Taraprasanna Ganguly... v. Naresh Chandra Chakr..., Calcutta High Court, Judgment, Law, casemine.com

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Case Number

Appeal No. 211 of 1932

Judges

Mitter
M.C Ghose, JJ.

Acts

provisions of the Trusts Act (2 of 1882), Ss. 75

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Smart Summary

Factual and Procedural Background

The appellants (plaintiffs in the original suit) sued the Secretary, Ex-Officio President and the then members of the Madaripur Donovan Girls' School Committee for recovery of Rs. 5,728 due on bills arising from a contract dated 7 March 1925 for construction of school premises. Defences included a contention that the suit was not maintainable because the personnel of the managing committee had changed since the agreement.

On 9 February 1931 the Subordinate Judge decreed the plaintiffs in part for Rs. 1,561-12-0 with interest Rs. 699-8-0 and costs, directing that the decree "shall not be executed personally against the defendants." The plaintiffs appealed to the High Court (F.A. No. 148 of 1931); the defendants filed cross-objections and the appeal and cross-objections were pending.

The appellants applied to execute the decree (Execution Case No. 59 of 1931). After the decree three members of the managing committee went out of office and three new members were substituted; those new members and later another member (Miss Kiranbala De) were added on the record in the execution proceedings. The appellants sought attachment and sale of movables at the school and boarding premises, money held in certain Madaripur banks in the names of the Secretary and Joint Secretary, other moneys held by the Secretary for the Committee, and immovable property if necessary.

Three petitions of objection were filed (by eight members of the old committee, by the three new members, and by another new member). Principal objections sustained below were that (a) the decree could not be executed against the assets of the school, and (b) the decree was not against the committee or, at least, not against the present committee because the personnel had changed. The Subordinate Judge dismissed the execution petition on the view that the decree as drawn could not be executed against the new members or the school's assets because the committee was not a legal entity, not a firm, and had not been sued as a fluctuating class under O.1, R.8 CPC.

Legal Issues Presented

Whether a decree against the managing committee of an unincorporated school, with a direction that members are not personally liable, should be construed as a decree against them in their representative capacity and thus bind the school despite changes in personnel.
Whether such a decree can be executed against the assets of the unincorporated institution (the school) at the time of execution.
Whether the new members of the managing committee (appointed after the decree) can be treated as judgment-debtors or be brought on record so that execution may proceed against the institution's assets.
What is the applicability of Order I, Rule 8 and Order XXII, Rule 10 of the Code of Civil Procedure (CPC) to representation and devolution of interest in this context.

Arguments of the Parties

Appellants' Arguments (Mr. Atul Chandra Gupta)

Beyond corporations and firms there exist entities constituted by holders of office; the members of the school managing committee form a body of trustees whose representative character persists despite changes in personnel.
Authorities and equitable principles (reference to Lewin on Trusts, edn. 13 at p. 235, and to Ss. 75 and 76 of the Trusts Act, 2 of 1882) support the proposition that trustees/representatives hold property of such institutions and that execution can be levied against those assets in the hands of the managing committee for the time being.
If the Subordinate Judge's narrow construction is maintained, it would effectively prevent school committees in the province from operating other than on a cash basis.

Respondent's Arguments (Dr. Basak)

The decree is really against certain members of the committee; there is no trust deed and, in the absence of such a deed, the institution's property cannot be regarded as vested in the members on behalf of the school.
The managing committee is not a legal entity (not a "person" in law) and the Court did not intend to pass a decree against the committee or the school properties — as evidenced by the striking off of prayer "Kha" of the plaint by order dated 19 January 1931 (which sought realization from the school fund and sale of school property if necessary).
Authority cited: a passage from Halsbury's Laws of England (Vol. 4, p. 420, para. 903) was relied on for the proposition that an unincorporated institution is not an association legally recognized in the same sense as a corporation.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Wise v. Perpetual Trustee Co. Ltd., 1903 AC 139	The case addressed liability and indemnity of trustees/committee members of an unincorporated club: trustees who incur liability under onerous covenants accepted on behalf of a club are entitled to indemnity out of club property to which their lien as trustees extends; trustees' authority to contract depends on rules or necessary implication.	The court noted the analogy to ordinary clubs but held the analogy did not fully apply. It relied on the principle that representatives who act on behalf of an association may be entitled to indemnity out of association assets, and used the authorities to support construing the decree as operating in a representative capacity binding the institution rather than making members personally liable.

