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1957 Supreme(MP) 150
High Court Of Madhya Pradesh
B. K. Chaturvedi, J.
PASSARILAL MANNOOLAL - Appellant
Versus
CHHUTTANBAI - Respondents
Second Appeal 852 Of 1951
Decided On : 09/02/1957
P.R.Padhye, R.S.DABIR, V.K.SANGHI, V.S.PANDIT
A champertous agreement, as defined under Section 19-B of the Indian Contract Act, is voidable and can be set aside by the court under Section 19-C.
Headnote:
CHAMPTEROUS AGREEMENT - CONTRACT ACT, SECTIONS 19-B AND 19-C - INTERPRETATION AND APPLICATION - AGREEMENT TO SHARE PROPERTY IN RETURN FOR FINANCING LITIGATION - VALIDITY AND ENFORCEABILITY - COURT'S DISCRETION TO SET ASIDE - PRINCIPLES GOVERNING EXERCISE OF DISCRETION.
Fact of the Case:
Plaintiff (appellant) entered into an agreement with Moolchand (respondent No. 2) to finance a partition suit against his father (respondent No. 3) in exchange for a share of the property, specifically a house in Ghamapur ward. The partition suit was compromised, and the house in question was given to respondent No. 1, Moolchand's sister. Plaintiff filed a suit for specific performance of the agreement or, alternatively, for a decree of Rs. 4,000. The trial court granted specific performance, but the lower appellate court held the agreement to be champertous and unenforceable, awarding the plaintiff a decree for Rs. 4,000.
Finding of the Court:
The court held that the agreement between the plaintiff and Moolchand was a champertous agreement as defined under Section 19-B of the Indian Contract Act, as amended by the C. P. and Berar Indian Contract (Amendment) Act, 1938. The court found that the plaintiff had no interest in the partition suit and was motivated by a desire to acquire the house in question for a cheap price. The court also held that the plaintiff was a 'maintainer' as defined under Section 19-B, as he had agreed to share a part of the property secured by Moolchand in the partition suit.
Issues: 1. Whether the agreement between the plaintiff and Moolchand was a champertous agreement? 2. Whether the plaintiff was a 'maintainer' as defined under Section 19-B of the Indian Contract Act? 3. Whether the agreement was void or voidable? 4. Whether the court had the discretion to set aside the agreement? 5. Whether there was any evidence of fraud or collusion between Moolchand and his father in the compromise of the partition suit?
Ratio Decidendi: 1. The court interpreted Sections 19-B and 19-C of the Indian Contract Act, as amended by the C. P. and Berar Indian Contract (Amendment) Act, 1938, and held that a champertous agreement is voidable and can be set aside by the court. 2. The court held that the plaintiff was a 'maintainer' as defined under Section 19-B, as he had agreed to share a part of the property secured by Moolchand in the partition suit. 3. The court held that the agreement was champertous and, therefore, voidable. 4. The court held that it had the discretion to set aside the agreement under Section 19-C of the Indian Contract Act. 5. The court found that there was no evidence of fraud or collusion between Moolchand and his father in the compromise of the partition suit.
Final Decision: The court dismissed the plaintiff's appeal, holding that the agreement was champertous and unenforceable and that there was no evidence of fraud or collusion in the compromise of the partition suit.
( 1 ) THIS is plaintiffs second appeal against a decision of the 2nd Additional District judge, Jabalpur, holding that the contract in the suit is champertous and cannot be specifically enforced; but at the same time it granted a decree for Rs. 4,000/in favour of the plaintiff. The plaintiff has come in second appeal and desires specific performance of the contract and prays for the restoration of the trial court's decree.
( 2 ) THE facts of the case are: Lala Ram Dube (respondent No. 3) is the father, respondent No. 1 Smt. Chhuttanbai is his daughter and respondent No. 2 moolchand is his son. There were disputes between father and son about the property which according to the former was self-acquired, and according to the latter was ancestral. The wife of Moolchand (respondent No. 2) also filed a suit against her father-in-law for the return of her ornaments. The son had no money to file a suit for partition; so he approached the plaintiff for some money. The plaintiff agreed to finance the son mainly for the litigation and an agreement was entered into on 7-7-1948 between the plaintiff and Moolchand (respondent No. 2 ). The portion of that agreement (Ex- P-5), which is material is as follows :
"great ill-will has been created between me and my father and he keeps the full income received from the property with him. Due to this it has become very difficult-for me to maintain myself and my children. There is no other means except to file a suit for partition. I have no money for filing a suit, nor can I defend the suit alone. By way or compassion you are ready to invest the money and continue the suit. In lieu thereof I make an agreement with you that I shall try to get the house No. 6 in ghamapur ward, Jabalpur, allotted to my share : On its coming to my share, I will execute the sale-deed in your favour for Rs. 4,000/- and at the-time of compromise also, I shall comply with this condition. The whole amount which will be spent by you in litigation and the amount of my maintenance during the course of the case will all be added in accounts and debited and you will pay the remaining balance of price found due at the time of registration of the sale-deed of the house in suit. . . . . . If, for any reason, beyond my control the house does not fall to my share, I will return all your amount together with interest at 10% per month personally or from my property and besides this I will be responsible to pay you Rs. 500/- for your labour in this way. "
( 3 ) THE partition suit (Ex. P-12) was filed by Moolchand against his father on 2-81948. It continued till 5-12-1949. Meanwhile, the suit of Moolchand's wife for return of ornaments against her father-in-law was decreed by the Court. Soon after it, on 3-12-1949 the partition suit was compromised. The main conditions in the compromise as given in the decree signed on 7-12-1949 (Ex. P-9) were the following :
(1) Both father and son would reside in their, residential house either jointly or separately in the portions not occupied by the tenants. (2) Except for two houses, all the property would be under the management of the son, who was to recover rent of the houses, pay the taxes and repair and maintain the houses in good condition. (3) From the rents recovered, the son would! pay a sum of Rs. 75/- per month to the father. (4) No property would be alienated without the consent of the father. (5) Two houses would be given by the father to his two daughters : the possession of that in Ghamapur ward (i. e. , the house in suit) was delivered to respondent No. 1, Smt. Chhuttanbai, and the possession of a house in Bai Ka Baghicha was delivered to Smt. Annapurnabai. Formal registered documents were to be executed. (6) The father was to pay Rs 2,500/- to Pas-sarilal (i. e. the plaintiff-appellant in the present case ).
( 4 ) THIS compromise came as a set-back and a great disappointment to the plaintiff passarilai, who had advanced Rs. 2,379/-to respondent No. 2 Moolchand, bu
