Vallabhdas Mulji Vs. Pranshankar Narbheshankar - Court Judgment

Blackwell, J.

1. This is a summons for an order that the Prothonotary and Senior Master do pay to the applicants, the attorneys for the plaintiff in the suit, a sum of Rs. 2,680-13-8 deposited with him by defendants Nos. 1, 4, and 5 in the circumstances hereinafter mentioned.

2. The plaintiff was a mortgagor. Defendants Nos. 2 to 5 were mortgagees with a power of sale. They purported to sell the mortgaged propetry to defendant No. 1. Defendant No. 1 sold it to defendants Nos. 6, 7 and 8. The suit was for a declaration that the sale to defendant No. 1 was void. Defendants Nos. 6, 7, and 8 were struck out from the suit with the plaintiff's consent. Ultimately the suit was tried byFawcett J., who held that the plaintiff was entitled to avoid the sale. The costs of the hearing were given to the plaintiff against defendantsNos. 2 to 5 by the decree dated March 15, 1926. The mortgagees claimed that they (sic) are entitled to be paid the mortgage debt and various sums (sic) ended by them on the property. By the same decree Fawcett (sic) referred the suit to the Commissioner for taking accounts to (sic) an account and ascertain the amount due to the mortgage (sic) and reserved further directions and further costs. On March (sic) 1926, the applicants obtained a charging order ex parte (sic) the costs payable to the plaintiff by defendants Nos. 2 to 5. (sic)execution was then taken out by the plaintiff in respect of these (sic). Thereupon defendants Nos. 1, 4 and 5 took out a summon (sic) for a stay of execution upon the ground that a large amount (sic) be found due to them on the reference to the Commissioner. Upon that an order was made on November 8, 1927, that of defendantsNos. 1, 4 and 5 depositing the sum of Rs. 2,680-13-8 (sic) Court, execution should be stayed until the final hearing and (sic) of the suit, and the costs of the summons and order made (sic) were reserved with liberty to the parties to argue the (sic) before the learned Judge disposing of the suit finall (sic) The said sum of Rs. 2,680-13-8 was paid into Court. The Commissioner found Rs. 27,832-7-0 due by the plaintiff on the mortgage in favour of defendants Nos. 1, 4 and 5. By the final (sic) passed on February 13, 1931, the Commissioner's report (sic) confirmed, and judgment was passed for defendants No. (sic) 4 and 5 for Rs. 54,641-2-0 which included the costs of (sic) chamber summons taken out by defendants Nos. 1, 4 and 5 (sic) stay of execution which had been reserved.

3. It is alleged in the affidavit of Nagindas (sic) in support of the summons dated April 2, 1931, that at (sic) time of the passing of the final decree defendants Nos. 1, 4 (sic) applied to the learned Judge for an order allowing them (sic) off the amount of the costs which they had been ordered (sic) to the plaintiff against the amount payable to them by the (sic), and that the Judge declined to make the order asked for in view of the fact that the applicants had obtained a charging (sic). In the affidavit of Hathibhai Harishanker in reply date (sic) June 13, 1931, this is denied, and it is alleged that as the plaintiff (sic) counsel informed the Judge that the applicants claimed some (sic) against the said amount, and desired to be heard, and were not before the Court, the Judge made no order and left the parties to take such proceedings in the matter as might be necessary, Be that as it may, defendants Nos. 1, 4 and 5 resist this summons upon the ground that they have a right of set-off, and that is the question which I have to determine.

4. Sir Charles Sargent discussed an attorney's lien in Devkabai v. Jefferson, Bhaishankar and Dinsha I.L.R. (1886) Bom. 248 in the following terms (p 253):-

It is to be borne in mind that the solicitor's lieu in the High Courts of India is governed exclusively by the law as it existed in English Courts before the passing of 23 & 24 Vic, cap, 127, by which that lien was very much extended.

5. These observations were cited with approval by the Appeal Court in Tyabji Dayabhai & Co. v. Jetha Devji & Co. I.L.R. (1927) Bom. 855 : 29 Bom. L.R. 1196 where the incidents of an attorney's lien in India were discussed. It is, therefore, necessary to consider the law in England as regards set-off and a solicitor's lien.

6. As is pointed out in Mulla's Civil Procedure Code, 9th Edn., at p. 529, in the notes to Order VIII, Rule 6, before the year 1832 the Courts in England had a discretionary power as regards set-off and a discretion as to the terms upon which they would allow it. That discretion was taken away under the General Rules of 1832 and the General Rules of 1853. Rule 93 of the General Rules of 1832 was as follows:-

No set-off of damages or costs between parties shall be allowed to the prejudice of the attorney's lien for costs in the particular suit against which the set-off is sought; provided nevertheless that interlocutory costs in the same suit, awarded to the adverse party, may be deducted.

