are taking as regards the position of defendant 5, it is not necessary to consider whether the learned Judge was right in holding that the compromise decree would not bind even defendant 4 on the ground that he had attained majority during the pendency of the appeal. It is undisputed that defendant 5, at any rate, was a minor at the date of the compromise decree. It cannot also be disputed that Edgley J. did not give or record any leave which he gave or purported to give to the guardian ad litem of the minor to enter into the compromise. Having regard to those two facts, it would appear that the compromise was clearly voidable against all parties other than the minor as laid down in R. 7(2) of O. 32. But Mr. Ghose contended on the authority of the decision in the case of Sajahan Howladar v. Sreenath Mistri, 51 C.W.N. 26 : (A.I.R. (33) 1946 Cal. 438), that the minor could not urge the invalidity of the compromise decree as a defendant. 10. The words of the statute to which I have referred are reasonably plain. Sub-rule (2) of R. 7 of O. 32 reads thus: Any such agreement or compromise entered into without the leave of the Court so recorded shall be voidable against all parties other than the minor. 11. That, to my mind, clearly indicates that a compromise to which a minor is a party, but for entering into which the guardian was not granted any leave by the Court, can be avoided by the minor if he wishes so to do. The rule makes no distinction between the position of the minor as a plaintiff or as a defendant. It certainly does not say that such a compromise decree will be valid and operative till it is set aside by the minor in appropriate proceedings, nor that the minor cannot urge the invalidity of such a decree by way of defence to a suit. It certainly does not say that such a compromise decree will be valid and operative till it is set aside by the minor in appropriate proceedings, nor that the minor cannot urge the invalidity of such a decree by way of defence to a suit. But all doubts on the true meaning of O. 32, R. 7(2) have been set at rest by the decision of the Judicial Committee in Jamna Bai v. Vasant Rao, 43 I.A. 99 : ( AIR 1916 P.C. 2 ). There, what happened was that one Vasanta Rao instituted a suit in which one Jamna Bai and one Sethuram, her brother, were defendants, and in the suit the question in dispute was the validity of a will of one Sakharam. This suit was subsequently compromised on the terms that the plaintiff Vasanta Rao should receive Rs. 90,000 in full satisfaction of his claim. At the time of this compromise both Vasanta Rao and Sethuram were minors, but in order to secure the above sum, Jamna Bai and Sethuram, by his grandmother who was guardian of his property, entered into a bond by which they jointly agreed to pay Rs. 90,000 to Vasanta Rao within three months of their taking delivery of the movable and immovable properties of Sakharam as scheduled in the suit. On a suit being brought for the enforcement of this bond, it was held by the Judicial Committee that the leave of the Court not having been obtained on behalf of the minor under S. 462, Civil P.C., 1882, the bond was not enforceable against the minor, but it was enforceable to the full amount against the joint contractor. Sir Lawrence Jenkins who delivered the judgment of the Board seems to have regarded the invalidity of the bond as against the minor as patent. He considered it sufficient to say that the requirements of the section not having been observed for the protection of Sethuram, the bond could not be enforced against him. There can be no doubt that Sethuram was a defendant in that suit and he was pleading the unenforceability of the bond by way of defence. He considered it sufficient to say that the requirements of the section not having been observed for the protection of Sethuram, the bond could not be enforced against him. There can be no doubt that Sethuram was a defendant in that suit and he was pleading the unenforceability of the bond by way of defence. This case is thus a clear authority for the proposition that a minor, who is ostensibly a party to a compromise, can challenge the validity of the compromise decree on the ground that leave of the Court was not obtained; that it is not required that he should bring a suit for the purpose; and that he can take that plea by way of defence in a suit as much as he can seek to have the decree set aside by bringing a suit himself. 12. The decision of this Court relied on by Mr. Ghose does contain a statement of the law which is plainly contrary to what was held by the Judicial Committee in the case to which I have referred. Mr. Gupta, who appears for the respondent in the present case and also appeared for the respondent in the case cited, explained to us the peculiar facts of that case in which he contended that the principles laid down by the Judicial Committee in the case of Mir Sarwarjan v. Fakhruddin Mohamed Chowdhury, 39 I.A. 1 : (39 Cal. 232 P.C.), could not be applied to a case of a compromise decree to which a minor was a party. The defence which Mr. Gupta urged was that a contract to which a minor is a party fell to be considered by reference to considerations quite different from those which were applicable to a compromise decree, inasmuch as to the latter applied the clear statutory provisions of O. 32, R. 7. This contention was not in terms accepted by the learned Judges, although they accepted its substance, and they stated their reasons in their own way. In doing so, they observed as follows: No doubt a minor is not bound by a consent decree on the ground that his guardian ad litem had not obtained leave of the Court to compromise. This contention was not in terms accepted by the learned Judges, although they accepted its substance, and they stated their reasons in their own way. In doing so, they observed as follows: No doubt a minor is not bound by a consent decree on the ground that his guardian ad litem had not obtained leave of the Court to compromise. It is not, however, a void decree and he has to avoid it by a proceeding attacking it in a direct manner, and until it is set aside it is binding on him. 13. Then the learned Judges proceeded to cite two decisions, one of the Madras High Court and one of this Court which, according to them, lent support to the proposition which they had formulated earlier. 