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  • Order 31, Rule 5 of the Original Side Rules of this High Court. Rule 5
  • Order 1, Rule 10 (2) of the Code of Civil Procedure.
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  • Order 31, Rule 5 of the Original Side Rules of this High Court. Rule 5
  • Order 1, Rule 10 (2) of the Code of Civil Procedure.
Smart Summary

Judgment Summary — Applications in C.S. No. 762 of 1926 (partition suit concerning the P.M.A. Firm)

Factual and Procedural Background

This is a partition suit (C.S. No. 762 of 1926) concerning a joint family known as the P.M.A. Firm. A preliminary decree dated 22nd November 1928 referred the suit to a Commissioner to take several accounts, including (a) an account of the property, credit and effects of the joint family as on institution of the suit, (b) an account of the debts and liabilities of the family outstanding, and (c) an account of all moneys of the joint family which had come into the hands of certain defendants and an enquiry whether a compromise set up by some defendants was true and binding.

It was alleged by certain worshippers connected with a Saivite temple at Elamayankottur that the family was in possession of funds amounting to Rs. 1,38,000 which were trust funds belonging to the deity. Two applications (later effectively three applicants) were made in relation to that allegation.

The first application (filed 17th September 1929) sought declarations and directions, inter alia, that the amount credited to the deity be declared a trust payable by the Receivers, that the Receivers be directed to retain sufficient amounts, and that costs be paid out of the estate. The first application relied on Order 31, Rule 5 of the Original Side Rules.

The first application was dismissed for non-compliance with Order 31, Rule 5 (no notice having been directed/given). A second application sought to be added as party defendants under Order 1, Rule 10(2) of the Code of Civil Procedure so that the applicants could press their allegation that the Rs. 1,38,000 were trust funds and so that the Commissioner and Court would consider that contention. The court heard argument on both applications and reserved a substantive decision on whether the amount was in fact trust money.

Legal Issues Presented

  1. Whether the applicants (strangers to the original suit) could rely on Order 31, Rule 5 of the Original Side Rules to seek relief in this partition suit (i.e., whether notice had been directed or given so as to permit their application under that rule).
  2. Whether the applicants should be added as parties to the partition suit under Order 1, Rule 10(2) of the Code of Civil Procedure because their presence was necessary "to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit".
  3. Whether the Commissioner should be permitted to report on the debts and liabilities of the family without regard to the applicants' contention that Rs. 1,38,000 are trust funds (i.e., whether the Court can completely settle the questions involved without joining these applicants).

Arguments of the Parties

Applicants' Arguments (represented by Mr. T. M. Krishnaswami Aiyar)

  • The applicants initially relied on Order 31, Rule 5 of the Original Side Rules to press their application concerning the alleged trust fund.
  • When difficulties arose with the first application, the applicants sought leave to apply to be added as parties to the suit under Order 1, Rule 10(2) of the Code of Civil Procedure so that the Commissioner and Court would take cognisance of the contention that Rs. 1,38,000 were trust funds payable to the deity.
  • The applicants contended that their presence was necessary to enable the Court to adjudicate completely and effectually on the matters referred to the Commissioner, particularly the debts and liabilities of the family and the alleged trust fund.

Respondents' Arguments (represented by Mr. Duraiswami Aiyar)

