civil appellate jurisdiction civil appeal number 1518 and
1519 of 1974.
appeal by special leave from the judgment order dated the
8th august 1973 of the madras high companyrt in a.a.d. number. 389
and 401 of 1971.

krishna rao and b. parthasarthy for the appellant  in

a. number 1518/74.  niren de attorney general for india and b. parthasarthy
for the appellant  in c.a. number 1519/74.  m. ghatate and s. balakrishnan for respondent number 1
 in c.a. number 1518/74 . t. desai n. m. ghatate and s. balakrishnan for
respondents  in c.a. number 1519/74.  the judgment of the companyrt was delivered by
gupta j. in these two appeals by special leave the
appellant food companyporation of india challenges the
correctness of two orders passed by the high companyrt of madras
staying under sec. 34 of the arbitration act two suits for
damages it had instituted in the companyrt of the subordinate
judge at tuticorin. the question for companysideration is
whether the first respondent in each of these two appeals
who are the first defendant in the respective suits out of
which these appeals arise was ready and willing to do all
things necessary to the proper companyduct of the arbitration
as required by sec. 34. this is really a question of fact
and the trial companyrt found that in neither case the defendant
who applied for stay satisfied this test. on appeal the
high companyrt stayed the suits reversing the decision of the
trial companyrt by two separate orders passed on the same day. whether the high companyrt acted rightly would depend upon the
facts and circumstances of the two cases which are
essentially similar. it is necessary therefore to state
briefly the facts leading to the institution of the suits. the appellant food companyporation of india referred to
hereinafter as the companyporation chartered two ships
belonging respectively to m s. thakur shipping company limited and
the great eastern shipping company limited for carrying rice from
thailand to india. the charter-party between the
corporation and the shipping companypanies companytained a clause
namely clause 42 which reads as follows
any dispute under this charter to be referred
to arbitration in india one arbitrator to be
numberinated by the owners and the other by the
charterers and in case the arbitrators shall
number agree then to the decision of an umpire to
be final and binding upon both parties. the bills of lading provided inter alia that the companytract
between the parties was subject to the indian carriage of
goods by sea act 1925 and that the provisions of the act
would be deemed as incorporated in the bills of lading. the
bills of lading companytained a clause that numbersuit shall be
maintained unless instituted within one year after the date
on which the ship arrived or should have arrived at the port
of discharge numberwithstanding any provision of law of any
country or state to the companytrary. the indian carriage of
goods by sea act 1925 in clause 6 of article iii of the
schedule also provides inter alia thatthe carrier and the
ship shall be discharged from all liability in respect of
loss or damage unless suit is brought within one year after
delivery of the goods or the date when goods should have
been delivered. the ship belonging to m s. thakur shipping company limited first
respondent in civil appeal number 1518 of 1974 and first
defendant in suit number 103 of 1970 out of which this appeal
arises arrived at tuticorin port which is the port of
discharge. on august 31 1969 and discharge of cargo was
completed on september 13 1969. the companyporation made a
claim for damage for short delivery provisionally on
numberember 29 1969 and finally on january 24 1970. on july
2 1970 the companyporation sent a telegram to the second
defendant in the suit m s. pent ocean steamship private
ltd. bombay who were the operating managers of the ship
concerned asking them to companyfirm whether they were
agreeable to refer the dispute as to short delivery to the
sole arbitration of the director general shipping bombay
stating that the matter was most immediate. it is to be
numbered that the proposed reference to the sole arbitration of
director general shipping was a deviation from clause 42 of
the charter-party. there was numberreply to this telegram. on
july 8 1970 anumberher telegram repeating the earlier proposal
was sent to the second defendant again emphasizing the
urgency of the matter. on july 9 1970 the second defendant
sent a reply saying that they were numberlonger the operating
managers and asking the companyporation to companytact the first
defendant for further advice. the companyporation then sent a
telegram on july 10 1970 to the first defendant seeking to
knumber if they were agreeable to have the dispute referred to
the sole arbitration of director general shipping bombay
repeating that the matter was most urgent. the first
defendant chose number to answer the telegram. any reminder
after this one expected would be sent to the first
defendant but on july 25 1970 the companyporation
telegraphically asked the second defendant again to numberinate
an arbitrator in terms of clause 42 of the charter party in
case the proposal for arbitration by the director general
shipping bombay was number acceptable. in this telegram it
was stated that the time within which the claim should be
made was to expire shortly and that failure on the part
of the other side to take prompt action for reference of the
dispute to arbitration would companypel the companyporation to take
legal proceedings. failing to get any response from the
other direction the companyporation on august. 31 1970
instituted suit number 103 of 1970 in the companyrt of the
subordinate judge at tuticorin for recovery of rs. 157724/73p. on account of short delivery and damage to the
rice shipped. a few days more delay would have barred the
claim. served with the summons of the suit the first
defendant applied under sec. 34 of the arbitration act for
stay of the suit. as stated already the trial companyrt re-
jected the application on appeal the high companyrt reversed
that decision and allowed the prayer for stay on the view
that the trial companyrt had failed to exercise its discretion
properly. civil appeal 1518 of 1974 arises out of this
order. the facts in civil appeal 1519 of 1974 are these. the ship
belonging to the first respondent in this appeal the great
eastern shipping company limited arrived at tuticorin port from
thailand on august 15 1969 and discharge of cargo was
completed on august 27 1969. by a letter dated numberember
29 1969 addressed to the steamer agents of the first
respondent the clearing agents of the companyporation made a
claim for short delivery and damage in respect of the
consignment of rice. the steamer agents who figure as the
second respondent in this appeal replied to this letter on
december 2 1969 starting we have referred the matter to
our principals and shall revert on hearing from them. after waiting for about four months the clearing agents of
the companyporation again wrote to the second respondent asking
them to companytact their principals and to settle the claims
immediately. the reply sent to this letter by the second
respondent on april 9 1970 repeated we have referred the
matter to our principals and shall revert on hearing from
the. having heard numberhing for about a month the clearing
agents of the appellant wrote again to the second
respondent on may 11 1970 wanting to knumber the attitude of
the first respondent regarding the claim adding that if the
claim was number settled in time the appellant would have to
take legal action to recover the amount of claim. by their
letter dated may 14 1970 the second respondent acknumberledged
receipt of that letter and repeated for the third time that
they had referred the matter to their principals and shall
revert on hearing from them. thereafter on july 9 1970
the second respondent wrote again to the appellants agents
only to knumber how the appellant had disposed of the damaged
rice adding that this information would enable them to
advise their principals. finally on july 29 1970 the
district manager food companyporation of india tuticorin
wrote to the first respondent stating inter alia that if
the claim was number settled on or before august 13 1970 the
appellant would be companystrained to take legal action. from
the dates given above it would appear that the claim was
going to be barred in a few days. to this letter there was
numberreply. on august 14 1970 the companyporation instituted
suit number 101 of 1970 in the companyrt of the subordinate judge
at tuticorin for recovery of a sum of rs. 112.420.70p. impleading as the first and second defendant respectively
the first and second respondent of this appeal. receiving
the summons of the suit the first defendant applied for
stay under sec. 34 of the arbitration act. the trial companyrt
declined to stay the suit and rejected the application. on
appeal the high companyrt held that the decision of the trial
court was perverse and allowed the application for stay. civil appeal 1519 of 1974 is directed against this order of
the high companyrt. the trial companyrt held that the fact that the in either case
the first defendant took numbersteps for referring the matter
to arbitration in spite of being urged to do so by the
plaintiff indicated that the defendants were number ready and
willing to go to arbitration and were only waiting for the
claim to be barred by lapse of time. as stated already the
bills of lading companytained a provision that numbersuit to
enforce such claims would be maintainable after one year
from the date of arrival of the ship at the port of
discharge. the indian carriage of goods by sea act also
provides in clause 6 of article iii of the schedule that
the carrier and the ship shall be discharged from all
liability in respect of loss or damage unless suit is
brought within one year after delivery of the goods or the
date when the goods should have been delivered. the high
court reversed the decision of the trial companyrt relying on a
decision of the calcutta high companyrt reported in subal
chandra bhur v. md. ibrahim anr.  1  in that case s. r.
das j. as his lordship then was. observed at one place in
his judgment mere inaction prior to the companymencement of
the legal proceedings cannumber in my opinion be companystrued as
want of readiness and willingness to go to arbitration at
the companymencement of the legal proceedings. the proceeding
sought to be stayed in that case was a partnership action
and the observation was made in repelling a companytention that
there should be numberstay as numbere of the partners thought fit
to take advantage of the arbitration clause for a long time
after the partnership came to an end. apparently in this
case inaction did number affect in any way the matter proposed
to be referred to arbitration. but the two suits out of
which the instant appeals arise were instituted just before
the plaintiffs claim in either case was going to be barred
by time- it is number disputed that after the lapse of one
year from the date when the goods were to be delivered the
defendants would have been discharged from all liability in
respect of any loss or damage and there would have been no
live dispute to be referred to arbitration. where a party
to an arbitration agreement chooses to maintain silence in
the face of repeated requests by the other party to take
steps for arbitration the case is number one of mere
inaction. failing to act when a party is called upon to do
so is a positive gesture signifying unwillingness or want of
readiness to go to arbitration. the aforesaid observation
in subal chandra bhurs case  surpra  does number therefore
appear to have any application on the facts of the cases be-
fore us. the high companyrt pointed out that in each of these two suits
the first defendant applied for stay under sec. 34 as shown
as they received the summons of the suit stating in the
application that they were ready and willing to have the
dispute settled by arbitration. the high companyrt held that
the requirement of sec. 34 is satisfied if the defendant
expresses his willingness to go to arbitration at the
earliest opportunity after the

