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HIGH COURT OF BOMBAY
CHAGLA, SHAH, JJ.
Basudeo Ramgovind
Versus
Vachha and Co.
O.C.J. Appeal No.12 of 1954,
Decided On : 05-08-1954
ATTORNEY-CLIENT RELATIONSHIP - LIEN - COSTS - COLLUSION - FRAUD - JURISDICTION - EQUITABLE RELIEF - SUMMARY PROCEDURE - NOTICE - FUND IN COURT - ASSIGNMENT - CONSENT DECREE - COMPROMISE - SOLICITOR'S RIGHT TO RECOVER COSTS - CIVIL PROCEDURE CODE, S. 145.
Fact of the Case:
Plaintiff filed a suit against defendant for recovery of Rs.35,000 and in the alternative for accounts from the defendant in respect of certain consignments of carpets supplied by him to the defendant. On March 8, 1950, an order was made in chambers by Mr. Justice Bhagwati. This order was on a summons taken out by the plaintiff for attachment before judgment. The carpets in suit had been attached and the defendant appeared to show cause and wanted the attachment to be raised and the order that was taken on March 8, 1950, was that upon the defendant depositing in. Court a sum of Rs.5,000 on or before March 10, 1950, to the credit of the suit and further undertaking to hand over to the Court Receiver appointed Receiver herein the carpets mentioned in the list by way of security for the plaintiffs claim in suit the attachment before judgment be raised. Now, pursuant to this order the defendant deposited in Court the sum of Rs.5,000.
Finding of the Court:
The Court held that the agreement between the plaintiff and the defendant was collusive and fraudulent with regard to the sum of Rs.5,000 deposited in Court, and that the plaintiffs solicitors were entitled to a lien on that amount. However, the Court held that there was no collusion or fraud with regard to the balance of the claim, and that the plaintiffs solicitors were not entitled to look to the defendant for payment of those costs.
Issues: 1. Whether the agreement between the plaintiff and the defendant was collusive and fraudulent with regard to the sum of Rs.5,000 deposited in Court? 2. Whether the plaintiffs solicitors were entitled to a lien on the sum of Rs.5,000 deposited in Court? 3. Whether the plaintiffs solicitors were entitled to look to the defendant for payment of the balance of the costs?
Ratio Decidendi: 1. The Court held that the agreement between the plaintiff and the defendant was collusive and fraudulent with regard to the sum of Rs.5,000 deposited in Court, because the parties had entered into an unusual and extraordinary agreement whereby the defendant agreed to pay the full amount of Rs.14,500 to the plaintiff, ignoring and overlooking the fact that he had already made the payment of Rs.5,000, and the defendants solicitors were given liberty to withdraw the sum of Rs.5,000 deposited in Court, intending to deprive the plaintiffs solicitor of the lien on the sum of Rs.5,000. 2. The Court held that the plaintiffs solicitors were entitled to a lien on the sum of Rs.5,000 deposited in Court, because the agreement between the plaintiff and the defendant was collusive and fraudulent, and the plaintiffs solicitors had a lien on the fund as soon as it was brought into Court. 3. The Court held that the plaintiffs solicitors were not entitled to look to the defendant for payment of the balance of the costs, because there was no collusion or fraud with regard to the balance of the claim, and the plaintiffs solicitors had not given notice to the defendant not to pay the amount to the plaintiff.
Final Decision: The Court made the summons absolute only with regard to prayer A of the summons, which was for a declaration that the applicants had a lien and charge on the sum of Rs.5,000 deposited in Court. No order was made as to costs throughout.
FACTS : -One Satyanarayanlal (plaintiff), who was carrying on business as a carpet merchant at Bhadohi in Banares filed a suit against Basudeo (defendant) to recover Rs.35,000 odd in respect of certain consignments of carpets supplied by him to the defendant at Bombay. The defendant by his written statement admitted a sum of Rs.6,000.
On January 10, 1950, the plaintiff took out a summons for attachment before judgment, and the property of the defendant, including certain carpets, was attached. On March 8, 1950, an order was made in chambers by Bhagwati J. raising the attachment, the relevant portion of which was as follows:
"I do by and with such consent order that upon the Defendant depositing in Court a sum of Rs.5,000 on or before the 10th day of March 1950 to the credit of this suit and hereby further undertaking to hand over to the Court Receiver appointed Receiver herein as hereafter provided the carpets mentioned in List "B" hereto by way of security for the Plaintiffs claim in suit........And I do by and with such consent further order that the said Receiver be and he is hereby at liberty to sell the said carpets from time to time at the best rates with the consent of both the parties hereto or by order of this Honble Court and I do by and with such consent further order that the said Receiver do retain the net sale proceeds of the said carpets in his hands and when the aggregate amount of the said net sale proceeds after deducting his costs, charges and expenses and commission comes to Rs.8,000 or more the said Receiver to retain in his hands out of such net sale proceeds a sum of Rs.8,000 to the credit of the above suit and do pay the excess of the net sale proceeds over the said sum of Rs.8,000 and deliver the unsold carpets if any to the Defendant immediately thereafter...."
Pursuant to this order the defendant deposited in Court the sum of Rs.5,000.
On December 11, 1950, a consent order was taken out by the parties for discharging the Receiver, the relevant portion of which was as follows:
"......Upon hearing Messrs. Vachha and Co., attorneys for the Plaintiff who state that Seth Jaigopal Gangabishan has by his letter dated 28th November 1950 guaranteed payment to the Plaintiff of the amount of the Decree that may be passed against the Defendant in the above suit to the extent of Rs.8,000 over and above the sum of Rs.5,000 deposited in Court to the credit of the above suit the parties here have agreed that the Receiver appointed herein to take charge of the 145 carpets pursuant to the said consent order should be discharged."
Before the plaintiffs suit came on for hearing, the plaintiffs attorneys, Vachha and Co. (applicants), and the defendants attorneys, Benjamin and Co., received a letter dated September 23, 1953, signed by the plaintiff and the defendant to say that they had entered into an agreement to settle the suit. The agreement which was annexed to the letter was in the following terms:-
"This agreement made at Bombay this 23rd day of September 1953 between Satyanarayanlal Mahavirprasad Gupta (the sole proprietor of Carpet Museum of Bhadohi, Dist. Benares) hereinafter called the first party and Basudeo Ramgovind Misra (the sole proprietor of Misra Carpet Co., Bombay) hereinafter called the second party. Whereas the first party used to send carpets to the second party on consignment basis and had an account between the parties in respect of the aforesaid dealings. The first party was claiming from the second party about Rs.36,000 (Rupees thirty-six thousand only) the second party disputed this liability to the first party about that alleged claim. Thereupon the first party filed a suit in the High Court of Judicature at Bombay against the second party being suit No.36 of 1950. In the said suit a sum of Rs.5,000 (Rupees five thousand only) were deposited by the second party in Court to the credit of the above suit and gave surety of Seth Sitaram Jaygopal for the sum of Ks. 8,000 (Rupees eight thousand on
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