The appellant companytested the suit, inter alia, companytending that he was number aware of the loans advanced by the plaintiff and that he was also number aware of the assignments in his favour and that the 1st respondent plaintiff was negligent in number intimating to the companypanies whose shares were the trust property about the assignment in his favour and that this inaction or omission amounted to negligence on the part of the 1st respondent plaintiff and he was number entitled to claim any priority over the appellant defendant and that the appellant was a bona fide transferee for value without numberice of the assignment made in favour of the plaintiff.
After impleading the Union of India as defendant, the 1st respondent amended his plaint adding a further prayer that it be declared that the 1st respondent had prior and preferential right as against the Union of India to receive income of the trust properties and for an injunction restraining the Union of India from obstructing or interfering with the right of the plaintiff.
After the trial companyrt certified the finding to the High Court, the appeal was set down for hearing and finally the High Court declared that priority of the plaintiff does number extend to the additional claim of the plaintiff 1st respondent herein arising from the acceptance by Jehangir R. Vakil, Percy R. Vakil and defendant No.
1 asserts that in companysideration of the extension of time granted by him, the debtors Jehangir, Percy and Toos agreed to be jointly and severally liable for repayment of the whole of the amount of Rs.
3,00,000/ on the pretext that the income of the year 1949 50 was yet to be recovered by them and by pledging a part of the shares companyprised in the trust.
At some stage of the litigation Union of India had to be joined as a defendant as defendants 4 10 in the suit, some of the companypanies shares of which were the trust property, numberified that they have been served with numberice by the Commissioner of Income tax to pay the dividends and share of income due and payable to the trustees of the trust to the Income tax Department.
Sir Rustom Vakil of Ahmedabad died on November 1, 1933, leaving behind him his widow Lady Tehmina, three sons Jehangir, Percy and Toos and his daughters.
To this suit respondent impleaded the present appellant Sheth Dahyabhai, the heirs of Jehangir who had died in the meantime, the heirs of Percy who also had died in the meantime, Toos and Lady Tehmina and the various companypanies whose shares were pledged either with the 1st respondent or the appellant as also the official assignee representing the estate of Jehangir and Toos who had been adjudged insolvent in their life time and the trustees of the properties at the relevant time.
The litigation ended in a companysent decree and pursuant to the terms of the companysent decree a trust deed was executed on April 14, 1941.
Some of the trustees named by the testator had died in the mean time with the result that the trust deed named Jehangir, Percy, Lady Tehmina and three other persons as trustees.
Appellant Dahyabhai disputed the double priority claimed by the 1st respondent which led to a suit being Civil Suit No.
A further declaration was sought that the 1st respondent had a prior and preferential right to the income of the assigned chose in action and sought an injunction against some of the other defendants restraining them from acting companytrary to his rights under the assignment.
559 The assignors were the debtors who as beneficiaries were entitled to receive the dividend income.
The suit filed by the 1st respondent was decreed in his favour save and except holding that the question of joint and several liability of the three debtors companyld number be decided in the suit filed by the 1st respondent.
The High Court by a companymon judgment companyfirmed the decree of the trial companyrt according priority to the claim of the 1st respondent over the present appellant.
Notice of assignment was given to the trustees who were liable to distribute the dividend income.
1,00,000/ from 1st respondent Sheth Ambalal Himatlal and assigned to him by way of charge to secure repayment of the amount advanced, all rights, claims and interest over the income payable to him under Clause 8F of the will of Sir Rustom Vakil.
A schedule was annexed to the trust deed specifying the properties which were settled on trust In fulfilment of the direction given in the will of the testator.
Accordingly, by the indenture dated August 3, 1948 Sarosh Kothawala retired as a trustee and Toos, one of the sons of the testator was appointed as a trustee.
A prayer was also made that it be declared that Jehangir, Percy and Toos were jointly and severally liable to the plaintiff for his dyes and he had a prior and preferential right even in respect of the joint and several liability of his debtOrs.
However, the High Court posed to itself another question whether the assignment made in favour of the 1st respondent companyers the joint and several liability of each of the three brothers to pay the outstanding loan and whether this joint and several liability can be accorded priority over the appellant and directed that the issue be remitted to the trial companyrt for certifying its finding to the High Court.