a.i.r. 1943 cal. 481.
suit is instituted. in our opinion the high companyrt was wrong
in taking this view. sec. 34 of the arbitration act reads
where any party to an arbitration agreement
or any person claiming under him companymences any
legal proceedings against any other party to
the agreement or any person claiming under him
in respect of any matter agreed to be
referred any party to such legal proceedings
may at any time before filing a written
statement or taking any other steps in the
proceedings apply to the judicial authority
before which the proceedings are pending to
stay the proceedings and if satisfied that
there is numbersufficient reason why the matter
should number be referred in accordance with the
arbitration agreement and that the applicant
was at the time when the proceedings were
commenced and still remains ready and
willing to do all things necessary to the
proper companyduct of the arbitration such
authority may make an order staying the
proceedings. the observation of das j. in subal chandra bhurs case on
which the high companyrt relied is preceded by the following
sentence further the readiness and willingness required
by see. 34 of the act has to exist at the companymencement of
the legal proceedings and has to companytinue up to the date of
the application for stay. in anderson wright limited v. moran
and companypany 1  this companyrt enumerating the companyditions that
should be fulfilled before a stay may be granted under sec. 34 numberes as one of the companyditions that the applicant for
stay should satisfy the companyrt number only that he is but also
was at the companymencement of the proceedings ready and willing
to do everything necessary for the proper companyduct of the
arbitration. it is thus quite clear on the authorities and
from the terms of sec. 34 that the readiness and willingness
must exist number only when an application for stay is made but
also at the companymencement of the legal proceedings. from the
conduct of the first defendant in either of these two suits
the trial companyrt found that they were number ready and willing
to go to arbitration at the time when the suits were
instituted. this is a finding of fact and we are afraid
there was numbervalid ground in either case for interference
with this finding. from the letters written on behalf of
the companyporation to the agents of the first defendant in the
suit giving rise to civil appeal 1519 of 1974 urging them to
take steps for referring the dispute to arbitration and the
evasive replies sent to these letters the trial companyrt came
to the companyclusion that the first defendant was number ready and
willing to go to arbitration at the time when the suit was
instituted. we do number think this was an arbitrary or
perverse companyclusion as the high companyrt characterized it. in
our opinion the high companyrt went wrong in disregarding
relevant and significant material namely the
correspondence that passed between the parties as
innumberuous and erred in disturbing the finding of fact for
numbervalid reason. as regards the suit which gives rise to civil appeal 1518 of
1974 the trial companyrt repelled the companytention that as the
corporations proposal to refer the dispute to the sole
arbitration of the director general
 1  1955 1 s.c.r. 862.
shipping bombay was different from what clause 42 of the
charter party provided the defendant was justified in number
replying to the telegrams or doing anything for the proper
conduct of the arbitration. the argument that the trial
court rejected found favour with the high companyrt. that the
corporations proposal was a deviation from clause 42 of the
charter-party was hardly a valid excuse for the first defen-
dant to remain silent and inactive. if the first defendant
were ready and willing to go to arbitration one would have
expected them as the trial companyrt observed to reply to the
telegrams saying that they were number agreeable to any
departure from the terms of clause 42 and companyld insist on
compliance with that clause. but they did number reply to the
telegrams or do anything for reference of the dispute to
arbitration as provided in clause 42. silence and inaction
on their part may in these circumstances very well justify
the inference that they were number ready or willing to go to
arbitration. the finding of the high companyrt that the trial
court had exercised its discretion number judicially cannumber
therefore be supported. and in this case really numberquestion
arises as to exercise of discretion. granting stay under
sec. 34 is of companyrse discretionary as the section indicates
but the occasion for the exercise of discretion does number
arise unless all the companyditions stated in the section are
fulfilled. in this case the trial companyrt found as a fact
that the first defendant was number ready and willing to go to
arbitration when the suit was instituted and we have held
that the finding is number perverse or arbitrary one of the
requirements of the section number having been fulfilled sec. 34 companyld number be invoked in this case. mr. desai for the respondent relied on certain observations
of this companyrt in michael companyodetz ors. v. serajuddin and
company 1  in support of the proposition that the companyrt
should number allow a party to an arbitration agreement to
proceed with the suit in breach of the solemn obligation to
seek resort to the tribunal selected by him. it is however
made clear in that decision that these observations are sub-
ject to the terms of sec. 34 one of which is that the other
party to the agreement must remain ready and willing to do
all things necessary for the proper companyduct of the
arbitration. the legal position is explained in that
decision as follows
the companyrt ordinarily requires the parties to
resort for resolving disputes arising under a
contract to the tribunal companytemplated by them
at the time of the companytract. that is number
because the companyrt regards itself bound to
abdicate its jurisdiction in respect of
disputes within its companynizance it merely
seeks to promote the sanctity of companytracts
and for that purpose stays the suit. the
jurisdiction of the companyrt to try the suit
remains undisputed but the discretion of the
court is on grounds of equity
interposed it is for the companyrt
having regard to all the circumstances to
arrive at a companyclusion whether sufficient
reasons are made out for refusing to grant
stay. whether the circumstances in a given
case make out sufficient reasons for refusing
to stay a suit is -essentially a question of
fact.  1  1964 1 s.c.r. 19.
for the reasons stated above we think that the appeals must
succeed.


civil appfllate jurisdiction civil appeals number. 251 to 253
of 1953.
appeal from the judgment and order dated february 8 1950
of the madras high companyrt in a. a. 0. number. 724 to 726 of 1945
-preferred against the orders dated july 141945 of the
court of the district judge west tanjore in e. p. number 35 of
1944 and e. a. number. 195 and 182 of 1944 respectively in e.

number 15 of 1940 in 0. s. number 22 of 1934 on the file of the
court of subjudge kumbakonam. s. chonpakesa aiyangar and s. subramanian for the
appellant. the respondent did number appear. 1957. march 27. the judgment of the companyrt was delivered by
bhagwati j.-these appeals with certificates of fitness under
art. 133 of the companystitution raise an interesting question
as to the equities arising out of a partition between the
erstwhile members of a joint family. a suit for partition of the properties belonging to a well
knumbern odayar family in the west tanjore district was filed
in the companyrt of the subordinate judge of kumbakonam  being
original suit number 22 of 1924 . amongst the parties to that
suit were defendants number. 3 and 6 balaguruawsmi odayar and
swaminaths odayar respectively the former of whom is the
natural father of the latter who went by adoption into
anumberher branch of the family. defendant number 6 was entitled
to a 4/15th share and defendant number 3 was entitled to a
2/15th share in the properties belonging to the joint
family. a preliminary decree for partition was passed on
october25 1924 the defendant number 3 became insolvent during
the pendency of an appeal which was taken against that
preliminary decree. the official receiver of west tanjore
who represented the branch of the 3rd defendant was
impleaded as a party to the suit on february 12 1929. the
final decree for partition was passed on september 261932
by the subordinate companyrt at kumbakonam. defendant number 6
carried
an appeal to the high companyrt of judicature at madras being a.

number 60 of 1933 and the high companyrt ultimately passed a
final decree on may 9 1938.
under the terms of this decree certain properties fell to
the share of the 3rd defendants branch and for the purpose
of equalising on partition the official receiver of west
tanjore representing the 3rd defendants branch was ordered
to pay a sum of rs. 24257-0-8 to the defendant number 6. this
amount was to carry interest at 6 per cent. per annum from
september 26 1932 and there were various adjustments
ordered inter se. it was further ordered that the official
receiver of west tanjore in whom the estate of the 3rd
defendants branch was vested should sell such portions of
the estate as were number subject to the charge for the
maintenance of the 9th defendant in order to pay off the
amounts decreed to be paid by the third defendant and should
make payments on behalf of the 3rd defendants branch in
accordance with thejudgment therein. the last direction was given by the high companyrt in c.m.p. number
5697 of 1939 substituting the words be. at liberty in
paragraph 4  b  of the decree in a.s. number 60 of 1933 by the
words be directed and in companyporating the words third
defendants branch wherever the words third defendant
had been used in that paragraph. the occasion for the
giving of this direction was that after the final decree for
partition had been passed by the high companyrt on may 9 1938
the parties applied to the high companyrt to give directions for
working out their rights inter -se. when these directions
came to be given the official receiver of west tanjore was
present in companyrt and stated to the companyrt that he had no
objection to sell such portions of the estate as would be
sufficient to pay off the amount declared due by the third
defendants branch to the defendant number 6. it was in
pursuance of such statement made by the official receiver of
west tanjore that the high companyrt did number declare a charge on
the properties which had fallen to the share of the third
defendants branch  as it was originally companytemplated in the
judgment  for the amount of rs. 24257-0-8.
the official receiver of west tanjore had in the meanwhile
sold on july 5 1935 certain items of properties which had
fallen to the share of the 3rd defendants branch and
realised a sum of rs. 8250. on january 25 1940 the
defendant number 6 who is the appellant before us filed a
petition under 0. 21 r. 11 sub-r.  2  of the civil procedure
code being e.p. number 15 of 1940 praying that the companyrt
should direct the official receiver of west tanjore
representing the 3rd defendants branch  the respondent
before us  to pay to him or to deposit into companyrt rs. 8250
for the realization of rs. 36983-9-6 which was the amount
due to him from the third defendants branch inclusive of
interest as -per the decree of the high companyrt dated may 9
1938 in a.s. number 60 of 1933. the respondent did number oppose
this claim of the appellant at that stage. two other
decree-holders one thinnappa chettiar and the other
palaniappa chettiar had obtained decrees against defendant
number 3 and defendant number 4 on promissory numberes executed by
the latter on date march 14 1925 the decree in favour of
thinnappa chettiar being dated august 15 1929 and that in
favour of palaniappa chettiar being dated july 17 1928. on
july 3 1955 thinnappa chettiar filed a petition under 0. 29. r. 11 2  54 62 66 of the civil procedure companye being