  • For the first application, respondents contended that Order 31, Rule 5 did not apply because the Court had not directed notice to be given to all persons having claims against the family and in truth no such notice had been given; therefore the applicants could not avail themselves of that rule.
  • For the second application, respondents argued that the substantial questions involved in the suit must relate to disputes between the parties themselves and that the family members were not at issue on the question whether the money was trust money (they asserted the money belonged to the family).
  • Respondents suggested that the applicants should bring an independent suit (an alternative the court considered), and pointed to authorities they said supported refusal to add such persons as parties; they relied on cases that, in their submission, pointed the other way.
  • Respondents sought to distinguish the Esquimalt and Nanaimo Ry. Co. v. Wilson case on the ground that that case affected Crown interests, implying a distinction from the present case.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Vydianadayyan v. Sitaramayyan (1881) I.L.R. 5 Mad. 52 Interpretation of the words in the provision allowing addition of parties: a broad construction enabling the Court to avoid conflicting decisions and to finally put an end to litigation. The Court relied on this authority to support a wide interpretation of Order 1, Rule 10(2), endorsing addition of persons whose presence is necessary to effectually and completely adjudicate the questions involved.
In the matter of Baluswami Ayyar (1928) I.L.R. 51 M. 417; 55 M.L.J. 175 (F.B.) That in a partition/insolvency context an Official Assignee (or analogous representative) can apply for all creditors to be made parties so findings as to the nature of debts may bind all. The Court cited this case to show precedent for joining interested third parties so that findings as to liabilities bind all concerned.
Secretary of State v. M. Murugesa Mudaliar A.I.R. 1929 M. 443 Principle that although a decision binds only parties before the Court, the Court is not bound to decide a dispute in the absence of those whom the dispute most vitally concerns. The Court used this authority to reinforce the proposition that persons vitally concerned should be before the Court when the dispute affects their interests.
Esquimalt and Nanaimo Ry. Co. v. Wilson (1920) A.C. 358 (Privy Council) When an action, if successful, will affect rights claimed by the Crown (or a third party), that third party (Attorney-General for the Crown) is a necessary and proper party to avoid conflicting outcomes. The Court considered and adopted the underlying reasoning, rejecting the respondents' attempt to distinguish the case on the basis of Crown interest and applying the logic to the present applicants' vital interest in the alleged trust fund.
Naraini Kuar v. Piarey Lal (1880) I.L.R. 2 A. 738 Where an application is made for addition of a person under the corresponding provision, such person should generally be added only where questions directly arise out of and are incidental to the original cause of action and where there is identity or community of interest. The Court acknowledged this authority (including Justice Straight's observations) but found nothing in it inconsistent with the conclusion reached — that the present applicants' claims are sufficiently connected to the matters referred to the Commissioner to justify their addition.
Montgomery v. Foy, Morgan & Co. (1895) 2 Q.B. 321 Where several disputes arise from one subject-matter, the rules enable the Court to bring all parties before it so that all disputes may be determined together, avoiding multiple actions. The Court invoked this reasoning to support the practical desirability of adding parties so that all related disputes (including the alleged trust) can be settled in one set of proceedings.

Court's Reasoning and Analysis

The court proceeded in two distinct stages corresponding to the two applications before it.

First, with respect to the initial application under Order 31, Rule 5 (which allows the Court in partition suits, where outstanding debts cannot be ascertained, to direct notice to be given to claimants by advertisement or otherwise), the Court found as a factual and legal matter that the rule had not been complied with: the Court had not directed notice to be given and, in truth, no such notice had been given. Because compliance with that procedure was a prerequisite to the applicants relying on that rule, the Court dismissed the first application and ordered costs in favour of the respondents (to be taxed).

Second, the Court considered the application to be added as parties under Order 1, Rule 10(2) of the Code of Civil Procedure. The court undertook the following analytical steps:

  • Identified the questions involved in the suit by reference to the preliminary decree — notably the Commissioner's task to ascertain the debts and liabilities of the family and to take accounts of family assets.
  • Observed that if the Rs. 1,38,000 were trust funds, that fact would be a liability of the family and would directly affect the distribution of the family's assets; consequently, a Commissioner reporting without knowledge of such claims would treat all monies as family assets available for distribution to creditors.
  • Asked whether the Court could "effectually and completely adjudicate upon and settle all the questions involved in the suit" without joining the applicants. The Court framed the core statutory purpose of Order 1, Rule 10(2) as allowing addition of persons necessary to avoid conflicting decisions and to enable final settlement of litigation.
  • Considered precedent (Vydianadayyan v. Sitaramayyan, Baluswami Ayyar, Secretary of State v. Murugesa Mudaliar, Esquimalt, Naraini Kuar, Montgomery) and applied the line of authority favouring a broad and practical construction of the power to add necessary or proper parties so as to avoid multiplicity of proceedings and conflicting outcomes.
  • Rejected the respondents' argument that the question of trust was not "in issue" between the existing parties and that, therefore, the applicants should be excluded; the Court held that the absence of the applicants would prevent the Commissioner and Court from taking account of the alleged trust and thus would impede complete adjudication of the matters referred.
  • Considered but did not decide the substantive question whether the monies in fact constituted trust funds — that question was kept open for determination with the applicants joined so that the Commissioner and Court may consider the contention.
  • Noted that the alternative of the applicants bringing a separate suit could produce two proceedings addressing overlapping questions and potentially produce conflicting decisions; this practical consideration weighed in favour of joining them to the existing suit.