14. With regard to the observation which I have quoted from the decision in the case of Sajahan Howladar, 51 C.W.N. 26 : (AIR 1946 Cal. 438), it is only necessary to say that the decision of the Privy Council in the case of Jamna Bai v. Vasanta Rao, 43 I.A. 99 : ( AIR 1916 P.C. 2 ), was apparently not cited before the learned Judges and, in any event, they do not seem to have had that decision present to their mind when they made the said observations. It is true that the observations emanated from a Division Bench, but having regard to the principle authoritatively laid down by the Judicial Committee, we do not consider that the existence of those observations in a decision of a Division Bench is any obstacle to our deciding the present case in accordance with the opinion of the Judicial Committee. 15. In our opinion, for the reasons given above, the compromise decree, so far as it affected defendant 5, must be held to be void and ineffective, inasmuch as he seeks to avoid it, although he is doing so as a defendant in the suit. 16. The question then arises as to whether the compromise decree is still binding on the remaining parties. I shall leave aside the case of defendant 4 which presents a further complication. But in my view, even so far as the adult parties are concerned, the compromise decree could not be regarded as binding or effective in the special facts of the present case. I shall leave aside the case of defendant 4 which presents a further complication. But in my view, even so far as the adult parties are concerned, the compromise decree could not be regarded as binding or effective in the special facts of the present case. The compromise decree, as I have already stated, recites that all the parties were agreeing that the plaintiff was a partner to the extent of eight annas in the business concerned. They were also agreeing that the agreement of 1st December 1932 would be regarded as ineffective and that limitation would be saved for the plaintiff by eliminating the dissolution which was sought to be caused on that date. It is impossible to see how a compromise of that character can remain effective or operative when one of the contracting parties drops out of it by reason of the fact that it is not binding upon him. In my view, the compromise decree not being binding on defendant 5, it ceased to be an effective and operative compromise decree even so far as the remaining parties were concerned. 17. In view of the above finding, it is hardly necessary to consider whether the agreement of 1st December 1932 was a valid agreement. The lower appellate Court has found that defendants 4 and 5, who were undoubtedly minors at the date of that agreement, had not merely been admitted to the benefits of the partnership, but were made contracting parties through their guardians. But as minors cannot enter into a contract of partnership, the lower appellate Court has found that even in so far as the (major?) partners are concerned, the contract of 1st December 1932 was invalid and inoperative. Just as in the case of the compromise decree, so in the case of this agreement, Mr. Ghose contended that the rest of the agreement could still survive and it would be a valid contract as between the plaintiff and defendants 1, 2 and 3. It appears to me that this contention is plainly untenable. As I have stated already, one of the terms of the agreement was that the plaintiff would have an eight annas share in the interest and the five defendants between themselves would have a joint interest in the remaining eight annas. It appears to me that this contention is plainly untenable. As I have stated already, one of the terms of the agreement was that the plaintiff would have an eight annas share in the interest and the five defendants between themselves would have a joint interest in the remaining eight annas. If by reason of the minority of defendants 4 and 5 the agreement is to be regarded as invalid and inoperative so far as they are concerned, it is impossible to see that any valid, workable or intelligible contract survives so far as it concerns the remaining parties. The minors certainly had a share and an agreement which proceeds on the footing that the entire property is being dealt with in a certain way and is to be held in certain shares, cannot be given any effect after the owners of some of the shares are held to be freed of the agreement and their shares are thus left unaccounted for. Mr. Ghose tried to go further backward into the facts and to establish that as a matter of fact defendants 4 and 5 had no share in the business. To my mind, it is not possible for him to adopt that course. The contract was one based on the assumption that all the defendants had an interest in the business and in judging the validity or otherwise of the contract, it is only that assumption which can be regarded and any enquiry into the alleged real position would not be, in my view, admissible. If the validity of the contract is to be judged on the basis that all the five defendants had a share in the business and that the share was a joint share of eight annas, the effect of the agreement being invalid, so far as defendants 4 and 5 were concerned, is, in my view, to make the whole agreement invalid. 18. For the reasons given above, it appears to me that the view taken by the lower appellate Court on both the questions was correct. This appeal must accordingly fail and it is dismissed with costs. Harries, C.J. 19. I agree.