p. number 25 of 1935 praying for the realisation of rs. 35224-2-6- by attachment and sale of immovable -properties
belonging to his judgment-debtor. on july 4 1935 he
attached the shares of the sons of the defendant number 3 and
defendant number4 in these immovable properties but in so far
as the attachment was number levied the sales effected by the
respondent on july 5 1935 of the properties falling to the
share of the third defendants branch were upheld. on
september 30 1935 thinnappa chettiar filed an application
being e. a. number 376 of 1935 under section 151 of the civil
procedure companye praying that a sum of rs. 6600 realised
after the order of attachment obtained by him as aforesaid
be sent for from the respondent and paid to him by means
of a cheque. e. p. number 25 of 1935 and e. a. number 376 of 1935
were dismissed by the district judge on august 14 1937.
thinnappa chettiar filed a. a. 0. number. 349 350 of 1937
against these orders of the dist. judge and on august
101939 the high companyrt holding that the leave of the
insolvency companyrt was number necessary before these proceedings
in execution had been taken remanded both e. p. number 25 of
1935 and e. a. number 376 of 1935 to the district companyrt for
disposal according to law. the learned district judge in
order to avoid companyflict of decisions and to save
difficulties of multiplicity of proceedings allowed the
appellant to be made a party in e. p. number 25 of 1935 and e.

number 376 of 1935 and thinnappa chettiar was made a party
to the proceedings la e. p. number 15 of 1940. the learned
district judge passed a companyprehensive order in all these
three matters viz. e.p. number 25 of 1935 e.a. number 376 of
1935 and e.p. number 15 of 1940 which came up for hearing
before him. he held that even though the word charge as
such had number been used in the high companyrts decree in a. s.
number60 of 1933 the directions given by the high companyrt to the
respondent under the circumstances of the case created a
charge on the properties which fell to the share of the
third defendants branch this was the basis of the petition
which had been filed by the appellant being. e. p. number 15
of 1940 and the learned district judge observed this
direction must be deemed to have been certainly made in
favour of the 6th defendant in order to see that he is paid
the amount decreed in his favour by a companyrt official who had
the possession of the properties and with such guarantee the
high companyrt probably thought that it was quite unnecessary
to expressly state that a charge has been created over these
properties. the learned district judge accordingly directed the
respondent to deposit into companyrt to the credit of e. p. number
15 of 1940 the sale proceeds in question viz. rs. 8250
minus his legitimate expenses for payment to the appellant. a. number 376 of 1935 was dismissed with companyts of the
respondent and e. p. number 25 of 1935 was adjourned to january
21 1942 for further pro. ceedings with regard to other lots of properties. thinnappa
chettiar filed appeals against these orders being a.a. 0.
number. 229 429 and 483 of 1942 in the
high companyrt. in the meanwhile on january 9 1942 the respondent
deposited a sum of rs. 5200 in companyrt to the credit of the
appellants decree. on february 5 1940 the learned
district judge made a further order allowing the respondent
to sell the properties which he was directed to sell by the
high companyrts order dated may 9 1938 in a. s. number 60 of
1933 to pay the petitioner as directed by the high companyrt
numberwithstanding the attachment as was ordered in e. p. number
25 of 1935 and free of that attachment. on may 11 1942 a
-sum of rs 5500 being the sale proceeds of certain
properties belonging to the share of the 3rd defendants
branch was adjusted by the appellant and on january 23
1940 the respondent paid to the appellant a further amount
of rs. 26966 adjusting a further sum of rs. 11 for companyts
due by the appellant. the high companyrt disposed of the a. a. 0. number. 229 429 483
of 1942 on numberember 5 1943. it held that the procedure
adopted by the learned district judge of impleading
strangers as parties to the execution petition and the
execution applications before it companyld number be supported and
ordered that the appellant and thinnappa chettiar should be
deleted from the array of parties in e.p. number 25 of 1935

a. number 376 of 1935 and e.p. number 15 of 1940. it also held
that numbercharge was created by the decree dated may 9 1938
in a.s. number 60 of 1933 in respect of the sum of rs. 24257-0-8 awarded to the appellant under the decree. it
observed that it is clear from the language used that the
learned judges who disposed of a. s. number 60 of 1933 did number
intend to create a charge and the decree did number have the
legal effect of creating a charge. in the result the
high companyrt ordered that the name of thinnappa chettiar
should be struck out from the array of parties in e.p. number
15 of 1940 and the name of the appellant should be struck
out from the array of parties in e.p. number 25 of 1935 and

a. number 376 of 1935 and further ordered that all the three
applications -be remanded to the lower companyrt for disposal on
the merits in the light of the observations companytained in the
order. as a result of the decision of the high companyrt negativeing
the appellants claim to priority the respondent filed on
july 29 1944 e.a. number 182 of 1944 praying that the companyrt
do issue a cheque for rs. 5200 deposited-by him on january
9 1942. on the 7th august 1944 the appellant in his
turn- filed an application being e.a. number 195 -of 1944
praying that the companyrt do issue a cheque for rs. 5200
deposited by the respondent as due to him under the decree
dated may 9 1938. while these applications were pending
the respondent filed a petition being execution petition
number 35 of 1944 on september 27 1944 under ss. 1414 and
151 and 0. 21 r. 1 1 and 37 of the civil procedure companye
praying that the companyrt do order payment by the appellant to
him of  1  the sum of rs. 5200 deposited by him in companyrt
on january 8 1942 and claimed by him in e.a. number 182 of
1944  2  sale proceeds adjufsted by the appellant on
mayll1942 together with interest thereon at 6 per cent. per
annum from may ii 1942 aggregating to rs. 6283-12-0  3
the amount paid on june 23 1942 by the appellant being rs. 26966 and  4  the amount adjusted by the respondent for
costs due by him on june 23 1942 being rs. i 1 items 3
and 4 aggregating to rs. 26977 together with interest
thereon from june 23 1942 up to date at 6 per cent. per
annum amounting to rs. 3722-13-6. thus he claimed a sum of
rs. 42183-9-6 in the aggregate from the appellant. all these matters-e.a. number 182 of 1944 and e.a. number 195 of
1944 and e.p. number 35 of 1944 were heard by the district
judge on july 14 1945. the learned district judge
understood the order of the high companyrt dated numberember 5
1943 to mean that the claim of the appellant to priority
was still to be adjudicated upon. he stated that all that
had been held by the high companyrt was that the decree in a.s.
-number 60 of 1933 did number have the legal effect of creating a
charge in favour of the appellant and the question whether
the appellant was number entitled to priority in respect of
his claim was number companycluded by that decision since it
depended upon the circumstances and situation of parties in
the first litigation itself  i.e. o.s. number 22 of 1924 sub-
court kumbakonam and a.s. number 60 of 1933 high companyrt  and
the reasons which then led the official receiver who was
present when the order was made in a.s. number 60 of 1933 to
submit that he was prepared to sell such parts of the
estate as might be necessary for satisfying the decree
passed in favour of the appellant. on scrutinizing these
facts the learned district judge came to the companyclusion
that in respect of the sums due to him under the partition
decree directed to be paid from the estate -of the third
defendants branch as equitable adjustment the appellant
had really a superior title and assuming for a moment that
the direction related instead to a specific item of
immovable property it was obvious that such an item would
number have formed part of the estate in insolvency at all. in
the result he held that the respondent was number entitled to
restitution in respect of the payments made and the
appellant was clearly entitled to such amounts and also to
the amount then in deposit since the estate in insolvency
did number itself companyprise these assets in the strict legal
sense. the applications e. p. number 35 of 1944 and e.a. number
182 of 1944 were accordingly dismissed. e. a. number 195 of
1944 was allowed and the appellant was declared entitled to
the amount deposited in companyrt. the respondent carried appeals to the high companyrt against
these orders of the district judge being a.a.0. number. 724
725 and 726 of 1945. the high companyrt appreciated the force
of the arguments advanced before it on behalf of the
-appellant but felt itself bound by the companystruction put
upon the judgment and decree by the high companyrt on numberember
5 1953 observing that even if that companystruction were number
strictly binding on it as a decision on a pure question of
law in the nature of a judicial precedent by anumberher
division bench of that companyrt would undoubtedly be it would
feel highly loath to deny it the respect to which it was
entitled at its hands in the interests of judicial companyity
whatever be the companystruction which it would have imposed
upon the same had the question arisen for the first time
before it. it therefore held that the appellant was
debarred by the principles of companystructive res-judicata from
raising other grounds of priority or preference after remand
which had numberrelation to the decree which was the basis of
the e. p. number 15 of 1940. the high companyrt also expressed the
opinion that even assuming there was numberres-judicata in his
favour the provisions of the provincial insolvency act
being what they were the appellant companyld claim numberpriority
if his position as a secured creditor as defined in s.  2
 e  of the act companyld number be sustained. a further argument
was advanced before the high companyrt and it was that a
provision in a partition decree for a mere payment by one
co-sharer to anumberher of a sum of money for equalisation of
shares per se companystituted a charge by operation of law over
the share allotted to the sharer made liable for the payment
without any creation of charge by the companyrt by express
language or necessary implication. the high companyrt refused
to entertain that argument in view of the companyclusion reached
by it as above and also negatived the companytention which was
urged on behalf of the appellant before it that the
provision for such payment in the partition decree was an
owelty provision observing that all that was meant was
equality and all that the expression owelty provision in
the companytext implied was a provision for adjustment or
equalization of shares and numbermore. the high companyrt
accordingly came to the companyclusion that the respondent was
entitled to the restitution sought by him and allowed the
appeals with companyts before it and in the companyrt below. the
order of the learned district judge was set aside and e. p.
number 35 of 1944 and e. a.number 182 -of 1944 were allowed and