On these grounds the Court concluded that the presence of the applicants was necessary to effectually and completely adjudicate all questions involved, and thus they should be added as party defendants under Order 1, Rule 10(2).

Holding and Implications

Core Ruling:

First application dismissed. Second application allowed: the three applicants are directed to be added as party defendants in C.S. No. 762 of 1926. The Court further ordered that the Receivers retain in their hands the sum of rupees one lakh and thirty-eight thousand (Rs. 1,38,000) until further order.

Consequences and immediate effects:

  • The Commissioner must take into account the contentions of the newly added applicants (including the allegation that Rs. 1,38,000 are trust funds) when ascertaining the debts and liabilities of the family.
  • The Respondents were awarded costs of the first application (to be taxed). The Applicants were awarded their costs of the second application (to be taxed). The Court did not impose terms on the addition of parties and granted liberty to both sides to apply further.
  • The Court did not decide the substantive question whether the money is trust money; that question remains to be determined with the applicants added so that the matter can be adjudicated in the present proceedings.
  • The judgment explains and applies existing authorities on the addition of necessary or proper parties; it effects a pragmatic resolution to avoid multiplicity of suits and potential conflicting decisions by ensuring persons with a vital interest are before the Court.

The opinion does not state that it is laying down any novel legal principle beyond applying existing authorities and the statutory rule; its practical effect is to bring before the Court those whose interests are vitally affected so that the Commissioner's report and the Court's ultimate adjudication can be complete.

    Ramaswami Chettiar v. P.M.A. Vellayappa Chettiar

    1. It is a tribute to the learned Counsel who have appeared before me that my mind has fluctuated a good deal during the course of their arguments. Rightly or wrongly my mind is now stabilised. There are before me two applications. Both applications are made in a suit for partition entitled C.S. No. 762 of 1926 relating to a joint family known as the P.M.A. Firm. In that suit a preliminary decree was passed on the 22nd November, 1928. By that preliminary decree it was ordered and decreed that the suit be and thereby was referred to a Commissioner to take the following accounts:

    (a) an account of the property, credit and effects of the said joint family (inclusive of the assets, profits and liabilities of the said P.M.A. Firm belonging to the said joint family) as on the institution of the suit,

    (b) an account of the debts and liabilities of the said family outstanding, and

    (c) an account of all moneys of the joint family which have come into the hands of both or either of the defendants 1 and 3 herein not on the ground of wilful default, but in the ordinary course of management of the said family, and to make an enquiry whether the compromise set up by the defendants 11 to 13 herein is true,, valid and binding on the plaintiff or any members of the family herein.

    2. The joint family referred to therein as the P.M.A. Firm is, I am told, one of the leading families of the class to which they belong. I am told that they took an active part in relation to the conduct of a Saivite temple at Elamayankottur. It is alleged that they were in possession of funds amounting to Rs. 1,38,000. It is alleged that that fund was a trust fund. It is alleged that the family itself regarded that money as the money of the deity. Those being the allegations an application taken out on the 17th September, 1929, was made to me asking for the following relief:

    (a) Why the amount standing in the accounts of the P.M.A. Firm, Madras, (a) the credit of Sri Elamayankottur Deivanayagaswami should not be declared to be a trust fund payable by the Receivers of the estate Messrs. Fraser and Ross, in full,

    (b) Why the said Receivers should not be directed to retain out of the realisations made by them a sum sufficient to pay in full the said amount,

    (c) Why costs of the application should not come out of the estate, and

    (d) Why such further or other order should not be passed as may be necessary in the interests of justice and in the circumstances of the case.

