I & G Investment Trust Vs Raja of Khallikote

Court: Calcutta High Court.

Date of Judgement: 15/01/1952.

Appellants: Indian and General Investment.

Respondent: Raja Mardaraja Rao, Raja of Khallikote.

Bench:

• Justice Sinha.

Statutes Referred:

• Code of Civil Procedure.
• Constitution of India.
• Independence Act,1947.

Cases Referred:

• SHREE NATH CHAKRAVARTY v. PRIYA NATH’ 58 Cal 832.
• SHEO TAHAL RAM v. VINAYEK SHUKUL’ 53 All 747.
• CHORMAL BALCHAND FIRM v. KASTURICHAND, 40 Cal W N 591.
• PEMBERTON v. HUGHES (1899).
• GURDAYAL SINGH v. RAJAH OF FARID-KOT, 21 Ind App 171 P C.
• WAGHELA RAJSANJI v. MASLUDIN, 14 Ind App 89 P C.

Facts:

• The Respondent was the zamindar of Khallikote and Atagea zamindaries located in Orissa. The Respondent was born in 1900 and was the only son of the late Raja Saheb Meherban-i-Dostana Shri Harihar Mardaraja Deo.
• The Respondent was governed by the Mitakshara School of Hindu Law.
• The Respondent’s father was burdened by debts. So in the year 1903, when the respondent was only three years old, the Respondent’s father decided to raise a debenture loan of 135,000 in England upon the security of the zamindary properties.
• On 24th September 1903, the Madras High Court, in its Extraordinary Original Civil Jurisdiction, issued an order appointing the late Raja the guardian of his son’s property with the power to mortgage the son’s share to raise a debenture loan of 135,000. By an indenture dated 23rd October 1903, the late Raja, for himself and as the guardian of his minor son, transferred the zamindary estates to the Indian General Investment Trust Ltd. as Trustees for the redemption of 135,000 raised on 1350 debentures of 100 each.
• In the year 1906, the late Raja wised to raise an additional amount of 77,500. The entire procedure followed in 1903 was repeated. On 11th December 1906, the Madras High Court exercising its Extraordinary Original Civil Jurisdiction passed an order appointing the late Raja as the guardian of his minor son’s property with the power to mortgage his share to raise a new debenture loan.
• The late Raja executed an indenture on 18th December 1906, on his own behalf and on behalf of his minor son, who was then the Respondent in the case, mortgaging the zamindari estates of Khallikote and Atagada. The application by the Appellant in the case was based on this indenture.
• The late Raja died in 1909.
• Against the original loan of 77,500, the Appellants had already realised a sum of 218,250/10/9, of which 177,384/18/0 was interest. A sum of 9,675/0/0 had been deducted as remuneration and/or commission.
• The plaintiff contended that the debenture terms could not be said to be mild and that a significant chunk of the money had been realised.
• Orissa Money Lenders Act 1939 read with the Orissa Money Lenders (Amendment) Act 1947 exonerated a borrower from paying, for principal and interest, an amount more than double the original loan.
• The Trustees thus adopted the following procedure:

·      On or about the 24th January 1949, an action was instituted in the Chancery Division of the High Court of London by the plaintiffs as Trustees against the defendant (the present respondent) under the Indenture dated 18th December 1906 for recovery of the following sums:

1. 48,500 as balance of principal outstanding;

2. 2,425 as premium on debentures drawn for redemption since 1st May 1946 but not redeemed;

3. 4,365 as interest from 1st May 1947 to 1st November 1948;

4. Further interest and costs.

·      A further action was similarly commenced by the plaintiffs, The Indian and General Investment Trust Limited, for recovery of the following sums:

1. 1,425 as remuneration of Trustees, unpaid between the 1st May 1939 and 1st November 1948;

2. 1,425 as commission of the Trustees’ London Agents;

3. Costs.

• A writ for each of the two cases was issued by the High Court in England on 24th January 1949, which required the respondent to make an appearance within ninety days of the service of the writ upon him. However, refused to accept the service of the writ.
• The Appellant’s took out two Master’s summonses on 17th November addressed to the Respondent for passing the final judgements in the actions taken against him. The summonses were, however, not served to the Respondent.
• On 29th November 1949, the Court passed an order on each of the two actions.
• The Appellants taxed their costs, and on 21st January 1950 filed the certified copies of the two orders with all the necessary certificates in the High Court of Calcutta in its Ordinary Original Civil Jurisdiction under the provisions of section 44A of the Code of Civil Procedure.
• The first petition mentions that the Respondent owes an amount of 782,096/10/2 with respect to the first order passed by the High Court of Justice, Chancery Division in England and the second petition states that the Respondent owes an amount of 39,135/14/2.59 with respect to the England Court’s second order.