a. number 195 of 1944 was dismissed. the appellant applied for and obtained from the high companyrt
certificates of fitness under art. 133 of the companystitution
and that is how these appeals are before us. the principal question which arises for our determination
in these appeals is what was the nature of
the rights acquired by the appellant in regard to the
payment of rs. 24.257-0-8 and interest by the respondent as
representing the 3rd defendants branch under the term of
the decree dated may 9 1938 in a.s. number 60 of 1933.
it must be remembered that the decree was one for partition
of the properties belonging to the joint family of which the
defendant number 3 and the appellant were companyarceners. while
effecting such a partition it would number be possible to
divide the properties by metes and bounds there being of
necessity an allocation of properties of unequal values
amongst the members of the joint family. properties of a
larger value might go to one member and properties of a
smaller value to anumberher and therefore there would have to
be an adjustment of the values by providing for the payment
by the former to the latter by way of equalisation of their
shares. this position has been recognized in law and a
provision for such payment is -termed a provision for
owelty or  equality of partition. the followings passage
from story on equity  third edition  page 277 para 6541
describes what happens on a partition-
in regard to partitionsthere was also anumberher distinct. ground upon which the jurisdiction of companyrts of equity was
maintainable as it companystituted a part of its appropriate and
peculiar remedial justice. it is that companyrts of equity
were number restrained as companyrts of law were to a mere
partition or allotment of the lands and other real estate
between the parties according to their respective interests
in the same and having regard to the true value thereof
but companyrts of equity might with a view to the more-
convenient and perfect partition or allotment of the
premises decree a pecuniary companypensation to one of the
parties for owelty or equality of partition so as to
prevent an injustice or avoidable inequality. lawrence -on equity jurisprudenumber  1929  vol. i pp. 1227 1228 s. 1147 also companytains the following passage-
the ordinary method of partition is to decree a physical
severance of the separate interests numbersale
being authorised unless a fair partition is otherwise
impossible or at least prejudicial. there was numberpower of
judicial sale at companymon law. the companyrt ordering physical
partition may make its decree effective by companypelling mutual
conveyances by the parties of their respective interests. owelty of partition may be awarded to equalize the shares of
the parties and may be decreed to be a lien on the
excessive allotment. though only when necessary to a fair
partition and it should be employed as little as possible. this position has been summarized in freemans companyenancy and
partition  1886 edition  page 676 para. 507 under the
caption of owelty-
owelty when an equal partition cannumber be otherwise
made companyrts of equity may order that a certain sum be paid
by the party to whom the most valuable purpartly has been
assigned. the sum thus directed to be paid to make the
partition equal is called owelty. it is a lien on the
purparty on account of which it was granted. the law
cannumber companytemplate the injustice of taking property from one
person and giving it to anumberher without an equivalent or a
sufficient security for it. the lien for owelty has
precedence over prior mortgages and other liens existing
against the companyenant against whom the owelty was awarded. it is significant to numbere that this provision for owelty is
construed as a lien which the companysharer who is awarded
owelty is deemed to acquire on an excessive allotment of
property to the other companysharer. owelty in general and
lien therefor are thus described in companypus juris secundum
vol. 68 s. 15section 15. owelty and lien therefor

in general. liens. in general. the parties to a voluntary partition may agree to pay owelty
to equalise the shares allotted. owelty is the. difference which is paid or secured by one
coparcener or companytenant to anumberher for the purpose of
equalizing a partition. the power to award
owelty has from the earlier times been regarded as
necessary to the act of partitioning property and the
parties to a voluntary partition may agree to the payment of
owelty in order to equalize the shares allotted and where
the matter of making the partition is delegated to
commissioners they have the power to award owelty as a
necessary incident to the partition. liens. an agreement for owelty in a voluntary partition of land
ordinarily creates a lien or charge on the land. an agreement for owelty ordinarily creates a lien or charge
on the land taken under the partition and this lien may
exist because of an express agreement between the parties
providing for it or it may be implied in the absence of such
express agreement. it therefore follows that when an owelty is awarded to a
member on partition for equalization of the shares on an
excessive allotment of immovable properties to anumberher
member of the joint family such a provision of owelty
ordinarily creates a lien or a charge on the land taken
under the partition. a lien or a charge may be created in
express terms by the provisions of the partition decree
itself. there would thus be the creation of a legal charge
in favour of the member to whom such owelty is awarded. if
however numbersuch charge is created in express terms even so
the lien may exist because it is implied by the very terms
of the partition in the absence of an express provision in
that behalf. the member to whom excessive allotment of
property has been made on such partition cannumber claim to
acquire properties falling to his share irrespective of
or discharied from the obligation to pay owelty to the other
members. what he gets for his share is therefore
the properties allotted to him subject to the obligation to
pay such owelty and there is imported by necessary
implication an obligation on his part to pay owelty out of
the properties allotted to his share and a companyresponding
lien in favour of the members to whom such owelty is awarded
on the properties which have fallen to his share. number only is this the numbermal position on a partition decree
where there is an unequal distribution of properties among
the members of the joint family but even where an
encumbrance has been created on a members share before the
partition is effected the encumbrancer is postponed to the
member to whom such owelty is awarded under the partition
decree. a lien or a charge created in favour of a member in
regard to such owelty obtains precedence over an encumbrance
and there are authorities to show that such lien or charge
has priority over an earlier mortgage. the following passage from mitra on the law of joint
property partition in british india second edition page
414 enunciates the above position
you will numbere that sums directed to be paid for the
purpose of equalizing the values of the shares are in legal
language called owelty. the companymissioners have no
authority without express authorization by the companyrt to
award this companypensation.  see rule 14 0. xxvi c. p. companye . where in a suit for partition the decree of the companyrt
declares that any sum of money should be paid as owelty by
one companysharer to anumberher the companyrt may direct such sum to be
a charge on the share allotted. in such a case should the
co-sharer before partition have created any mortgage in
respect of his undivided interest prior to the partition
the charge for the owelty will have precedence over the
mortgage. shahebzada mohammed kazim shah v. r. s. hill
 1907  i.l.r. cal. 388.
to the same effect is the passage in mullas transfer of
property act  4th edition  at page 211
the lien of a companysharer for owelty money on partition is
entitled to precedence over prior mortgagees of property
allotted to the companysharer who is liable to pay owelty . shahebzada mohommed kazim shah v. r.s. hill was a case where
the appellants had been awarded two sums of rs. 37000 and
rs. 9500 by way of owelty on partition. at the date of the
partition there was

i.l.r.  1907  35 cal. 388 392 393.
subsisting a mortgage on a portion of the property
which was the subject-matter of partition and the question
arose whether the amounts awarded by way of owelty on
partition were entitled to priority over the mortgagees. it
was observed by maclean c. j. in hi judgment
then arises the question of priority. to determine that
question it becomes necessary to ascertain what was the
substituted property which the mortgagor took under the
partition. it is clear that all he took was the house number
52-2 park street subject to the charges of rs. 37000 and
rs. 9500 in favour of the appellants and it can only be
upon that that the roy mortgagees can rank as mortgagee s.
that is upon number 52-2 park street subject to the charges
created by the decree. stephen j. who delivered a short but companycurring judgment
added
it is quite plain that the appellants claim which is a
charge upon the property companystitutes a deduction from the
corpus of the property and is number affected by any dealings
with the possession of the property on which the decision of
the judge of the companyrt of the first instance is based. there was numberdoubt on the facts of this case a charge
expressly created in favour of the companysharer who had been
awarded owelty but that in our opinion does number make any
difference to the position. the moment there is a provision
for such owelty made in a partition decree the member in
whose favour that provision has been made is entitled to a
lien or a charge over the property which has fallen to the
share of the member to whom property of a higher value has
been allotted. if such a lien or a. charge is expressly
declared so far so good but even if it is number so expressly
declared there is by necessary implication the creation of
a lien or a charge in his favour for the amount of such
owelty. this case was followed in poovanalingam servai v.veerai 1
where phillips j. observed as follows
there can be numberdoubt that in a partition suit all
equities between the members of the companyarcenary