    3. That application was made in this partition suit by two persons who were described as worshippers at the temple in question. When that application came before me I expressed some surprise that persons, strangers to the suit, should try to come in and make an application of this sort. I was told by Mr. T. M. Krishnaswami Aiyar, who appeared on behalf of the applicants, that he rested his application on Order 31, Rule 5 of the Original Side Rules of this High Court. Rule 5 provides as follows:

    If it appears to the Court that there are outstanding debts or liabilities of the family, and that the same cannot then be ascertained, the Court may direct an account to be taken thereof, and may, in its discretion, direct notice to be given to all persons having claims against the family, or its property by advertisement in the newspapers or otherwise, to bring their claims into Court before a fixed day.

    4. Order 31 is dealing solely with partition suits. It was conceded before me that the right of the applicants to come under that rule depended upon whether or not the Court had directed notice to be given to all persons having claims against the family and whether in fact such notice had been given. I am told by Mr. Duraiswami Aiyar, who appeared on behalf of the respondents, that the Court did not direct notice to be given to all persons having claims against the family and that in truth no such notice had been given. That being so, it appears to rat that the applicant cannot avail himself of that rule. I doubt very much whether the rule in any case would entitle strangers to come in and make substantive applications in such a suit as this. However it is unnecessary for me to decide that. It is sufficient for me to say that the rule itself not having been complied with the application fails and is dismissed. The respondents will have their costs of this application in any event, such costs to be taxed.

    5. I now turn to the second application. Mr, Krishnaswami Aiyar feeling that he was in some difficulty and knowing the doubts I entertained with regard to his first application, asked for leave to take out an application to make the applicants parties to the Suit. That he did in the second application. The original applicants were the applicants in this also and a third applicant was added, who, I am told, is the manager of the temple. These three persons on the second application sought the following relief:

    (a) Why the applicants herein should not be added as party defendants in C.S. No. 762 of 1926, and

    (b) Why such further or other orders should not be made as may be necessary in the circumstances of the case and in the interests of justice.

    6. Upon what does the second application depend? It depends as is admitted upon Order 1, Rule 10 (2) of the Code of Civil Procedure. That rule provides as follows:

    The Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the Court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the Court may be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit, be added.

    7. Now the first matter I have to put to myself is this. What are the questions involved in this suit? I look at the preliminary decree and 1 see that a Commissioner has been appointed {a) to take an account of the property, credit and effects of the said joint family, (b) an account of the debts and liabilities of the said family outstanding.

    8. There can be no question at all that if in truth this is a trust fund--and I do not propose to decide that one way or the other here--then this family is liable to account for it. If it had held these moneys in trust for various persons connected with this temple then that must be regarded as one of the liabilities of the family.

    9. It has been argued by Mr. Duraiswami Aiyar on behalf of the respondents that the substantial question involved in this suit must relate to questions upon which the parties themselves are at issue. It is obvious that the members of this family are not at issue upon this question. It is not part of their case that this money is trust money. In fact it is their case and I have no doubt that they do say that this money belongs to their family. So says Mr. Duraiswami Aiyar, this is not a question involved in this suit. Let us see; is it not involved in this suit ? Supposing the Commissioner finds this family is in possession of an amount in excess of Rs. 1,38,000. He is directed to ascertain what are the debts and liabilities of the family. Unless these -persons (applicants) are before the Court it is admitted that in no sense would the Commissioner take cognizance of the allegations made in respect of this alleged trust fund. He would know nothing about it; he would regard all the moneys in the hands of the Receiver as being moneys of the family. He would regard those moneys as being available and completely available for distribution among the creditors. It may very well be that there is no issue between the parties. But is this a question entirely for them? Order 1, Rule 10 (2) says that the Court may at any stage of the proceeding order that the name of any party improperly joined, whether as plaintiff or defendant be struck out and that the name of any person who ought to have been joined, whether as plaintiff or as defendant, or whose presence before the Court may be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit be added. Why is the Court empowered to do that? It is empowered to do that in order to enable the Court "effectually and completely to adjudicate upon and settle all the questions in the suit". Now can the Court completely adjudicate upon and settle all the questions involved in this suit if it shuts its eyes to the persons who are making this application? Can the Court entirely disregard the allegation that one lakh and thirty-eight thousand rupees out of the moneys in the hands of the Receiver is trust money. Can the Court completely decide what are the debts and liabilities of the family if it wholly ignores this question of the alleged trust fund? It is said, rather it is contended before me, that if in fact it is held to be trust money there may be nothing for the creditors. That may very well be but if this is trust money and there are no other available assets then plainly the creditors are entitled to nothing. That is not an argument to sway my mind upon an issue such as this. I simply ask myself this question. Here are the rules framed giving the widest possible discretion to the Court. I have to ask myself can the Court completely settle all the questions involved in this suit without adding these persons as parties? In my opinion it cannot.