Court's Reasoning and Analysis

The Court examined the Subordinate Judge's reasoning and the submissions of the parties. The Subordinate Judge had held that the managing committee was neither a corporation nor a firm, that it had not been sued as a fluctuating class under Order I, Rule 8 CPC, and therefore the new members could not be called judgment-debtors; he concluded the execution petition must be dismissed because the petition was not framed against the "former body."

The High Court (Mitter, J., with M.C. Ghose, J. agreeing) rejected that narrow construction for the following principal reasons drawn from the opinion:

Legal forms such as corporations or firms are not the only means by which persons may represent an institution; the members of a managing committee may act in a representative capacity for the institution and effectively stand for the school in its affairs.
Analogies to ordinary clubs (and the authorities about trustees of clubs) show that representative bodies can bind the institution and that trustees/representatives who act may be entitled to indemnity out of association assets; although the club analogy does not map exactly on this case, the legal principles about representation and indemnity are relevant.
A decree must be given a reasonable construction and the Court should avoid a construction that would render a decree inexecutable. The intention of the Subordinate Judge in framing the decree (including the direction that members are not personally liable) was to make them liable in a representative capacity.
Therefore, the only reasonable construction was that the decree was passed against the persons representing the institution and binds the institution even if membership changes between decree and execution.
It is sufficient for execution that all members of the present managing committee are on the record before execution proceeds; the addition of a representative after time in appeal does not defeat the representative character of the suit where several persons were sued in a representative capacity.
Order I, Rule 8 CPC (regarding suit by or against a fluctuating class) was held not to apply because all members of the managing committee at the date of suit had been sued; a change in membership after decree amounts to a devolution of interest under Order XXII, Rule 10 CPC.
Accordingly, the preliminary objection that a later-added member (Dhirendra Nath Das) was added out of time was not decisive; while he should ideally have been added on notice, his late addition did not deprive the representation of effect and the objection was not of substance.

On these bases the Court concluded that the Subordinate Judge's dismissal of the execution petition was founded on an unduly narrow construction of the decree and directed that execution proceed as prayed for by the decree-holders.

Holding and Implications

APPEAL ALLOWED.

Direct effect on the parties:

The order of the Subordinate Judge dismissing the execution petition is set aside.
The Subordinate Judge is directed to proceed with execution of the decree in the manner sought by the decree-holders (attachment and sale of movables at the school premises and realization from funds/moneys specified), subject to the usual procedural requirements (noting the court's view that present managing committee members be on the record before execution proceeds).
In all the circumstances the High Court ordered that there would be no order as to costs.

Broader legal implications as stated by the Court:

A decree against the managing committee of an unincorporated association (for example, a school), when accompanied by a direction that members are not personally liable, should reasonably be construed as a decree against them in their representative capacity and binds the institution even if the members change after the decree.
Such a decree can be executed against the assets of the institution that exist at the time of execution.
It suffices for execution purposes that all members of the present managing committee be on the record before execution proceeds; members who pay the school's debt are entitled to indemnity out of the institution's assets.
Order I, Rule 8 CPC has no application where all members of the managing committee at the date of suit were sued; change in membership after decree constitutes devolution of interest within Order XXII, Rule 10 CPC.
The managing committee stands in law for the school and therefore a decree against them in their representative capacity binds the school.

The summary above is confined to the content and conclusions expressly stated in the provided opinion.

