Allsop, J.:— This appeal arises out of a suit for partition and mesne profits instituted by the plaintiff-appellant, Beni Madho, on the allegation that he had acquired a share in the properties mentioned in the schedules annexed to the plaint under a deed of sale or assignment executed in his favour by one Henry Celestine John on 22nd August, 1939. It was stated that Hear Celestine John had three brothers, Edwin John, George Anthony John and Anthony Ulysses John, that they jointly held in equal shares forty debentures out of two hundred in the Agra United Mills Limited, that the mortgaged property was put to sale by the debenture-holders and that the properties mentioned in schedules A to D annexed to the plaint passed to the debenture-holders. It was, therefore, alleged that the plaintiff was entitled to a one-twentieth share in these properties. It was further stated that Henry Celestine John and his three brothers were owners in equal shares of the properties mentioned in schedule E annexed to the plaint and that the plaintiff-appellant had acquired a one-fourth share in these properties. The first eight original defendants were Anthony Ulysses John, since deceased, and the representatives-in-interest of Edwin John and George Anthony John. The other defendants except No. 15 were impleaded as holders of mortgages or charges created by the brothers of Henry Celestine John. The fifteenth defendant was a receiver appointed by the High Court of Bombay in the course of a suit instituted by, the ninth and tenth defendants on the basis of a mortgage in their favour. The tenth defendant has since died and is represented by the ninth. Anthony Ulysses John is represented by his widow, Adriana John and his son, Anthony John.
The defendants raised various pleas, but those which we must first consider were that Henry Celestine John had no subsisting interest in the properties in suit at the date of the alleged execution of the deed of sale and that, even if he had, there was no valid transfer. On the first point the learned Judge of the court below gave a decision against the defendants. On the second point he overruled the contention of the defendants that the deed was not proved to be executed, but he found that the deed did not operate to transfer a share in the properties to the plaintiff. His decision was based on two grounds, namely, (1) that the deed does not evidence a sale but evidences a transfer of a mere right to sue which would be void under, the provisions of section 6, clause (e) of the Transfer of Property Act and (2) that the transfer was based on an agreement to finance litigation in consideration of obtaining a share in the property in suit if recovered, which though, as such, was not opposed to public policy, was still so opposed because it was based on an unconscionable and extortionate bargain.
In order to understand and discuss the arguments of the learned Judge it is necessary to refer to the deed itself. The deed begins with a series of recitals explaining how the alleged vendor was entitled to the property to be transferred, his reasons for making the transfer and the fact that the transferee had agreed to purchase the property and then contains the following general clause:—
“In pursuance of the said agreement with the purchaser and in consideration that the purchaser will at his own expenses and costs take proper legal steps and other necessary proceedings in the litigation hereinabove referred to and Other necessary action to protect and defend the properties hereby conveyed and assigned to him and in further consideration that in the event of his succeeding in litigation the purchaser will pay to the vendor a sum equivalent to fifty per cent, of the gross amount, and value that be recovered and realised by the said purchaser out of and in respect of the said properties.”
In explanation of this clause it should be stated that the recitals had set forth that the interests of Henry Celestine John were in jeopardy owing to claims made by Anthony Ulysses John and George Anthony John, that he was not in a fit state of health to go to India to protect his interests and that it was necessary to undertake litigation to uphold his rights. After, this, general clause there are series of clauses by which the alleged vendor granted, conveyed and confirmed unto the purchaser certain shares in various properties. Then there were certain covenants by the vendor intended to secure the purchaser in his rights and lastly there were certain covenants by the purchaser who also executed the deed. The first three of these covenants were that the purchaser should take all necessary steps to enforce the rights of the vendor, that the purchaser should pay to the vendor a sum equivalent to fifty per cent, of the gross amount and value of the property recovered and that the purchaser should have no claim against the vendor in respect of any expenses, costs or other disbursements which he might have to incur, defray and spend over the litigation. The fourth covenant was that all property recovered by the purchaser in respect of the rights assigned should be paid to the joint account of the vendor and purchaser whose receipt alone should be a sufficient discharge. It may perhaps be mentioned that each of the clauses conveying shares in various properties was expressed to, be subject to the covenants by the purchaser.