    10. Now a number of authorities have been cited before me and I propose to refer to only a few. The question which I am now considering was considered by this Court in Vydianadayyan v. Sitaramayyan (1881) I.L.R. 5 Mad. 52 by Sir Charles A. Turner, Chief Justice and Muthuswami Aiyar, J. In construing the words which I am called on to construe the Court in that case said:

    Is it meant by these words that a person not originally impleaded is to be made a party only if the questions raised in the suit cannot otherwise be completely and effectually determined between the parties to the suit? or is it meant completely and effectually determined so that they shall not be again raised in that or in any other suit between the parties to the suit or any of them and third parties? To accept the more restricted interpretation involves the addition of words which we do not find in the section, namely, 'between the parties to the suit' and there can be a few, if any, questions which cannot be determined between the parties to the suit one way or the other, and of which the determination, if they be material will, as between, the parties to the suit, not be final. On the other hand, the, interpretation warranted by the terms would enable the Court, to avoid "conflicting" decisions on the same question which would work in justice to a party to the suit, and finally and effectually to put an end to litigation, respecting them.

    11. To the same effect is a judgment of Ramesam, J, In the matter of Baluswami Ayyar (1928) I.L.R. 51 M. 417 : 55 M.L.J. 175 (F.B.). There referring to a partition suit such as this (that case being a case of insolvency) the learned Judge in the course of his judgment said that the Official Assignee can apply for all the creditors to be made parties so that the findings as to the nature of the debts may bind all.

    12. To the same effect is a judgment of Mr. Justice Venkatasubba Rao in Secretary of State v. M. Murugesa Mudaliar A.I.R. 1929 M. 443. There dealing with the rule the, learned Judge says:

    The first part deals with necessary parties and the second, with, proper parties. True, a decision is binding only on the parties to the suit; but does it follow that a Court is bound to decide a dispute in the absence of those persons whom it most vitally concerns?

    13. The learned Judge in the course of his judgment referred to a number of authorities and among them is a case Esquimalt and Nanaimo Ry. Co. v. Wilson (1920) A.C. 358. That is a decision of the Privy Council. The headnote says this:

    When an action, if successful, will affect rights claimed by the Crown but the plaintiff has against the Crown no claim to which the procedure by petition of right is applicable, the Attorney-General is a necessary and proper party and may be joined as a defendant by the plaintiff.

    14. In the course of the judgment Lord Buckmaster says at page 363 with regard to the contention that there is no need to make the Attorney-General a party, With regard to the first of these contentions, their Lordships are clearly of opinion that the Attorney-General ought to be before the Court. It is. quite true that the title of the Crown to the land in question is not in controversy, nor is the Crown asked to do any act or grant any estate or privilege; but in the event of the plaintiffs' success, the rights existing in the Crown and consequent upon the grant to the respondents will cease. If these interests lay in a third party, he ought certainly to be added as defendant, and that is the best means of testing the necessity of the attendance of the Crown.