A further loan of Rs, 3,00,000/ was borrowed by Jehangir, Percy and Toos from Sheth Dahyabhai and executed an assignment of an identical nature in his favour.
179/52 filed by the 1st respondent in the Court of Civil Judge Senior Division , Ahmedabad.
By Clause 8F of the will he directed that during the life time of his son Jehangir, Percy and Toos the entire income of the trust properties shall be enjoyed by them in equal shares but that after the life time of each son, trust property falling to his 1/3 share, interest as well as principal shall go to his children sons and daughters in the proportion therein mentioned.
A reference to the 10th Schedule is necessary for the purposes of this appeal in which shares of a number of companypanies and the right to specific share in the income of certain managing agency companypanies was enumerated.
On January 7, 1950, Toos borrowed a loan of Rs.
On May 28, 1950, Percy borrowed a loan of Rs.
The second deed of assignment was impounded by the Collector for adjuding the adequacy of the stamp duty but that is number relevant for the present purpose.
By this will he appointed five persons as executors and gave a specific direction in Clause 8 of the will that certain properties therein specified be settled on trust by executing a trust deed and the executors were to be trustees for the purpose of the trust.
Subsequently, on June 14, 1951, Jehangir, Percy and Toos borrowed a loan of Rs.
Jehangir, Percy and Toos obtained from 1st respondent creditor extension of time for the repayment of the advance of Rs.
it is number necessary to refer to the various averments in the plaint save and except saying that 1st respondent prayed for a declaration that the transfers made by way of assignment or mortgage in favour of the appellant were number binding upon the 1st respondent and for an injunction restraining the appellant from recovering the income which was payable to him.
1,00,000/ each advanced by the 1st respondent.
3,00,000/ from the appellant Sheth Dahyabhai and assigned in his favour the right to receive certain dividend and the right to receive the income of the three companymission agencies till the debt was fully repaid.
It may be made clear that the 1st respondent has neither filed cross objections number any separate appeal questioning the decree of the High Court number according priority to the joint and several liability undertaken by the three debtOrs.
1,00,000/ from the 1st respondent and made an identical assignment of his share of the income in favour of the creditor.
On October 12, 1949, Jehangir took a loan of Rs.
Consequently, Jehangir, Percy, Toos and Lady Tehmina were the trustees and from amongst them Jehangir, Percy, Toos were also the beneficiaries of the trust.
It is unnecessary to refer to the priority claimed by Union of India in view of the fact that the trial companyrt negatived this priority and the First Appeal No.
The claim of priority of the 1st respondent is questioned by the appellant companytending that on account of the omission, inaction or negligence on the part of the 1st respondent the appellant being a bona fide transferee for value without numberice, the 1st respondent is estopped from claiming priority over the appellant.
A Division Bench of the High Court heard the appeal of the present appellant, First Appeal No.
A further direction was given that his son Jehangir be appointed as an additional trustee and executor when he attained the age of 21 years.
Aggrieved by the decision of the trial Court the appellant 1st defendant in the shit preferred First Appeal No.
1,00,000/ from the first respondent and made a similar assignment of his share of the income in favour of the 1st respondent.
612/56 filed by the Union of India in the High Court of Bombay was dismissed and numberfurther proceeding appears to have been taken.
After his death there was some litigation between Percy on the one hand and Jehangir, Toos and Lady Tehmina on the other for administration of the estate of the deceased.
1 claims priority in payment over appellant under assignment in his favour.
He had made his last will and testament on November 18, 1924.
The dispute in this appeal is with regard to the priority to claim payment under the assignment in favour of the 1st respondent and the appellant.
612/56 filed by the Union of India, and four other appeals with which we are number companycerned in the present appeal.
1/57 in the High Court of Bombay.
Respondent No.
Respondent No.
By 1948, of the three trustees other than the descendents of the testator only one Sarosh Kothawala was surviving and he desired to retire as a trustee.
Notice of assignment was given to the trustees in each case on the very day on which the advance was made.
3,00,000/ to him.
3,00.000/ to him.
Aggrieved by the decree of the High Court according priority to the debt of the three debtors Jehangir, Percy and Toos in repayment of the debt over the 1st defendant, the latter has preferred this appeal by certificate.
4 of the joint and several liability to pay the balance of loans taken in respect of each of them by the other two.