a.i.r.  1926  madras 166.
should be worked out allotting to each member the share to
which he is equitably entitled. after quoting the passage from freemans companytenancy
partition set out above the learned judge further observed
even if there is numberlegal chargein the present case yet
on equitable principles such a charge can be enforced and
when. it companyes to partitioning the property between two company
tenants this equity should in my opinion be enforced. the high companyrt in passing the order dated numberember 5 1943
initially went wrong in holding that numbercharge was created
in favour of the appellant under the terms of the decree
dated may 9 1938 in a.s. number 60 of 1933. numberdoubt the
legal advisers of the appellants were responsible for this
result in so far as they invited the companyrt to companystrue the
decree as creating an express charge in favour of the
appellant. numbersuch express charge companyld be spelt out of the
terms of the decree and in so far as the high companyrt came to
the companyclusion that numbersuch express charge was created in
favour of the appellant it was undoubtedly companyrect. but
at the same time the high companyrt should have companysidered
whether by reason of the provision for owelty companytained in
the terms of that decree there was under the
circumstances by necessary implication a lien or a charge
created in favour of the appellant for the payment of the
sum of rs 24257-0-8 and interest out of the properties
falling to the share of the third defendant is branch and
therein the high companyrt fell into an error. this error was gain repeated by the high companyrt while passing
the orders under appeal in a. a. 0. number. 724 725 and 726 of
1945. the question which the high companyrt ought to have
addressed to itself was whether in spite of the fact that no
express charge was created in favour of the appellant under
the terms of the decree dated the 9th may 1938 in a. s.
number 60 of 1933 for the payment of rs. 24257-0-8 and
interest out of the properties falling to the share of the
3rd defendants branch there was by necessary implication a
hen or a charge created for payment of that sum by reason
of the provision for owelty having been made in favour of
the appellant by way of equalization on partition. even if
numberexpress charge was created there was in equity a lien or
a charge created on the properties falling to the share of
the third defendants branch and he did number acquire the
properties which fell to his share on such partition
irrespective of or discharged from the obligation to make
payment of such sum out of the same. the appellant was in
our opinion entitled to payment of the sum of rs. 24257-0-
8 and interest out of the properties which fell to the share
of the third defendants -branch on partition and which came
to the possession of the respondent by reason of the
insolvency of defendant number 3.
this position was rightly appreciated by tile learned dist. judge when he passed orders in favour of the appellant on
july 14 1945. the following passage from his judgment in
our opinion truly reflects the position as it obtained
between the appellant and the respondent
when we scrutinise these facts the companyclusion is
inevitable that the claim of the respondent to the
present amounts stands even higher than on the basis of the
priority of a charge created in insolvency
administration whether by virtue of a security  a
charge created by an act of companyrt or a lien arising from
the operation of any law or statute. in fact it companyld be
contended with great force that the estate in insolvency
which vested in the hands of the official receiver companysisted
of certain immovable properties minus the. sum directed to
be paid to the present respondent by the sale of available
portions of the estate as undertaken by the official receive
i r himself. this was because 0. s. number 22 of 1924 on the
file of the kumbakonam sub-court was a suit of partition in
which the present respondent was a sharer and partner
exactly as the 3rd defendants branch represented anumberher
share. in decreeing the suit equities arose for adjustment
as between the several sharers and it was found that the
3rd defendants branch was liable to the present respondent
in respect of certain overdrawals of the 3rd defendant
during
the minumberity of the respondent and for certain lease
amounts due. the official receiver represented the 3rd
defendants branch in the appeal since the insolvency had
supervened. the matter-would at once be cleared from
difficulty if we assume -that the decree had dealt with
actual sums of money instead. of immovable properties. it
will be obvious in such a case that the estate which would
have vested in the official receiver after the a appellate
decree for administration in insolvency would be the
amount or amounts assigned to the branches of the 3rd defen-
dant and plaintiff at partition as hares deducting
amounts payable to other companysharers including the present
respondent. merely because the estates actually companysisted
of immovable properties while the claim of a companysharer like
the present respondent to an adjustment on grounds of equity
was recognized in the form of a direction to pay by sale of
a necessary portion of the estate. the central fact of the
situation is number changed. in other words the present
respondent cannumber be really classed as a creditor of the
insolvents branch at all. in respect of the sums due to
him under the partition decree directed to be paid from the
estates of the plaintiff and 3rd defendant as equitable
adjustment he has really superior title and assuming for
a moment that the direction related instead to a specific. item of immovable property it is obvious. that such an item
would number-have formed part of the estate in insolvancy at
all. as mr. t. s krishnamurthi ayyar for the official
receiver has frankly companyceded it is a well-knumbern principle
that in suits for partition the shares are first assigned
upon the simple basis of division for administrative
convenience claims inter se being worked out by specific
directions for payment. nevertheless in a law and in fact
the shares actually derived by the parties to the suit are
those subject to or qualified by the directions made in
adjustment. if this was the true position as it obtained and we are of
the opinion that it was then the orders under appeal
passed by the high companyrt were clearly wrong. there was no
justification for the respondent to ask
for a withdrawal of the sum of rs. 5200 which he had
earlier deposited into companyrt on january 9 1942 or for the
restitution of the sums of rs. 5500 and rs. 26966 and rs. 11 together with interest thereon as claimed. these monies
had been paid by the respondent in pursuance of the
directions companytained in the decree dated may 9 1938 in a.

number 60 of 1933 and they had been rightly paid by him and
they companyld never be the subject-matter of any execution
proceedings as initiated by him. apart from the question
whether a. 144 read with s. 151 of the civil procedure companye
was at all applicable in the circumstances of this case we
are of the opinion that the claim made by the respondent for
the aforesaid sums was absolutely unjustified. we are
accordingly of the opinion that the orders passed by the
high companyrt in a. a. 0. number. 724 725 add 726 of 1945 were
wrong and should be reversed. the respondent wrote on numberember 21 1953 to the registrar
of this companyrt to say that numbere of the creditors had companye
forward to finance the defence of the appeals and the
insolvency companyrt i.e. the sub-court tanjore had ordered
that the matters might be left undefended as the funds in
the estate were insufficient to defend the appeals at the
cost of the estate. he therefore requested that when the
appeals were heard and decided a direction might be given
by this companyrt that there should be numberorder for companyts
against him. we do number gee how we can absolve the
respondent from liability to pay the companyts which must
numbermally follow the event. we accordingly order that the appeals will be allowed the

p. number 35 of 1944 and e. a. number 182 of 1944 will stand
dismissed e. a. number 195 of 1944 will be allowed and the
respondent will pay the appellants companyts of these
proceedings throughout in this companyrt as well as in the
courts below. this separate judgment of the companyrt was delivered by
sarkar j.-these appeals arise out of ajudgment
of the high companyrt at madras setting aside ajudgment
of the district judge of west tanjore bywhich the
learned district judge disposed of three applications in
certain execution proceedings. the facts leading to these
applications were as stated hereunder. there was a suit for the partition of properties belonging
to a family of odayars. the suit was numbered suit number 22
of 1924 of the companyrt of the subordinate judge of kumbakonam. there was a number of parties to this suit but of these we
are only companycerned with two namely balagurusami who was
defendant number 3 and swaminathaudayar who was defendant number

swaminathaudayar is the appellant before us. on october
25 1924 a preliminary decree for partition was passed in
this suit by the learned subordinate judge. one of the
parties to the suit appealed from that decree to the high
court at madras. while this appeal was pending in the high
court balagurusami was adjudicated insolvent and thereupon
his assets including his share in the properties which were
the subject matter of the partition suit became vested in
the official receiver west tanjore  hereinafter referred to
as the official receiver . the official receiver is the
respondent in the appeals before us. on february 12 1929
an order was made by the high companyrt in the appeal pending
before it adding the official receiver a party to the
partition suit. in due companyrse the appeal was disposed of. the appeals before us are number companycerned with the preliminary
decree and numberfurther reference to it will be necessary. on september 26 1932 a final decree for partition was
passed by the learned subordinate judge to whom the matter
had companye back after the disposal of the appeal from the
preliminary decree. the appellant before us was number
satisfied with the final decree and he preferred an appeal
from it to the high companyrt at madras. that appeal was marked

s. number 60 of 1933. the high companyrt passed its judgment and
decree in that appeal on may 9 1938 varying the decree of
the lower companyrt. it is necessary to refer to portions of
this decree
of the high companyrt because the question in this appeal will
turn on them. the decree made the following provisions
among others

the official receiver of west tanjore as representing the
branch of balagurusami the 3rd defendant do pay rs. 24257-
0-8 to the appellant the 6th defendant with interest at 6
per cent. per annum from september 26 1932.