    15. Mr. Duraiswami Aiyar sought to distinguish that case from this upon the footing that there some interest of the Crown was affected. Personally I fail to see the distinction between that case and this. In the case now before me is it not true to Say that this Court has appointed a Commissioner to ascertain what are the debts and liabilities of this family. Is it not true to say that the interests of the present applicants who are saying that a large portion of the available assets, represent trust money are vitally concerned?

    16. Mr. Duraiswami Aiyar drew my attention to a number of cases which he says point the other way. He directed my attention this morning to a case reported in Naraini Kuar v. Piarey Lal (1880) I.L.R. 2 A. 738, The headnote says this:

    Where an application is made, under Section 32 (that corresponding to Order 1, R: 10 (2) of the present Civil Procedure Code) for the addition of a person whether as plaintiff or defendant, such person should, as a general rule, be added, only where there are questions directly arising out of and incidental to the original cause of action; in which such person has an identity or community of interest; with the original plaintiff or defendant.

    17. I look at the judgment of Mr. Justice Straight at page 741. There I read this:

    No doubt it is most desirable, when litigation has been instituted in respect of a particular subject-matter or specific, contract, that the Court having cognizance of it should see that all questions directly springing out of it should be raised and dealt with; once and for all, and that all persons naturally concerned in and likely to be legally affected by the determination of those questions should be joined as parties.

    18. I do not want to deal with the particular facts of that case but I see nothing generally in the judgment of Mr. Justice Straight which is inconsistent with the view I am now taking.; 1 pause here and ask myself the question as to what is the alternative suggested. The alternative suggested here is that the pre-sent applicants should bring an independent suit. There is much to be said in favour of that suggestion and prima facie I should say that that is the right course. But supposing that they do in fact bring an independent suit. What would be the position ? Two suits would be proceeding in this Court and in both of them this question would be involved as to what are the, liabilities of this family. In suit No. 1, a decision would be reached without any reference whatever to the question of whether this money is trust money or not. In suit No. 2, a decision would be reached only solely with reference to this question. Is it not obvious that the effect of these two decisions would be that in all probability if the present applicants are right in their contention--they may be wrong, but if they are right--there would be two conflicting decisions.

    19. Mr. Duraiswami Aiyar referred me also to certain English cases and among them is one- reported in Montgomery v. Foy, Morgan & Co. (1895) 2 Q.B. 321. There, a shipowner brought an action against certain consignees and an application was made that the shippers of the cargo should be added as defendants in the action In order that they might counter-claim against the plaintiff damages for short delivery and injury to cargo. The matter went up to the Court of Appeal and there Lord Esher said this:

    Here the matter before the Court is the contract of affreightment, and there are disputes arising out of that matter as between the plaintiff and the defendants and the company whom it is sought to add as defendants, and who were the defendants' principals in the matter. I can find no case which decides that we cannot construe the rule as enabling the Court under such circumstances to effectuate what was one of the great objects of the Judicature Acts, namely, that, where there is one subject-matter out of which several disputes arise, all parties may be brought before the Court, and all those disputes may be determined at the same time without the delay and expense of several actions and trials.

    20. In these circumstances although there is much to be said both ways, the conclusion to which I have come is that this application falls within Order 1, Rule 10 (2) of the Code of Civil Procedure by which the Court may at any stage of the proceedings add a party to the suit and I see no difficulty about that at all. I am told that the Commissioner will not report for about twelve months. Whether that be so or not I am satisfied that he ought not to report in this Court as to what are the debts and liabilities of this family without regard to the contentions put forward by the present applicants. I think their presence before the Court is necessary to enable the Court effectively and completely to adjudicate and settle all the questions involved in this suit.

    21. In these circumstances I direct that these three applicants be added as party defendants in C.S. No. 762 of 1926 and that all proceedings therein be amended accordingly. I do not propose to put the applicants on any terms in making this order and they will have their costs of this application in any event such costs to be taxed. I direct that there be liberty to both sides to apply. I direct that the Receivers do retain in their hands the sum of rupees one lakh and thirty-eight thousand until further order.

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    Ramaswami Chettiar v. P.M.A. Vellayappa Chettiar
    (Jan 17, 1930)