Issue:

• Did the Madras High Court have jurisdiction to pass the orders?
• Is it permissible, in a Mitakshara Family, to appoint a guardian of the share of a minor coparcener?
• Can such a guardian enter into a personal covenant that is binding on the guardian?
• Had the Madras High Court order authorised the guardian to enter into a personal covenant?

The contention by the Appellants:

• As the contract was binding and a decree was obtained, the Trustees were bound to make efforts to recover the loan amount.
• The Trustees repeatedly tried to have the debenture loan exempted from the operation of the Orissa Money Lenders Act but were unsuccessful.
• The Orissa Money Lenders Act cannot affect the liabilities of a borrower incurred outside Orissa.
• The High Court of Calcutta had no jurisdiction to decide any questions upon the application. The applications were made in the court merely for transmission and not for execution. The District Court of Behrampore must decide the questions.
• The Respondent owns some racehorses within the jurisdiction of the Calcutta High Court and some properties within the jurisdiction of the District Court of Behrampore.
• Article 394 of the Constitution of India mentions that the date of commencement of the Constitution is 26th January 1950. So, before that, the Government of India Act 1935 is still in operation, and the previous status continues.

The contention by the Respondent:

• Since the Respondent was a non-resident foreigner who owned no moveable or immoveable property in England, the High Court of England had no jurisdiction over him.
• The High Court of Calcutta has the jurisdiction to decide the questions in the case.
• The only reason that the Appellants raised objections regarding the High Court trying the case was so that they could say before the District Court of Behrampore that the decree was that of the High Court of Calicut, and as such, the provisions of the Orissa Money Lenders Act did not apply.

Obiter Dicta:

• Before the final orders were passed by the High Court in England, India was declared a sovereign democratic republic on 26th November 1949.
• If the decree passed by the High Court of Justice in England is to be considered as a decree passed by the High Court of Calcutta, it would be unreasonable to say that the Calcutta High Court was powerless in determining the questions under Section 13 or Section 47 of the Code, just because the petitioners asked for nothing but transmission.
• The words “District Court executing a decree” in Section 44 A(3) cannot exclude a Court in which an application is made for transmission. In an application made under Section 44A of the Code, it was open to the judgement-debtor to put forward their objections during any stage of the proceedings. And when such objections are raised, the Court is bound to adjudicate upon them.
• The fundamental rule pertaining to foreign judgments is that the court whose judgements is sought to be enforced must have jurisdiction from the point of view of Private International Law. This rule was recognised by the Foreign Judgements (Reciprocal Enforcement) Act, 1933. The provisions of the 1933 Act were extended to India and Burma.
• A personal contract entered into by the guardian is not binding on the minor. 
• The Respondent never entered into any contract to pay in England.
• After attaining the status of sovereign independence, India was not bound to follow any principle of International Private Law.
• The English Courts do not wholly extend to foreign courts, the principles upon which they entertain cases against non-resident foreigners.
• The fact that money is being stipulated to be paid in a foreign country does not equate to an implied submission to the jurisdiction of the courts of that foreign country.
• There is nothing in the reciprocating agreements between India and the United Kingdom which would make any decree passed by the Courts in either country valid in the other country, where it is not valid from the point of view of private International Law. 

Judgement:

• The Calcutta High Court had jurisdiction to deal with the questions raised by the judgement-debtor.
• The English Courts had no jurisdiction to entertain cases and pass judgements thereof.
• The Appeal was dismissed.

Rationale:

• The case in question involved a special process wherein a foreign decree had been filed in the Calcutta High Court and sought to be executed as a decree passed by the Calcutta High Court.
• Before transferring a foreign decree to a court where it is intended to be executed, the Court in which it has been filed prior to the transmission must have the power to adjudicate upon it and satisfy the question that the Court or the defendants might have.
• The late Raja, appointed as the guardian of his minor son’ property, only had the authority to bind the share of the minor.

Conclusion:

• After becoming a sovereign independent state, India was no longer obliged to follow the laws and decrees of the British Parliament and The England Courts. It had the liberty to choose from various laws and practices from different countries with respect to foreign judgements and decrees.