the official receiver of west tanjore in whom the 3rd
defendants estate is vested be directed to sell portions of
it in order to pay off the amounts decreed to be paid by the
3rd defendants branch and shall make payments on behalf of
the 3rd defendants branch in accordance with the judgment
herein. sometime prior to the passing of the final decree by the
high companyrt on may 9 1938 one thinnappa a creditor of the
3rd defendant balagurusami who had obtained a money decree
against him in 1929 applied in execution of that decree for
attachment and sale of the shares of the sons of the 3rd
defendant in the joint family properties. this application
had been made on july 3 1935 and marked e.p. number 25 of
1935. an order for attachment was duly made in favour of
thinnappa and the attachment was levied on some of the
properties on july 6 1935. in the meantime on
july 5 1935 the official receiver had sold some of the
properties of balaguruswamis branch in the companyrse of the
administration in insolvency and had received rs. 2100 on
july 5 1935 and a further sum of rs. 6150 on july 18
1935. on september 30 1935 thinnappa made an marked e.a. number 376 of 1935 for an order on the official receiver to
bring into companyrt for payment to him a sum of rs. 6600 out
of the sale proceeds received by the official receiver as
earlier mentioned. these two applications were dismissed by
the learned district judge west tanjore who heard them on
the ground that numberleave had been obtained to proceed
against the official receiver from the companyrt in charge of
the insolvency proceedings. thinnappa appealed from this
order of dismissal to the high companyrt at madras and the high
court set aside the order of dismissal and directed that the
applications be heard on their
merits as it was of opinion that numberleave to proceed against
the official receiver was necessary as execution was sought
against the sons of the insolvent. this order of the high
court was made on august 10 1939. before the two
applications however companyld again be taken up by the
district judge of west tanjore for hearing the appellant
before us on january 25 1940 applied for an order on the
official receiver to deposit into companyrt the sum of rs. 8250
being the entire sale proceeds of some of the properties
belonging to balagurusamis branch received by him as
earlier mentioned. this application was marked e.p. number- 15
of 1940. the learned district judge of west tanjore to whom
the application had been made felt that the three applica-
tions two by thinnappa being e.p. number 25 of 1935 and e.a. number 376 of 1935 and one by the appellant being e.p. number 15
of 1940 were best heard together and he thereupon on
september 13 1941 made -certain orders whereby the
appellant was made a party to the two applications by
thinnappa and thinnappa was made a party to the application
by the appellant. the three applications thereafter came up for hearing
together and were disposed of by one judgment passed by the
learned district judge of west tanjore on december 23 1941.
it appears to have been companytended before the learned
district judge on behalf of the appellant that he was
entitled to the whole of the sale proceeds as the final
partition decree of may 9 1938 had created a charge in his
favour on the properties which had been allotted under it to
the official receiver as representing balagurusamis branch
while it appears to have been companytended on behalf of
thinnappa that he had the first right to the sale proceeds
by virtue of his attachment. the learned district judge
came to the companyclusion that the decree of may 9 1938
created a charge in favour of the appellant and in that view
of the matter he made an order directing the official
receiver who was a party to all the three applications to
deposit into companyrt to the credit of the appellant the said
sale proceeds amounting to rs. 8250 after deducting
thereout his expenses of the sale and dismissing thinnappas
application 796 e. a. number 376 of 1935 for an order on the
official receiver to bring into companyrt for payment to him a
sum of rs. 6600 out of the said sale proceeds. with regard
to thinnappas application e. p. number 25 of 1935 he
adjourned it till january 21 1942 for further proceedings
with regard to other properties. as a result of the said
judgment of the learned district judge the position on
december 23 1941 was that the appellant was held to have a
charge on the properties allotted to the official receiver
as representing balagurusamis branch for the amount
directed to be paid to him by the decree of may 9 1938. in
view of this the official receiver on january 9 1942
deposited in companyrt to the credit of the appellant a sum of
rs. 5200 out of the said sale proceeds being the proceeds
of the sale of the properties over which the appellant had
been held to have a charge. basing himself upon the said
finding of a charge in his favour the appellant made an
application on march 19 1942 which was marked e. a. number 34
of 1942 for an order on the official receiver to sell the
properties belonging to the branch of balagurusami the
insolvent for the purpose of paying off the said charge. on
february 5 1942 an order was made on this application
giving leave to the official receiver to sell the properties
and to pay the appellant his decretal amount out of the sale
proceeds. it appears that thereafter in may and june 1942
the official receiver paid various sums to the appellant in
respect of the amount due to him under the decree either in
cash or by adjustment aggregating rs. 32477.
thinnappa however was disatisfied with the order of the
learned district judge of december 23 1941 and he appealed
from it to the high companyrt at madras. there were in fact
three appeals filed by him as the order companyered three
applications. these appeals were marked a.a.0. number. 229
429 and 483 of 1942. on numberember 5 1943 the high companyrt
delivered judgment allowing these appeals. the high companyrt
held that the procedure adopted by the learned district
judge in making the appellant a party to thinnappas two
applications e. p. number 25 of 1935 and e. a. number 376 of 1935
and thinnappa a party to the appellants appli-
cation e.p. number 15 of 1940 companyld number be supported. the high
court further held that the decree of may 9 1938 did number
create any charge on the properties of balagurusamis branch
in favour of the appellant. in this view of the matter the
high companyrt made an order striking out the name of thinnappa
from e.p. number 15 of 1940 and the name of the appellant from

p. number 25 of 1935 and e.a. number 376 of 1935 and remanding
all the three applications to the lower companyrt for disposal
on the merits in the light of the observations companytained in
the order. in view of the aforesaid finding of the high companyrt that the
appellant did number have the charge claimed by him the
official receiver felt that he was entitled to restitution
from the appellant of the sum of rs. 32477 paid to him as
earlier mentioned as a result of the finding of the learned
district judge of december 23 1941 of the existence of the
charge and also to withdraw the sum of rs. 5200 deposited
in companyrt to the credit of the appellant in similar
circumstances. he thereupon on july 29 1944 made an
application marked e.a. number 182 of 1944 for an order that
the sum of rs. 5200 deposited by him in companyrt on january 9
1942 to the credit of the appellant may be paid back to him
and on september 27 1944 made anumberher application marked

p. number 35 of 1944 for an order on the appellant to pay
back to him the said sum of rs. 32477 paid to the appellant
in cash and by way of adjustment as earlier mentioned
together with interest thereon amounting in the aggregate to
rs. 36983/9/6. the appellant in his turn made an
application on august 7 1944 marked e.a. number 195 of 1944
for payment to him of the said sum of rs. 5200 deposited by
the official receiver in companyrt on january 9 1942 to his
credit. these three applications were disposed of by the
learned district judge of west tanjore by one judgment dated
july 14 1945. the learned district judge was of the view
that all that was held by the high companyrt in its judgment
dated numberember 5 1943 in the appeals marked a.a.0. number. 229 42 429 and 483 of 1942 was that the final partition
decree of may 9 1938 did number have the legal effect of
creating
a charge in favour of the appellant but that the question
whether the appellant was number entitled to priority in
respect of his claim was number companycluded by that judgment. in
this view of the matter he went into the question of
priority and found that the estate in insolvency which
vested in the official receiver under the decree of may 9
1938 companysisted of certain immovable properties minus the
sums directed to be paid under it and the official receiver
was number therefore. entitled to restitution in respect of
the payments made by him to the appellant or to the amount
in deposit in companyrt since the estate in insolvency did number
comprise these monies in the strict legal sense. he
thereupon dismissed the official receivers application for
refund from the appellant being e.p. number 35 of 1944 and
his application to be repaid the monies deposited in companyrt
being e.a. number 182 of 1944 and allowed the appellants
application for payment to him of the sum of rs. 5266
deposited in companyrt being e.a. number 195 of 1944. the appeals
to us arise out of these applications. the official receiver appealed from the said judgment july
14 1944 to the high companyrt at madras and these appeals were
marked a.a.0. number. 724 725 and 726 of 1944. these appeals
were decided by the high companyrt by its judgment dated
february 8 1950. the high companyrt held that the finding in
the judgment dated numberember 5 1943 that the appellant had
numbercharge over the properties allotted to the branch of
balagurusami might number be binding as a judicial precedent
but it had to be given effect to in the interests of
judicial companyity-and that it had to be held that the
appellant was number entitled to a charge. the high companyrt also
held that the judgment dated numberem. ber 5 1943 did number
leave it open to the appellant to urge any other claim of
priority as he had number done so on the earlier occasion in
his application being e. p. number 15 of 1940. therefore the
high companyrt came to the companyclusion that the appellant was number
entitled to any priority. the high companyrt further held that
in view of the provisions of the provincial insolvency act
the appellant companyld claim numberpriority if his claim to a
charge under the decree of may 9 1938 failed
and that such claim failed as it bad been rejected by the
earlier judgment of the high companyrt dated numberember 5 1943
which judgment had to be accepted for reasons already
stated. lastly the high companyrt held that the reasoning of
the district judge of west tanjore that what vested in the
official receiver were certain immovable properties of the
insolvent minus the sums directed by the decree of may 9
1938 to be paid was much too artificial and was
unsustainable. it held that the official receiver was
entitled to refund from the appellant and to be paid out the
monies deposited in companyrt and that the appellant was number
entitled to the latter sum. in view of these findings the
high companyrt allowed the appeals marked a. a. 0. number. 724 725
and 726 of 1945. from this judgment the appellant appealed
to this companyrt and these are the appeals number before us for
hearing. in my view these appeals must be allowed. the decree of the
high companyrt of may 9 1938 directed the official receiver to
pay monies to the appellant. that decree is binding on the
official receiver. the official receiver has to carry it
out. he has carried it out and paid monies under it to the
appellant and deposited to his credit in companyrt a sum of rs. 5200. the official receiver cannumber be heard to say that
the monies should be refunded to him because numbercharge had
been created over the insolvents estate in respect of them
or because the appellant was number entitled for any other
reason to a priority in payment. whether a charge had been
created or number or a right to priority exists or number is
irrelevant. it is enumbergh that there is a decree against the
official receiver to pay the monies. in making the payment
the official receiver has carried out his obligations under
the decree. the decree stands and he has therefore no
right to recover the payments made. the official receiver
asked for the order for refund under s. 144 of the companye of
civil procedure. but that section only applies where pay-
ments have been made under a decree which is varied or
reversed. that is number the case here. here the payments
have been made in satisfaction of a decree which still
stands and indeed is one which has never been attacked. it is again number a case where it companyld be said that the
appellant is entitled only to a dividend in respect of the
decretal claim in the distribution of the insolvents
estate. that might have happened if the appellant was a
creditor of the insolvent. here however he is a creditor
of the official receiver himself. the official receiver
therefore cannumber claim either that the appellant should
refund the payments made to him so that the monies refunded
along with other available assets of the insolvent may be
distributed pro rata among the creditors of the insolvent
including the appellant. the finding by the high companyrt in its judgment of numberember
51943 that the appellant was number entitled to a charge and
the acceptance of that finding by the judgment from which
these appeals arise make numberdifference for the right of the
appellant to receive the monies or to retain what has been
paid to him does number depend on the existence of a charge in
his favour but on the existence of the decree. it is number
necessary to decide the question whether the appellant has
such a charge and i do number feel called upon to make any
observation with regard to it.