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Taraprasanna Ganguly And Others Decree-Holders v. Naresh Chandra Chakrabarty And Others Judgment-Debtors

Mitter, J.:— This is an appeal on behalf of the decree-holders and is directed against an order dismissing their application for execution of a money decree-obtained in their favour. The circumstances which have led to the order appealed against may be briefly stated thus: The appellants instituted a suit against the Secretary, Ex-Officio President and the then members of the Madaripur Donovan Girls' School Committee, (who were all named in the plaint) for recovery of Rs. 5,728 due on bills on account of a contract entered into on 7th March 1925 between the appellants and the then school committee for the construction of the school premises. Various defences were taken in the suit amongst which it is necessary to notice only one, namely, that the suit was not maintainable as the personnel of the managing committee had changed since the date of the agreement. On 9th February 1931 the appellants' suit was decreed in part for Rs. 1,561-12-0 with interest Rs. 699-8-0 and costs and it was directed that the decree shall not be executed personally against the defendants. Against this decree the plaintiffs-appellants preferred an appeal to the High Court (F.A No. 148 of 1931) in which the defendants to the suit preferred cross-objections. Both the appeal and the cross-objections are pending determination in this Court. It may be mentioned here that on the issue as to the maintainability of the suit in the form in which it was laid was decided in favour of the plaintiff and the Subordinate Judge was of opinion that:

“there is no reason why the suit could not be legally instituted against the institution although its members were changed,”

2. The appellants applied for the execution of the decree in execution case No. 59 of 1931; and as after the decree in the suit three members of the managing committee went out of office and three new members, were substituted in their place, the appellants brought the new members on the record and subsequently another member Miss Kiranbala De, was added as a party to the execution proceedings as another new member of the school committee. The plaintiffs-appellants prayed for attachment and sale of the moveables of the judgment-debtor which were lying in the Donovan Girls' School and Boarding premises and of the money lying in certain Madaripur Banks in the name of the Secretary and Joint Secretary as also of other moneys held by the Secretary on behalf of the School Committee either with himself or in the Madaripur Post Office.

3. The plaintiffs prayed that if necessary the attachment and the sale of the immovable properties of the judgment-debtor might also be effected. Various objections were raised in three petitions of objections (1) by 8 members of the old school committee, (2) by the three new members, (3) by another new member in three miscellaneous cases. The principal objections need only be noticed. They are: (a) that the decree cannot be executed against the assets of the school, (b) that the decree was not against the committee or at all events not against the present committee as the personnel of the committee has since changed. These objections have prevailed with the Subordinate Judge below. Hence the present appeal by the plaintiffs decree-holders. The Subordinate Judge is of opinion that as there is no decree against J some of the present members of the school committee the petition for execution can only be executed against what the present members and the outgoing members held or owned as the managing committee of the school and

“as the petition for execution was not on that footing as the former body was not on the petition.”

4. The petition must be dismissed. The lower Court recognizes that this position sounds startling and absurd, but nevertheless gives effect to the objection as he considers that his duty is to construe the decree as he finds it. His reasoning is that the school committee is not a Corporation which remains constant though its members change; that it is not a firm, that it was not sued as a fluctuating class by a representation under O. 1, R. 8 of the CPC, and that on no conceivable theory he could call the new members judgment-debtors. Mr. Atul Chandra Gupta who appears for the appellants has attacked this reasoning of the Subordinate Judge with great force. He contends that beyond a Corporation and a firm there are certain things as holders of office and that the members of the school committee really formed a body of trustees which does not change with the change of its personnel and refers to a passage in Lewin on Trusts (Edn. 13 at p. 235) and to the provisions of the Trusts Act (2 of 1882), Ss. 75 and 76, as embodying the rules of equity, justice and good conscience in support of his contention. The Trusts Act, it may be mentioned, does not apply to Bengal. He contends that the managing committee hold the property or the assets of the institution and that the present execution can be levied against the assets of the institution in the hands of the managing committee for the time being. He argues that if the view taken by the Subordinate Judge is upheld, no school committee in this province can get anything done except on the cash system.