The learned Judge has referred to the definition of the term ‘sale’ in section 54 of the Transfer of Property Act. He says that the price of property sold must be ascertained or ascertainable in money. He then says that the consideration of the so-called deed of sale consists of an undertaking by the vendee that he would fight out the litigation at his own expense and in the event of his success would pay a sum equivalent to fifty per cent, of the gross amount recovered and realised by him. Then the judge says that the costs of litigation were unknown and unascertainable in advance and besides this there was some risk involved and thus these costs could not be given a market value and this transaction could not be called a sale. He seems to have inferred that the transfer, if not a sale, would necessarily be invalid. There seems to be no force in this contention. A transfer is valid if it is for consideration and there may be valuable considerations other than payments of money or promises to pay money. There would be nothing invalid in a transfer, say, in consideration of services rendered. I may further say that it is difficult to understand the learned Judge's argument that the consideration for this transfer was not ascertainable in money. The law does not require that it should be immediately ascertainable at the time of the transfer. It is sufficient that it should be ascertainable at the time when the payment is to be made. If it can be said that the amount spent in litigation was part of the consideration that amount would certainly be ascertainable once the costs had been incurred and the litigation had been concluded. No payment was to be made till the property recovered as a result of litigation. It is clear, however, that the purchaser did not undertake to pay any sum on account of the costs, of litigation to the vendor and therefore it was not necessary to ascertain what those costs were. All he promised to do was to pay half the value of the property recovered and the amount due could clearly be ascertained when the property had come into the possession of the purchaser. Even if there was some difficulty in ascertaining the exact value of the property that would be no reason for holding that the value was not ascertainable. The learned judge has referred to the case of Zamindar of Palavaram v. Maharajah of Pittapuram(1) but even if that case can be said to support his argument, the decision was set aside in appeal by their Lordships of the Privy Council in Zamindar of Polavaram v. Maharajah of Pittapuram(2).
Then the learned Judge refers to the fact that the vendor was not in actual possession of the property and that it was in the possession of others. This observation does not appear to be relevant because there is a distinction between title and possession and there is nothing in law to prevent the owner of property from transferring his title even if the property is in the actual possession of others. The learned Judge seems to have been influenced by the observation made by Lindsay, J., in the case of Kalyan v. Desrain(3), but I must say, with the greatest respect, that these observations seem to ignore the distinction between title and possession and seem to suggest that a disputed title does not exist until a decree is passed by a court of law in favour of the claimant, whereas the truth is that a title is merely affirmed and not created by the court. No court can pass a decree in favour of a claimant to property unless that claimant has already an existing title. The other learned Judge, Sulaiman, J., disagreed with Landsay, J., and I have no doubt that his decision was right.
The learned Judge seems to have thought that the purchaser's fourth covenant, namely that the property recovered should be transferred to the joint account of the vendor and purchaser implied that the vendor would remain the owner of the property. The learned Judge says, “The sale deed read as a whole would show that Mr. H.C John tells Mr. Beni Madho that I transfer you property subject to my retaining half share”. Even if the deed can bear that interpretation, it must still mean that half of the property was transferred in praesenti to Beni Madho. There is no reason why the transfer at least of that half share should not be valid. The learned Judge, however, goes on to argue that the vendor meant to reserve to himself an interest in the property and that he did not intend to pass an absolute title to the purchaser. It is on this basis that he says that this is not a transfer of property but a transfer of a mere right to sue. As I have already said the argument could not apply to half the share which the vendor purported to transfer because in that half at least he did not retain any interest.
