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Judgment
Walsh, J.—This civil revision petition raises a question of considerable difficulty. Defendant 1 in the suit who was heavily indebted executed
a trust deed on 29th November 1929 and appointed defendants 2 to 6 who were five of his creditors as trustees. They were directed to discharge
all his debts to his creditors, who were mentioned in the document together with the amounts due to them. On the same day another consent deed
was entered into which is noted in the trust deed itself, by which the plaintiff and a certain number of other creditors compounded the debts due to
them by defendant 1 with the trustees for lesser amounts. The plaintiff sued defendant 1 for the full amount due to her and defendants 2 to 6
(trustees) were impleaded as co-defendants. The plea of the defendants was that the suit is not maintainable on account of the consent deed which
the plaintiff had signed. The plaintiff''s case was that she put her thumb-impression on soma paper on which she was told that the money due to her
would be paid, that the consent deed was not read out to her and that she never knowingly executed it.
This has been found against by the learned District Munsif. In argument the plea was raised there which has been raised here that the fact that
one of the creditors who had signed this consent deed afterwards obtained a decree for his whole debt against the property of defendant 1,
invalidates the contract and that therefore the plaintiff''s suit which was dismissed as unmaintainable can be maintained. Guruviah v. Kotiah 1915
Mad. 270 was quoted before the lower Court which held that it had no application to the facts of this case. At first sight on reading the lower
Court''s judgment which only mentions the fact that one of the creditors who had signed the consent deed obtained a decree against the property
of defendant 1 for the whole debt I was inclined to think that Guruviah v. Kotiah 1915 Mad. 270 does not at least in terms apply because that
case as well as Ajudhia Prasaa v. Sidh Gopal (1887) 9 All. 830 at pp. 337, 338 deals with the case of a creditor who did not sign the consent
deed, and could not therefore be prevented from obtaining his full debt in a suit brought for that purpose. On the other hand a creditor who has
signed such a consent deed can only get a decree through fraud on his own part or collusion and negligence on the side of the defendants who fail
to put forward the consent deed. Whether the position for the contract being cancelled is stronger or weaker in such a case than in a case where
the creditor who has not signed the consent deed sues and recovers his whole debt may be a matter for argument and I do not feel inclined to enter
on it here because I find in the evidence that there were several other creditors who did not sign the consent deed but did recover their whole
debts.
The existence of these creditors it seems to me brings the case directly on all fours with Guruviah v. Kotiah 1915 Mad. 270 and Ajudhia Prasaa
v. Sidh Gopal (1887) 9 All. 830. In Guruviah v. Kotiah 1915 Mad. 270 a few of the creditors without authority from the general body of creditors
arranged with the debtors that a certain portion of the assets should be set apart for the satisfaction of all the creditors in Madras and the balance
for the satisfaction of the mofussil creditors and an agreement was also drawn up in accordance with the arrangement making all the creditors
parties but some of the creditors failed to agree and recovered their claims in full. It was held that under the circumstances the proper inference to
make was that no creditor agreed to be bound unless all agreed, and in the absence of general consent even the signatories were not bound. The
trust deed in the present case and the consent deed were simultaneous and evidently drawn up with reference to each other for the trust deed
mentions the consent deed. The trustees were five of the creditors so that as in the Madras case, they without authority from the general body of
creditors, arranged with the debtor to take charge of all his properties for distribution amongst all his creditors who were mentioned below. Then
some of the creditors signed the consent agreement to take proportionately less while, as in this case, some of the creditors who had not signed
sued and obtained the whole amount of their debts. The ratio decidendi appears to be as follows. The consideration for the creditors who have
signed the consent deed giving up part of their debts was that the whole of the debtor''s properties were to be available for pro rata distribution
amongst his creditors.
When therefore any creditor by suit obtained his full share, the amount of the estate was diminished below what was contemplated in the
contract as available for division and hence the contract became void. Following these decisions it would appear that the plaintiff can maintain the
suit although, as I said, there is no express authority for a case where one of the signatories himself sues as has been done by one of the creditors in
this case. If it were necessary to express an opinion I should think this raises an even stronger case to hold that she contract has been broken. If
the debtor or his trustees negligently or collusively allows such an obviously fraudulent and an untenable decree to be obtained, it would appear
that there is clearly a breach of the contract. In the present case the suit appears to have been brought against the judgment, debtor directly, the
trustees not being-added. That creates no doubt certain difficulty. The plaintiff was undoubtedly bound to have the trustees added as parties just as
they were in the present case. But even assuming that the trustees did not know of the suit it might be contended that the suit itself was a breach of
the contract on the view that in such a case all the consenting creditors contracted not only with the trustees but also with each other. As I said
though I think this makes the case stronger than the cases quoted above which are cases where the suits were by non-consenting; creditors who
were therefore entitled in law to be paid their debts in full, nevertheless, I prefer to rest my decision on the case of these non consenting creditors
who, as the evidence in this case shows, sued and recovered their debts. This appears to me to bring the case within the decisions quoted above.
Their remains the question whether I should interfere in revision. No doubt at first sight it might appear that substantial justice was done by not
allowing the plaintiff to go behind her consent and thereby steal a march on other consenting creditors. But as against this as I pointed out, one of
the consenting creditors has himself stolen a march on the plaintiff, and if she is entitled, owing : to extra diligence to be the first in the field with her
claim after the contract had been broken by this creditor or by the non-consenting creditors obtaining their dues, it can hardly be said to be just
that she should not be allowed to reap the advantage of her diligence. As however she put forward a false case in the lower Court and did not
raise except in argument at the end of the case, the point which she should have raised at start, I direct that each party will bear his or her own
costs of this revision petition. The order of the lower Court is set aside and the suit will go back to that Court for disposal.