5. In reply for the respondent Dr. Basak argues that the decree is really a decree against certain members of the committee and points out that there is no trust deed in this case and in the absence of such a deed the property of the institution cannot be regarded as having vested in the members of the committee on behalf of the school. It is also said for the respondent that the committee is not a legal entity and its legal position is that it is not a person at all. It is argued that the Court never intended to pass a decree against the committee much less against the school properties and refers to the circumstance that the prayer “Kha” of the plaint was struck off by an order dated 19th January 1931. The prayer “Kha” was to the effect that a decree should be given for realization of the decretal amount from the school fund of the Madaripur Donovan Girls' school and if the decretal amount be not realized from the said fund then a decree should be passed for realization of the decretal amount by the sale of the moveable and immovable properties of the Donovan Girls' School. In support of the contention that an unincorporated institution is not an association which is legally recognized reference has” been made to Halsbury's Laws of England Vol. 4, p. 420, para. 903.

6. It is true that an unincorporated members' club is not a partnership and questions frequently arise as to who are the persons liable for goods supplied to such a club or on contracts professedly made on its behalf; it has been held that trustees of committee of management of such clubs have only such authority to contract on behalf of the members generally as may be given to them expressly or by necessary implications by the rules. An ordinary club is formed upon the tacit understanding, judically recognized, that no member as such becomes liable to pay its funds or otherwise any money beyond the subscriptions required by its rules: see: Wise v. Perpetual Trustee Co. Ltd. . 1903 AC 139. In the same case their Lordships of the Judicial Committee laid down that trustees of a club who have incurred liability under onerous covenants contained in a lease accepted by them on its behalf are entitled to indemnity out of any property of the club to which their lien as trustees extends. The analogy of clubs does not really apply to the present case. The only decree that could be passed in the present case is a decree against those who represent the public in their affairs of the school and all such members for the time being were made parties to the suit, and in passing the decree the Court was careful enough to state that the members of the managing committee were not to be personally liable. The intention of the Court was that they are to be liable in a representative capacity.

7. The decree might have been more explicit but a reasonable construction most always be put on a decree and the Court should always lean against a construction which would render a decree inexecutable. The only reasonable construction seems to be that the decree was passed against persons representing the institution and must bind the institution even if at the time of execution of the decree there has been some change in the personnel of the representatives. In this view it is not necessary to consider the preliminary objection taken that Dhirendra Nath Das, one of the present members of the committee was added as a party long after time in this appeal, for where several persons were sued in a representative capacity the addition of one of such representatives on the record of the appeal after time does not really make the representation any the less effective. I am therefore of opinion that this appeal should be allowed. The order of the Subordinate Judge must be set aside and he is directed to proceed with the execution of the decree in the manner asked for by the decree-holders appellants. In all the circumstances there will be no order as to costs.

8. My conclusions may be summarized as follows: The decree against the managing committee of an unincorporated association for example, a school like the Donovan Girls' School with a direction that the managing committee are not personally liable must be reasonably construed to mean a decree against them in their representative capacity and binds the school even if the members of the managing committee change after the decree, such a decree can be executed against the assets of the school at the time of execution; it is enough if all the members of the present managing committee are on the record before execution is proceeded with; the members of the managing committee if they pay the debt due by the school are liable to be indemnified out of the assets of the institution; that O. 1, R. 8 of the CPC, has no application to the present case as all the members of the managing committee at the date of the suit were sued; that the managing committee stood in law for the school and therefore the decree against them binds the school. In the present suit which is against the managing committee of the school in their representative capacity if there is a change in the members of the representative body there is really a devolution of interest within the meaning of O. 22, R. 10 of the CPC, and the preliminary objection raised by one of the respondents must fail although properly speaking the new member ought to have been added as a party on notice. We have however heard his learned advocate, and the objection by him is not of substance.

M.C Ghose, J.:— I agree.

K.S

9. Appeal allowed.

Taraprasanna Ganguly... v. Naresh Chandra Chakr...