Learned counsel for the respondents has not argued that the transaction was not a transfer. His argument is that the intention of the parties on a proper construction of the deed was that the transfer should not operate and the property should not vest in the purchaser till the proposed litigation has come to a conclusion and the property had come into the purchaser's hands. In my judgment the deed cannot bear this construction. The vendor has clearly stated in all the paragraphs by which he has conveyed shares in various properties that he is conveying them immediately. The transaction was quite a simple one. The property was conveyed to the purchaser and the price was to be ascertained after the purchaser had recovered the property. At that time the value of the property was to be ascertained and half that value was to be paid to the vendor. The purchaser's covenant to take all necessary steps to recover the property was necessary because the price depended on the recovery. The learned Judge has remarked that the purchaser did not acquire a full title because he could not even settle with the defendants out of court. There is nothing in the deed which prevents him from doing so, but if by such settlement he recovered less property than he should have recovered he would be liable for a breach of covenant to pay damages to the extent of half the value of the property which he should have recovered if he had properly pursued his remedy. The covenant that the property should be put in a joint account seems only to have been inserted by way of precaution so that the vendor might the more easily recover the price that was due to him. It does not to my mind imply an understanding that the vendor should retain a title in half the property recovered. There is nothing in the deed to the effect that the vendor shall be put in possession of any property as such. He is entitled under the terms of the deed only to half the value of the property paid in money. It is not quite clear how any property as such would be put in a joint account. The meaning of the covenant perhaps in a joint account, but, however that might be, this was purely a matter between the vendor and the purchaser. The final phrase whose receipt alone shall be a sufficient discharge probably does mean that a valid discharge could be given only by the vendor and purchaser jointly, but this is an agreement between the purchaser and vendor alone and I cannot see how it can affect any third party. It can refer only to payments of money and not to any property as such. Its probable meaning was that purchaser alone should not operate the joint account. To my mind it cannot possibly mean that the vendor is to remain owner of any share which he clearly purported to transfer to the purchaser. I am of opinion that the transfer was not invalid for the reasons given by the learned Judge. The vendor transferred the property itself and not a mere right to institute a suit.
Learned counsel for the respondents has argued that there, was an intention, that the vendor should be joined in any suit instituted by the purchaser for the, recovery of the property but he has not referred to any part of the deed from which that intention can be gathered. The purchaser was to undertake the litigation at his own costs and expense and indeed the very reason for the transfer as expressed was that the vendor was precluded by his age, health and financial position from taking any part in the litigation.
The argument of the leaned Judge that the transfer was contrary to public policy is based on his conclusion that the property conveyed by the deed was disproportionate to the price which was to be paid by the purchaser. He said that the title of the vendor to the property was quite clear and there was very little risk involved in the litigation. His argument was that Beni Madho would have been sure to win the case if he had impleaded the vendor as co-plaintiff and that he was to get a reward of Rs. 75,000 in case of his success whereas he was likely to spend very little, as compared to this sum, on the litigation. This sum of Rs. 75,000 is the estimated value of half the property as set forth in the deed of sale. It is to be noticed that the vendor never raised the plea that so far as he was concerned the bargain was unfair or unrighteous. It seems to me that an argument on this basis is not open to the defendants-respondents who have no cause to complain in this matter. Learned counsel has argued that it was held by their Lordships of the Privy Council in the case of Ram Coomar Coondoo v. Chunder Canto Mookerjee that an unjust agreement to finance litigation was contrary to public policy and that any agreement which is contrary to public policy is void under the provisions of section 23 of the Indian Contract Act and is not merely voidable. His argument is based, it appears to me, on an unjustifiable use of authority. In the case of Ram Coomar Coondoo v. Chunder Canto Mookerjee their Lordships of the Privy Council were not considering whether the agreement was a void agreement under the provisions of section 23 of the Indian Contract Act. They were considering whether it should in terms be enforced and I do not think it is safe to infer from the remarks which they made that they would have held that the contract was void as against the whole world if the parties to it had not themselves objected. Learned counsel for the parties to it has referred us to two cases, namely Manishankar Pranjivan v. Bai Muli and Baldeo Sahai v. Harbans. In the first case it is true that the court refused to enforce the rights of a transferee from a minor against third parties on the ground that those parties would be prejudiced if the minor at some later time objected to the transfer. That was a very special case. In the other case the transferor was a party to the suit by the transferee and himself objected to the transfer.