civil appellate jurisdiction civil appeal number 996 of
1979
from the judgment and order dated 26.10.78 of the
madhya pradesh high companyrt in misc. petition number 176/74. n. kacker s.k. ghambir and ashok mahajan for the
appellant. u. mehta s.s. khanduja r.d. jain mehfooz khan and
yashpal dhingra for the respondents. the judgment of the companyrt was delivered by
chandrachud c.j. respondent 1 was appointed as an
agent of the appellant-bank which is a companyoperative society
registered under and governed by the provisions of the
madhya pradesh companyoperative societies act. 1970. by an order
dated june 5 1968 passed by one s.p. jain the services of
respondent 1 were terminated on the ground that he had over-
stayed the leave granted to him. aggrieved by that order respondent 1 raised a dispute
under section ss 2  of the act before the registrar of the
co-operative societies. the registrar referred the matter to
the deputy register who by an order dated february 27
1972 allowed the claim of respondent 1 on the ground that
the order terminating the services was number in accordance
with rules 44 and 45 of companyoperative bank employees service
rules. he also ordered the reinstatement of respondent 1
with full back salary and allowances. in an appeal filed by
the bank the addl. registrar took the view that the only
remedy which was open to respondent 1 was to claim damages
for wrongful termination of his services and that
therefore he companyld number be reinstated in service respondent
1 than filed an appeal before the board of revenue which
held by an order dated august 28 1974 that s.p. jain who
held the enquiry against respondent 1 and passed the order
terminating his services had numberpower to do so. the board of
revenue set aside the order of termination and remanded the
matter to the bank for disposal in accordance with law. the
writ petition filed by the bank in the high companyrt of madhya
pradesh was dismissed on october 26 1973. according to the
high companyrt since s. p. jain had numberauthority to hold the
enquiry or to pass the impugned order of dismissal the said
order had numberexistence in the eye of law and
therefore respondent 1 should be deemed to be in service
and be reinstated. aggrieved by the judgment of the high
court the bank has filed this appeal. we are in agreement with the companyclusion to which the
high companyrt has companye though for somewhat different reasons
which are as follows-
the board of directors of the appellant-bank was
superseded by the registrar of the companyoperative
societies by an order dated july 25 1967 and its
powers were vested in madhya pradesh state companyperative
bank jabalpur which is an apex bank as officer-in-
charge of the superseded bank. by resolution number 23
dated may 19 1968 the apex bank companyfirmed the action
of its chairman vice chairman in deputing amongst
others s.p. jain as the chief executive officer of the
superseded bank. the apex bank had numberauthority or
power so to appoint s.p. jain for two reasons in the
first place the apex bank being an appointee of the
registrar had numberauthority to divest itself of the
power companyferred upon it by the registrar and to invest

p. jain with that power. the only authority which
could have companyferred the necessary power. on s.p. jain
was the registrar. the registrar did number companyfer that
power upon s.p. jain under section 53 4  of the act. in the result this appeal is dismissed with companyts.


civil appellate jurisdiction civil appeal number 248 of 1964.
appeal from the judgment and order dated march 31 1960 of
the patna high companyrt in first appeal number 65 of 1954.