7. That rule was reproduced in 1853. Then, when the Judicature Act of 1873 came into force, Order 65, Rule 14, enacted thus:-

A set-off for damages or costs between parties may be allowed notwithstanding the solicitor's lien for costs in the particular cause or matter in which the set-off is allowed.

8. The result is that in England the Courts exercise in matters of set-off, to which Order 65, Rule 14 applies, the discretion which was taken away by the General Rules of 1832. And, as I shall presently point out, they exercise a similar discretion in matters to which that rule does not apply.

9. It will now be convenient to refer to certain authorities. In Taylor v. Popham (1808) 15 Ves. Jr. 72 Lord Eldon said (p. 75):-

The doctrine of this Court that is a Court of Equity), however, has always been, that, where in a cause, comprising a great number of questions, costs may ultimately be due to both parties, and sums, to be paid as duties to each, the demands of both shall be arranged, so as to do justice (sic) them; and the lien of the solicitor is only as to those costs, whichupon the whole, taken together, one party can claim from the other.

10. And at p. 79 he said:-

I have a strong notion, that the doctrine of this Court has all along been, that, where different demands arise in a cause, the (sic) should be arranged, as the equities between the parties require ; withoutconsidering the solicitor.

11. In Cattell v. Simons (1843) 6 Bev. 304 where costs receival a and payable by two parties were ordered to be set off without regard to the lien of thesolicitors Langdale M. R. said (p. 306):-

Where a party owes another 35, 16 s. for costs, and at the same time is entitled to receive 3S, 14 s. from him for othercosts, nothing would seem more reasonable then that these sums should be set off (sic) against the other. Severalobjections, have, however, been made to this (sic) . First, that it interferes with the rights of the (sic) but I have do doubt whatever of the rule, that the lien of the solicitor for (sic) is not to interfere with the rights of the parties.

12. In Edwards v. Hope (1885) 14 Q.B.D. 922 the plaintiff brought an action against the defendant for the price of goods sold, (sic) jury found that credit had not expired, and there was judgment for the defendant. The defendant's costs were taxed a (sic) plaintiff at 48-8-10, Then the plaintiff brought another action, and recovered judgment for 20. The plaintiff (sic) that he might be allowed to set off against the defendant'sjudgment an equivalent part of the unsatisfied judgment for 70. (sic) defendant's solicitors claimed a lien, and Smith J, made (sic) set-off subject to their lien. The Divisional Court and the Appeal Court affirmed him. The Appeal Court did not decide whether Order 65, Rule 14, applied to different actions, or only to claims in the same action, but held that if it did, there was a (sic), and if it did not, there was a discretion under the theequitable principle prevailing before Reg. Hil, Term 1853, r. 63 and that the discretion had been properly exercised. Butit is to be observed that Brett M.R. said (p. 926) :-

The late Master of the Bolls had to consider the (sic) after theJudicature Acts came into operation, in Pringle v. Gloag (1879) 10 Ch. D. 676where the application was to Bet off a debt against costs, both of which were due (sic) the same award, and he points out the injustice which would result (sic) assertion of the solicitor's lieu caused the successful party to pay (sic) party's costs What he says would apply to this case if the claims (sic) in the sameaction instead of being in distinct actions.

13. In Blakey v. Latham (1889) 41 Ch. D. 518 Kay J. discussed the matter as follows (p. 521):-

If this case were absolutely free from authority (sic) it seems to me difficult to see why the solicitor's lien should intercept (sic) he right. Take thesimplest case one can imagine, A brings an action (sic) B, and it is dismissed with costs. B brings another action against A, and that is dismissed with costs. The order in each case is, A to pay B hiscosts in the one action, B to pay A his costs in the other action. Well, when those costs are taxed and the Master's allocatur is issued, there is a judgment in each action for a definite amount, and there is no doubt whatever that those judgments could be set off one against the other. That being so, just suppose the case (which is the only case in which the matter becomes the least material), that one of those parties, A, was insolvent and unable to pay anything; why B should pay costs to A for the sake of A's solicitor is what I cannot understand. I cannot see how there can be any equity for that. There is no connection whatever betweenA's solicitor and B. It is said A's solicitor by his diligence has obtained this order for costs against B Very well; but suppose that is so : I turn to the language of Lord Chief Justice Cockburn inMercer v. Graves (1872) L.R. 7 Q.B. 499 and he says this ; 'The question is simply whether the defendant has or has not a right to set off his judgment against that of the plaintiff, the reason alleged in the replication that he cannot is, that the attorney for the plaintiff has a lien for his costs on the order or judgment obtained by the plaintiff, and the plaintiff is suing as trustee for his attorney. But the attorney has no such lien for costs as to be able to compel the plaintiff to bring the action on his behalf as trustee for him. In truth, as Mr. Brown pointed out, there is no such thing as a lien except upon something of which you have possession. The matter is thoroughly well explained in Chitty's Archbold's Practice (pp. 139, 140, 12th ed,), that although we talk of an attorney having a lien upon a judgment, it is in fact only a claim or right to ask for the intervention of the Court for his protection, when, having obtained judgment for his client, he finds there is a probability of the client depriving him of his costs'. Well, that is reasonable enough, and that is en equity against the solicitor's own client; but how can A's solicitor possibly have an equity against B to make a pay the costs which B is ordered to pay to A, when B cannot recover from A the costs which A is ordered to pay to B.-how can A's solicitor have an equity to make B pay instead of setting them off? If this matter were free from authority, I should say that is the most extraordinary equity I ever heard of.