In the case before us the question also arises whether the bargain can rightly be held to have been unfair or unrighteous so that it would be contrary to public policy to enforce it. The learned Judge may be of opinion that there was no doubt about the vendor's title to the property, but it does not necessarily follow that was the opinion of the parties to the contract of sale. There is no reason to suppose that they did not think that the vendor had a just claim, but the purchaser might well have thought that he was running a certain risk in view of the chances of litigation. He had undertaken to expend money on instituting a suit and in prosecuting it and the expenses of litigation are by no means small in this country. He may have felt that it would not be worth his while to take this risk unless he received a substantial remuneration in case of his success. Even if he was fairly certain of obtaining a decree it did not necessarily follow that be would be able to execute it without years of trouble and much expenditure. If we are to judge by the results so far Beni Madho has spent his money, time and trouble and has obtained nothing whatsoever. In my judgment it cannot be said that the bargain was unfair especially as the other party to it has never raised the plea that he was unfairly treated. As far as the respondents are concerned it is difficult for them to raise the plea that Beni Madho overreached the vendor since they contend that the vendor had no title to, transfer and according to them Beni Madho had been induced to spend money without ever having any right to gain an advantage. I think the unsoundness of learned counsel's argument that he can question the validity of the transaction on the ground that it is void as against public policy is apparent because one might raise the hypothesis that the bargain was unfair to Beni Madho and surely if that was the finding it could not be said that the respondents could urge that it was void in spite of Beni Madho's own contention that he was not dissatisfied with it. In my judgment this contention was not open to the defendant-respondents and, even if it was, there is, as a matter of fact, no sufficient reason for holding that the agreement was so unfair to the vendor that the courts should refuse to give effect to it.
The defence that Henry Celestine John had no interest in the property at the date when he executed the deed, of sale is based oil the allegation that this was partnership property and that the vendor was so deeply indebted to the partnership that he has lost his interest in the partnership property. There is no evidence at all that he ever transferred his interest to his alleged partners. Learned counsel for the respondents has not urged, as I understand, that Henry Celestine John had ceased to have an interest in the property in suit but he has raised another argument that the property could be transferred to the plaintiff-appellant only subject to a taking of the partnership accounts. He has urged that the defendants who were partners of the vendors had a lien upon the vendor's share in the partnership property to secure the payments of sums due to them from the vendor in his capacity as their partner.
The properties transferred must be divided into two separate parts for the purposes of this argument. There can be no doubt that all the properties in suit were at one time the properties of a firm operating under the title of A. John & Co. in which the partners were Henry Celestine John, his three brothers and his sister, Lilian Mary Joranides. The sister died in the year 1920 and the original partnership came to an end. Before this event occurred the firm or partnership had transferred the properties mentioned in schedules A to D of the plaint to a company known as the Agra United Mills Limited for a large sum of money. The company was not able to pay the full consideration and the four brothers independently took up a number of debentures which were issued by the company, that is they held mortgages on the property to secure the payment of a balance of the price of this property. Henry Celestine John for his part had debentures to the value of ten lakhs. After the death of the sister the four brothers set apart a sum of money in their accounts as a reserve for the payment of her share of the assets of the partnership to her executors or trustees. They credited Henry Celestine John with ten lakhs of rupees, the value of his debentures and held those debentures in trust for part of the payment of the sister's share. Eventually the sum due to the sister was paid and the debentures were returned to the brothers. It was shown in the accounts that each brother, was credited with a sum of Rs. 2,50,000. Finally in or about the year 1927 the debenture holders instituted a suit for the sale of their property on the basis of their mortgage and obtained a decree from the court. In execution of this decree the property was put to sale and was bought by the holders of the debentures. Eventually in the sale certificate it was shown that each of the debenture holders was entitled to a separate share in the property. The share of Henry Celestine John was the one-twentieth which is claimed by the plaintiff in this suit.