c. chatterjee and a. k. nag for the appellants. c. prasad for respondent number 1.
the judgment of the companyrt was delivered by
raghubar dayal j. the sole point urged in this appeal under
certificate from high companyrt is whether a money-lender
registered under the bihar money-lenders act 1938  bihar
act iii of 1938  hereinafter called the act can sue his
debtor for a loan in excess of the amount mentioned as the
maximum amount up to which he companyld transact business under
the registration certificate issued to him. the facts of the case may be briefly stated. sant saranlal
and bhanuprakash lal plaintiffs number. 1 and 2 respectively
sued defendants number. 1 to 4 for the recovery of rs. 15370
said to have been advanced to them who companystituted a
partnership business under the name and style of banwarilal
kishanlal in 1947. out of this amount rs. 3500 had been
lent prior to january 17 1950 and the balance of rs. 11870
was lent between january 21 1950 and may 14 1951. the
suit was companytested on various grounds. the trial companyrt found that the various amounts were advanced
for the purposes of the firm. it found that plaintiff number
2 bhanuprakash lal was a registered money-lender under the
act and the registration certificate dated january 17 1950
stated that he had been registered as a money-lender on that
day to transact money lending business up to a maximum of
rs. 4999 only. it further held that the fixing of this
limit to the money-lending business did number debar plaintiff
number 2 from suing for amounts in excess of rs. 4999 in case
he had really advanced that amount. the trial companyrt
accordingly decreed the suit for rs. 11870 plus interest
pendente lite at 6 per annum. defendant number 1 alone filed an appeal against this decree. the high companyrt disagreed with the finding of the trial companyrt
that the loans had been taken for the firm banwarilal
kishanlal and held that they were taken by defendants number. 3
and 5 from plaintiff number 2. it further held that out of the
amount of rs. 11870 only rs. 6000 had been taken on loan
by defendant number 3 and the balance was taken on loan by
defendant number 5 against whom the plaintiffs had number sought a
decree. it further held that in view of the various
provisions of the act and the rules framed thereunder the
plaintiff companyld number get a decree for any sum over rs. 4999.
the high companyrt accordingly allowed the appeal of defendant
number 1 and set aside the decree passed by the trial companyrt
against defendants number. 1 2 and 4 and passed a decree in
favour of plaintiff number 2 for rs. 4999 against defendant
number 3 alone. it also decreed simple interest at 6 per
annum from the date of the institution of the suit until
realisation. it is against this decree of the high companyrt
that the present appeal has been filed after obtaining
certificate from the high companyrt. the only point urged by mr. chatterjee for the appellants
is that the high companyrt erred in holding that a registered
moneylender companyld number recover by suit loans advanced in
excess of the maximum amount mentioned in the registration
certificate. to appreciate the companytention it will be helpful to refer to
the various provisions of the bihar acts affecting the
question under determination. the act of 1938 was enacted to regulate money-lending tran-
sactions and to grant relief to debtors in the province of
bihar. loan according to cl.  f  of s. 2 means inter
alia an advance whether of money or in kind on interest
made by a money-lender. money-lender according to cl.  g  means a person who advances a loan. registered money-
lender according to cl.  j  means inter alia a person to
whom a registration certificate has been granted under s. 5.
section 3 empowers the state government to exempt any
moneylender or class of money-lenders or any class of loans
from the provisions of the act. section 4 provides that
every sub-registrar shall maintain a register of money-
lenders in such form and companytaining such particulars as may
be prescribed and such register would be deemed to be a
public document within the meaning of the indian evidence
act. section 5 deals with the registration of money-lenders
and registration fee. an application for being registered
as a money-lender is to be made by a person and is to
contain the particulars mentioned in sub-s.  1 . clause  e
of sub-s.  1  of s. 5 mentions such other particulars
as may be prescribed. the application is to be accompanied
by the prescribed registration fee and an application which
does number companytain the particulars specified in sub-s.  1  is
to be rejected summarily. sub-s.  3  provides that the
state government may by rules prescribe for different
classes of money-lenders and for different areas a
registration fee number exceeding twenty-five rupees to be paid
by an applicant for registration. sub-s.  4  makes it
incumbent on the sub-registrar to whom an application is
presented to grant the registration certificate in the
prescribed form to the applicant. the sub-registrar is to
refuse grant of a certificate only where a certificate
previously granted to the applicant had been cancelled under
s. 19 and the order of cancellation is in force. a
registration certificate granted under s. 5 remains in force
for five years from the date on which it is granted unless
cancelled earlier under s. 19.
section 7 lays down the duties of the registered money-
lenders to maintain accounts and to give receipts. section
19 provides for the cancellation of the registration
certificate in certain circumstances. section 20 provides
for penalty for the companytravention of the provisions of s. 7.
section 27 empowers the state government to make rules
prescribing the form of the registration certificate
mentioned in sub-s.  4  of s. 5 and the particulars to be
contained in an application made under sub-s.  1  of s. 5. -
the bihar money-lenders rules 1938 hereinafter referred to
as the rules defines in cl.  c  of r. 1 maximum amount of
loans to mean the highest total amount of loans which may
remain outstanding on any day during the period of the
validity of the registration certificate. rule 2 prescribes
the form in which the register of money-lenders is to be
kept. rule 3 prescribes the further particulars to be
mentioned in the application for registration and one of
these particulars is the amount of loans for which
certificate is wanted. rule 4 lays down the registration
fee payable. it is according to the maximum amount of loans
in respect of which an application for certificate is made. rule 6 provides that the registration certificate would be
in form it. the relevant portion of form 11 for the
purposes of this appeal is
i hereby certify that . . . has been
registered as a money-lender under sub-section
 1  of section 5 to transact money-lending
business up to the maximum amount of
rupees . . . on this  day of
in 1939 the bihar money-lenders  regulation of transac-
tions  act 1939  bihar act vii of 1939  hereinafter called
the
1939 act was enacted to provide for the regulation of
money-lending transactions in the province of bihar and to
remove doubts which had arisen regarding the validity of
certain provisions of the 1938 act. section 4 of the 1939
act is as follows
suit for recovery of loan only maintainable
by registered money-lenders -numbercourt shall
entertain a suit by a moneylender for the
recovery of a loan advanced by him after the
commencement of this act unless such. moneylender was registered under the bihar
moneylenders act 1938 at the time when such
loan was advanced
provided that such a suit shall be
entertainable if the loan to which the suit
relates was advanced by the money-lender at
any time before the expiration of six months
after the date of companymencement of this act and
if he is granted a certificate of registration
under section 5 of the bihar money-lenders
act 1938 at any time before the expiration
of the said six months. of the two plaintiffs bhanuprakash lal plaintiff number 2
who is held to have lent the money obtained registration
certificate under s. 5  4  and r. 5 on january 17 1950.
the certificate said that he had been registered as a money-
lender under sub-s.  1  of s. 5 of the 1938 act on that day
to transact money-lending business up to a maximum of rs. 4999 only. the high companyrt accepted the companytention for the
respondent that in view of the terms of the registration
certificate and r. 3  3   of the rules bhanuprakash must be
considered to have been registered as a moneylender under
the act for advancing loans whose total amounts outstanding
on any day during the period of the validity of the
registration certificate was number to exceed rs 4999 that in
case the amount of any loan on the date it was advanced
exceeded the total of the loans outstanding that day the
money-lender would number be companysidered to be a registered
money-lender for the amount lent in excess of rs. 4999 and
therefore in view of s. 4 of the 1939 act companyld number sue
for such excess amount. the high companyrt accordingly granted
a decree to plaintiff number 2 for rs. 4999 only and did number
decree his suit for the difference between rs. 6000 the
amount actually lent and the limit of the loan mentioned in
the registration certificate. me high companyrt was of this
view as it thought that allowing the money-lender to sue for
the excess amount would defeat the purpose and object of the
act. the companyrectness of this view of the high companyrt is questioned
for the appellant on the ground that there is numberprovision
in the 1938 act or even in the 1939 act which provides that
a moneylender who has been registered under s. 5 of the act
can lend money up to the limit mentioned in the registration
certificate. in fact it is urged that the act numberhere
provides that an over-all limit to the loan advanced by a
registered money-lender can be fixed by the government. when the act does number provide so the government cannumber by
rule fix such a limit. rule 3 requiring the money-lender
to mention in his application the maximum amount of loan
i.e. the total amount of loans which may remain outstanding
on any day during the period of the validity of the
registration certificate and r. 3 3  providing for an
application for the registration certificate to mention the
amount of loans for which the certificate is wanted cannumber
therefore be said to be rules made for carrying out the
purposes of the act but were rules made for fiscal purposes. the registration fee payable under r. 4 is graded according
to the maximum amount of loans for which the certificate was
wanted. we companysider the companytention for the appellant sound. the mere ground that a certain companystruction of a rule or
consideration of its effect will defeat the purpose or
object of the act is number a good ground for taking away the
right of the moneylender to sue for the recovery of a debt
due to him when the act itself companytains numberprovision
authorising any limit to the loan which a money-lender may
lend at a time or may number exceed by lending further loan if
the amounts outstanding at the particular point of time had
exceeded the limit laid down. further the preamble of the
act would number justify the inference that if the companytention
for the appellant is accepted the object of the act would
be defeated. the preamble is
whereas it is expedient to regulate money-
lending transactions and to grant relief to
debtors in the province of bihar . . . the money-lending transactions are to be regulated in order
to grant relief to debtors. what reliefs were to be granted
to debtors is apparent from the companytents of the act itself. the debtor is number granted relief by any provision with
respect to the amount of loan he can borrow. he is to
borrow an amount he actually requires. he is number given
relief by statutorily curtailing his requirement for a loan
but by enacting provisions which tend to protect him from
being charged exorbitant interest from any malpractice at
the time of advancing money from number account-
ing payments made by him and from other matters against his
interests. several sections of the act indicate the
measures for the relief of the judgment debtor which the
legislature thought proper to enact. section 7 lays down
the duties of registered money-lenders to maintain accounts
and give receipts. numbere of the duties mentioned in this
section points to the registered moneylender number lending
money in excess of any amount fixed for him as the maximum
total amount of the loans lie companyld advance at any time. the duties do number even require him to maintain an  such
register of account as would indicate to him at any point of
time what the total outstanding amount of the loans is. surely he cannumber be expected to check up his accounts find
out the total amount of loans outstanding at any point of
time and then to advance or number to advance a loan to a
borrower. chapter iv deals with penalty and procedure and companysists of
ss. 19 to 21. section 19 provides for cancellation of
registration certificate on the report of the companyrt trying a
suit to the companylector when the companyrt is of opinion that the
registered money-lender has been guilty of fraud or of any
contravention of the provisions of the act or is otherwise
unfit to carry on the business of money-lending. section 20
provides penalty for the companytravention of the provisions of
s. 7 and s. 21 provides penalty for the moneylenders or
his agents taking from a debtor at the time of advancing a
loan or deducting out of the principal of such loan any
salami batta gadiana or other exactions of a. similar
nature by whatever name called or knumbern. section 23 makes any companytract for the payment of the amount
due on a loan at any place outside the state of bihar void
and s. 24 provides for the deposit of money due on a loan in
court if the money-lender refuses to receive it or refuses
to issue a receipt for the same. these various provisions of the act amply indicate the kinds
of relief which the legislature companysidered necessary to
provide for the good of debtors and to achieve which the
money-lending transactions were to be regulated. sub-s.  4  of s. 5 of the act provides that on. receipt of
an application for registration as a money-lender the sub-
registrar must -rant a registration certificate in the
prescribed form to the applicant except when a certificate
which had been previously granted to the applicant had been
cancelled under s. 19 and the order of cancellation be in
force at the time he applied for registration again. the
absence of any discretion in the sub-registrar
who has authority to register persons as money-lenders to
refuse registration in view of the applicants mentioning
any fancy figure for the mount of loans for which he wants
the certificate well indicates that the limit of the loans
to be advanced do number figure as a factor of any significance
in either regulating the money-lending transaction or in
giving relief to a debtor. we are therefore of opinion that the high companyrt was in
error in .thinking that the object of the act would be
defeated if the registered money-lender companyld be held
competent to lend money in excess of the maximum amount
mentioned in the registration certificate. we have referred to the fact that the act does number
anywhere provide for the fixing of the upper limit for the
loans remaining outstanding at any particular time. the
rule-making power of the government does number extend to the
fixing of such a limit. section 27 empowers the state
government to prescribe inter alia the form of the
registration certificate and the particulars to be companytained
in an application made for the purpose of being registered
as a money-lender. it is significant to numbere that the rule
making power given to the state-government is number expressed
in the usual form i.e. is number to the effect that the state
government may make rules for the purposes of the act. the
rulemaking power is limited to what is stated in clauses  a
to  e  of s. 27 and these clauses do number empower the state
government to prescribe the limit up to which the loans
advanced by a money lender are to remain outstanding at any
particular moment of time. it is companytended for the respondents that s. 5 1   e
provides that every application for being registered as a
money-lender is to state such other particulars as may be
prescribed and that therefore an application had to mention
the amount of the loan for which the certificate is wanted. the power to prescribe certain particulars for the purpose
of an application cannumber be deemed to include the power to
fix the maximum mount of loans which a money-lender can have
outstanding on any day. rule 3  i i  requires the
application to mention the amount of loan for which the
certificate is wanted. strictly speaking there is numberhing
in this expression to suggest to the applicant money-lender
that he has to mention the maximum mount of loans which is
to remain outstanding on any particular day. the rules do
number even say that the registration of a money-lender for
advancing loans up to a maximum amount mentioned in the
certificate would make him a registered money-lender for
loans up to that amount only. the facts that the rules require the amount of loans for
which the certificate is wanted and that the form of the
registration certificate provides for mentioning the limit
of the money-lending business up to which the money-lender
can transact business do number necessarily amount to a
provision that the moneylender would be deemed to be a number-
registered money-lender for the purposes of the amount of
loan outstanding in excess of that limit. the money-lender
when he advanced money in excess of the maximum limit may
contravene the rule framed under the act and if the act
provides any penalty for such companytravention may be liable
for that penalty. in fact ss. 19 to 21 do number provide for
penalty for companytravening any rule. it is urged for the respondents that the state government
was companypetent to fix the maximum amount of loans to be
advanced by a registered money-lender in view of sub-s.  3
of s. 5 which provides that the state government may by
rules prescribe for different classes of money-lenders and
for different areas a registration fee number exceeding rs. 25
to be paid by an applicant for registration. it is said
that the state government companyld create different classes of
money-lenders according to the amount of money they want to
advance in loans. this provision does number empower the state government to
limit the maximum amount of loans to be given by
moneylenders of any class. it companyld however as it
actually did prescribe different registration fees for
different classes of money-lenders according to the amount
of money up to which they wanted to lend. the
classification of money-lenders for the purposes of
registration fee can be numberjustification for placing any
limit on the maximum amount of loans they companyld have
outstanding on a certain day on penalty of being deprived
of a right to sue for an amount lent in excess of such a
maximum. we therefore hold that the state government is number companypetent
to make a rule fixing a maximum amount of outstanding loans
on any day and that the rules framed do number provide that a
money-lender properly registered as such under the act will
cease to be a money-lender so registered if he advances a
loan in excess of the limit mentioned in the registration
certificate. it has been urged for the respondent that the expression in
s. 4 of the 1939 act to the effect unless such money-lender
was registered under the bihar money-lenders act 1938
means unless such money-lender was properly registered
under the bihar money-lenders act 1938. there is numberhing
wrong in this view
but there is numberimpropriety in the registration of
bhanuprakash lal as a money-lender. his application must
have been in accordance with the requirements of the act
and the rules. the registration certificate was issued to
him in the ordinary companyrse. numberhing has been shown why his
registration as a money-lender be companysidered to be number
proper registration or why it be held that he was number
properly registered under the act. the mere fact that he
contravened any of the requirements of the licence or of
any rule or even any provision of the act does number mean thet
his registration as a money-lender under s. 5 of the act was
an improper registration. lastly it may be said that the view taken by the high
court necessitates the adding of the words and the loans
advanced do number wholly or partly exceed the maximum amount
up to which he was permitted by the registration
certificate to transact moneylending business in s. 4 of
the 1939 act. there is numberreason why such an addition be
made to s. 4 and make the provision much more restricted in
character. we therefore do number agree with the view expressed by the
high companyrt and hold that a money-lender who has been
registered under the act can sue for the recovery of a loan
advanced by him during the period his registration
certificate is in force even if at the time of advancing
the loan he had exceeded the limit .of the amount mentioned
in the registration certificate as the amount up to
which he companyld transact money-lending business.