1966 Supreme(Ker) 14
Judges : S.VELU PILLAI,K.K.MATHEW
KRISHNAN NAIR SANKARAN NAIR - Appellant
Versus
S.CHELLAPPAN PILLAI - Respondent
Case No : S. A. No. 682 of 1961
Decided On : 01/15/1966
Advocates Appeared :
N. Raghavan; M. Prabhakaran; For Appellant K. Velayudhan Nair; V. S. Moothathu; K. J. Joseph; M. C. Sen; P. Balakrishna Kurup; C. R. Balakrishna Panicker; K. Gopalan Nair; For Respondent
The distinction between mandatory and directory provisions, and the consequences of their violation, as well as the interpretation of provisions intended to protect the interests of specific parties.
Headnote:
Chitty Security Bond - Validity of Assignment - Chitties Act, 1120, Section 33(1) - Summary: The court considered the validity of an assignment of rights under a chitty security bond and the requirement of previous sanction in writing of the Registrar of Chitties as per Section 33(1) of the Chitties Act, 1120. The court held that the assignment was valid and not void due to lack of previous sanction, emphasizing that the provision was intended to protect the interests of non-prized subscribers and did not render the assignment null and void. The court highlighted the distinction between mandatory and directory provisions, emphasizing that violation of the provisions would not render the transaction void but only voidable at the instance of the affected party. The court concluded that the plaintiff was entitled to recover the amount based on the assignment, setting aside the lower appellate court's judgment and restoring the decree passed by the Munsiff.
Fact of the Case:
The suit was for arrears of defaulted subscriptions due under a chitty security bond. The plaintiff, a non-prized subscriber, obtained an assignment of the rights of the foreman under the bond. The defendant raised contentions regarding the validity of the assignment and the bar of limitation.
Finding of the Court:
The court found that the assignment was valid and not barred by limitation. It held that the plaintiff was entitled to recover the defaulted subscriptions based on the assignment.
Issues: Validity of the assignment under the chitty security bond, requirement of previous sanction in writing of the Registrar of Chitties, and the bar of limitation.
Ratio Decidendi: The court emphasized the distinction between mandatory and directory provisions, highlighting that the violation of the provisions would not render the transaction void but only voidable at the instance of the affected party. It held that the provision requiring previous sanction was intended to protect the interests of non-prized subscribers and did not render the assignment null and void.
Final Decision: The second appeal was allowed, and the court set aside the judgment and decree of the lower appellate court, restoring the decree passed by the Munsiff.
1. The plaintiff is the appellant. The suit was for arrears of defaulted subscriptions due under a chitty security bond, Ext. P-1, executed by the first defendant in favour of the foreman, the second defendant. By Ext. P-2 the plaintiff, a non-prized subscriber in the chitty, got an assignment of the rights of the foreman under Ext. P-1. It was alleged in the plaint that the first defendant committed default in the payment of the subscriptions from the tenth instalment which fell due on 9 51953. The plaintiff, however, claimed the defaulted subscriptions only from the 13th to 30th instalments with interest. The suit was filed on 9-11-1956.
2. The defendant raised two contentions: (1) that the assignment (Ext. P-2) was invalid as previous sanction in writing of the Registrar of Chitties was not obtained as required by S.33 (1) of the Chitties Act of 1120 and (2) that the suit was barred by limitation.
3. The learned Munsiff held that Ex. P-2 assignment was valid, and that the suit was not barred by limitation and decreed the suit. On appeal by the first defendant, the learned judge came to the conclusion that Ext. P-2 assignment was invalid as previous sanction in writing of the Registrar was not obtained as required by S.33 (1) and that the suit was barred by limitation. He therefore allowed the appeal; hence this second appeal.
4. Counsel for the respondents did not seek to support the decree of the lower appellate court on the ground that the suit was barred by limitation. Admittedly the default occurred on 9 51953, but no notice, as contemplated under S.32 of the Chitties Act, 1120, was issued to the first defendant claiming the whole amount in a lump. Therefore the instalments due under Ex. P-1 have not become due in a lump. The instalments which fell due according to the terms of Ext. P-1 bond within three years of the date of suit were admittedly not barred by limitation and are recoverable by the plaintiff.
5. Then, the only point for consideration is whether the assignment of the right of the foreman under Ex. P-1 by Ex P-2 is invalid. S.33 (1) and (2) of the Chitties Act, 1120, are as follows:
" (1) No transferor the rights of a foreman to receive subscriptions from prized subscribers shall be made without the previous sanction in writing of the Registrar.
(2) Any such transfer of the rights of a foreman to receive subscriptions from prized subscribers shall, if it defeats or delays a non-prized or unpaid subscriber, be voidable at the instance of such subscriber".
6. It is contended by counsel for the first defendant that the assignment was invalid as it was against the mandatory provisions of S.33 (1). Counsel relied on S.23 of the Contract Act and submitted that the transfer of the right under Ext. P-1 was forbidden unless the previous sanction in writing of the Registrar of Chitties was obtained and, as admittedly it was not obtained in this ease, the plaintiff could not sue on the basis of Ex. P-2 assignment. We are not inclined to accept this contention. The object of sub-section (1) of S.33, as we understand it, is only to safeguard the interests of the non-prized subscribers in the chitty. The beneficial interest in the assets of the chitty belongs to the non-prized subscribers of the chitty. The sub-section is intended to protect the interest of the non-prized subscribers in the chitty who would be defeated or delayed in the satisfaction of their claims by the transfer of the assets of the chitty by the foreman in favour of strangers. It was argued that the provisions of S.33 (1) are mandatory and therefore violation of those provisions would nullify the assignment. We do not find our way to accept this submission. The question whether the provisions of a section are mandatory or directory will depend upon its language and object. No universal rule applicable to all eases can be formulated. If the object is to to protect the interest of the public or the enforcement of a public policy declared by the Leg