The contention of learned counsel for the respondents is that the four brothers entered into a new partnership after the death of his sister, that this partnership continued till the death of George Anthony John in 1937 and that the ten lakhs of debentures originally held by Henry Celestine John, transferred by him to the brothers after the sister's death and retransferred after the payment of the amount due to her was partnership property.
In so far as we are concerned with the properties in schedules A to D it seems to me that there, is a complete answer to the respondents' case. Whether there was or was not a partnership up to the year 1937, this property at least after the sale in execution of the decree could not be described as partnership property. George Anthony John instituted the suit on the basis of the debentures as trustee for the debenture holders but the sale certificate is a document of title and it shows that the property was purchased by each debenture holder separately. There is no thing in it to suggest that the ten lakhs of debentures originally field by Henry Celestine John were transferred at the sale to a partnership consisting of the four brothers. It is therefore unnecessary to go into the questions of law which can be raised whether the suit was barred by limitation because it was in essence a suit for taking partnership accounts or whether the plaintiff can get the property only subject to a lien held by the other partners.
To the property in schedule E other considerations apply. This property consists of four houses, three in Agra and one in Mussoorie, and a shop in Agra. Learned counsel for the respondents has argued that this at least must be considered to have been partnership property till the death of George Anthony John in 1937. The property did originally belong to the firm, A. John Co. He argues that this firm was Continued under a new agreement after the death of Lillian Mary Joranides and that the property continued to be the property of the new partnership consisting of the four brothers. There is no evidence however of any definite agreement between the four brothers constituting, a new partnership. A reference has been made to certain accounts which are printed on our record but learned counsel for the appellant has argued that these are not strictly proved and even if they are proved, they do not establish the respondents' case. It appears that Henry Celestine John had gone away to England and was there conducting a branch business on behalf of A. John Co. The other brothers remained in India and on the face of it seems that the accounts were not so much the accounts of a partnership but accounts showing the respective rights and liabilities of the four brothers as between themselves. Certain of the items in the accounts could not possibly refer to any partnership. There is one item, for instance, of. Rs-25,000 which is credited to George Anthony John alone. It is described as the proceeds of the sale of furniture of a house, No. 46 Cantonments, belonging to George Anthony John. There is another entry by which Rs. 5,000, Rs. 3,000 and Rs. 2,500 were credited separately to Edwin John, George Anthony John and Anthony Ulysses John on account of Directors bonuses paid by the Agra Spinning and Weaving Mills Co., Limited. No reference is made in the accounts to any profits earned by A. John Co., after 31st December, 1921. There is thereafter an entry about small sums said to have been the profits of John Brothers. There is; no evidence of any definite contract of partnership between the four brothers after the death of their sister. It seems that they carried on their affairs in some joint way without any definite agreement and they may have thought that there was a partnership of some kind. There is some correspondence between the brothers about the affairs of the business in London managed by Henry Celestine John. There is a letter written by the latter in the year 1928 in which he stated that he understood that A. John & Co. was still a continuing concern. He wished for an explanation of the fact that the accounts sent to him contained no reference to this firm but instead a reference to John Brothers. Probably the brothers were not very clear in their own minds upon the question whether there was or was not a partnership. There can be no doubt that all four brothers had equal shares in the property described in schedule E, but in the absence of any evidence it cannot be inferred that they treated this property as the property of any partnership. On one occasion at least they mortgaged two of the houses mentioned in the schedule and Henry Celestine John executed a power of attorney by which he authorised George Anthony John and Anthony Ulysses John to execute a mortgage on his behalf. Learned counsel for the respondents has argued that, this might merely have been a precaution required by the mortgagee, but it is at least in some measure an indication that the property was regarded as being held by the four brothers as tenants-in-common and not as the property of a partnership. The four residential houses at least do not appear to be property that would in normal circumstances be connected with any business. In my judgment it is not established that this property was partnership property so that it would be necessary to go into the accounts of the partnership before allowing the plaintiff to get possession of his share of it.