14. In view, however, of the authorities to which he then referred, the learned Judge said that he found it difficult to act upon his own view of the matter, and in the end, following Edwards v. Hope, he held that the right of set-off of costs in different actions was intercepted by the solicitor's lien, but that it was not so intercepted as regards costs in the same action.

15. I come now to a Calcutta decision, Bhupendra Nath Bhose v. Sassoon & Co. I.L.R. (1916) Cal, 932 On April 30, 1915, defendants had obtained an award against the plaintiff for Rs. 1,451-9-0. On August 10,1915, plaintiff obtained a decree against defendants for Rs. 1,431-8-0. On August 24, 1915, defendants applied that satisfaction of plaintiff's decree might be entered. Plaintiff's attorney claimed that he had a lien for his costs. Chaudhuri, J. allowed the set-off without regard to the solicitor's claim for a lien. He referred to Edwards v. Hope (1885) 14 Q.B.D. 922 where it was held that in the equities of that particular case the (sic) favour of allowing the solicitor's lien, pointed (sic) dealt with the set-off of costs under the English rule, and (sic) the was not bound to follow that case, as there was no such rule in India, unless he was convinced that the equity on behalf of the attorney was such that it ought to be allowed against the defendant. He also referred to the observations of Kay J. in Blakey v. Latham, to which I have referred, where that learned Judge expressed the opinion that the equity claimed on behalf of the attorney was the most extraordinary he had ever heard of. He went on to say (p. 936):-

I do not think that it has ever been recognised that a solicitor has higher rights than his own client, and it has always been held that the lien is subject to all the equities between the client and the other parties interested in the property. In considering Blaky v. Latham, Kay J. says that there is no such thing as lien except upon something of which you have possession, and that although one speaks of an attorney having a lien upon a judgment, it is in fact only a claim or right to ask for the intervention of the Court for his protection, when, having obtained judgment for his client, he finds there is a probability of the client depriving him of his costs. He did not think it was reasonable to hold that the solicitor had an equity against the defendant compelling him to pay instead of setting it off. No case in India has been cited to me which supports the attorney's claim in this suit.

16. The learned Judge then referred to the further fact in that case that the attorney did not say that there was no chance of recovering his costs from his client and that the property in question was the only property out of which his claim could be satisfied, and he held that it was not a ease in which he ought to hold that the solicitor's lien intercepted the set-off claimed.

17. After reviewing these authorities, I hold that the question whether an attorney's lien should or should not be allowed to intercept a Set-off between the parties to a suit is in India a matter of discretion, Mr. Setalvad, who appeared for the applicants, conceded that it is a matter of discretion in the case before me. It is true that the applicants in their affidavit in support of the application for a charging order alleged that their onlychance of recovering their costs lay in recovering the same from the defendants, who had been ordered to pay them, and that they repeat that allegation in their affidavit in support of the present application. I have, however, to bear in mind that these costs were ordered to be paid by the defendants at a preliminary stage in the action at a time when it was quite likely that the plaintiff might be ordered to pay a much larger sum to the defendants at a later stage, as in fact happened. In such circumstances I cannot conceive upon what principles of equity I ought to allow the attorney's lien to prevail over the rights of the parties themselves. I do not forget that the applicants applied for and obtained a charging order-a wrong method of procedure in India- as was pointed out in Tyabji Dayabhai & Co. v. Jetha Devji & Co., the proper procedure being an application for a declaration that the attorneys had a Hen. But treating the charging order obtained ex parte as if it were an order declaring that the applicants were entitled to a lien, I have still to decide whether that lien should be allowed to prevail over the set-off claimed by defendants Nos. 1, 4 and 5. After giving the matter the best consideration I can, I am clearly of opinion that justice requires me to refuse to allow the attorneys' lien to prevail over the rights of the parties in this action. Accordingly I dismiss this summons with costs, and I certify for counsel.