Learned counsel for the respondents raised some other arguments. One was that George Anthony John who instituted the suit on the basis of the debentures as trustee for debenture holder was entitled to get from the plaintiff a share of the costs of that suit before transferring the property recovered by means of it. There is a letter from Henry Celestine John in which he admitted that he was liable for his share of the costs of the suit, but it is apparent that there was no charge on the property for the payment of the costs and therefore there is no reason why the plaintiff, should be liable for any share of them. Another argument addressed to us by learned counsel for the respondents is that the learned Judge of the court below was wrong in holding that the deed of sale was executed by Henry Celestine John. He argues that there is no evidence of any witness that the document it was executed in his presence. The learned Judge of the court below has relied on the evidence of two witnesses who have deposed; that the signature on the deed is that of Henry Celestine John. The defendants did not definitely deny that the signatures sere i, his and they produced no evidence to rebut the evidence produced by the plaintiff. Henry Celestine John executed a power of attorney in favour of a lawyer in India to enable that lawyer to get the deed registered on his behalf the deed was duly prescribed by the attorney for registration and its execution was admitted. Learned counsel for the respondents has argued that he is not bound by any admission made by Henry Celestine John as he is not claiming the property through him. It seems however that the admission of the execution of the document by the, attorney of the man who executed it is evidence to prove that the document was duly executed. However that may be, there is nothing to rebut the evidence of the two witnesses who identified the signature of Henry Celestine John. I have no doubt that the document was duly executed.
The other argument is that there is no positive evidence to prove that Henry Celestine John had understood the contents of the document when he executed it. There was in my judgment no reason for such evidence. There is no suggestion that Henry Celestine John was not of sound mind and the assumption is when he executed a document that he had understood its contents.
Learned counsel for the respondents has mentioned some other points. He has claimed that the defendants should not be liable for any monies by way of mesne profits which did not actually come into their hands. The other side agree that this, contention is right. Another point was that the mesne profits should not be calculated on the profits accruing from the working of the mills. It is admitted that the mills were taken over by the receiver appointed by the. Bombay High Court and that he rented them to George Anthony John and Anthony Ulysses John who worked them in partnership. The other side agree that the plaintiff is entitled only to his share of the rents paid to the receiver. Learned counsel for the respondents also wished us to make it clear that mesne profits should be recovered only for the three years before the institution of the suit and the other side agreed that this is so.
My conclusion is that the plaintiff is entitled to a decree for partition and for mesne profits. I would, therefore, pass a preliminary decree in his favour that he is entitled to one-twentieth share in the properties mentioned in schedules A to D and one-fourth share in the properties mentioned in schedule E and that the court below should partition the property by metes and bounds except in so far as the property is subject to the provisions of the U.P Land Revenue Act. I would also pass a preliminary decree that the plaintiff is entitled to mesne profits for a period of three years next before the institution of the suit and thereafter till such time as the property is delivered to him. The court below will calculate the amount of the profits and pass such decree as is suitable after having made its calculations in accordance with the findings in this judgment: The plaintiff is entitled to his costs from the defendants other than defendant No. 15, the receiver appointed by the Bombay High Court, and defendants Nos. 7 and 8 who were pro forma. The costs should, be incorporated in the final decree of the court below.
Mathur, J.:— I agree.
By the Court:— A decree shall be drawn up as suggested in the judgment of Allsop, J.