Blackwell, J.@mdashThis was a summons taken out by the applicants Messrs. Dorab and Company, asking for a declaration that they have a lien
for their costs on the amount of costs awarded to one Ebrahim Ahmed, a debtor, as against the petitioning creditors payable under a certain order
dated June 19, 1928, made by the learned Commissioner in insolvency and taxed at Rs. 413-8-8, and for a declaration that by reason of that lien
the petitioning creditors were bound to pay that sum to the applicants above flamed. The summons in question was adjourned by me into Court for
argument.
2. The facts relied on by the applicants are set out in an affidavit dated April 9, 1929, made by Dorab Rustomji Chothia, who is the sole proprietor
of the applicants'' firm. Shortly stated, the facts are that a petition was presented against the debtor by the petitioning creditors, and on June 5,
1928, the debtor engaged the applicants to act for him. On June 19, 1928, the petition was ordered by the learned Commissioner in insolvency to
be dismissed with costs to be paid by the petitioning creditors to the debtor. Subsequently that bill of costs was taxed at the sum of Rs. 413-8-8,
the allocatur was served on the petitioning-creditors'' attorneys on March 23, 1929, and they have declined to pay. In the meantime the debtor had
on July 30, 1928, been adjudicated insolvent on another petition.
3. On the matter coming before me Mr. Munshi who appeared for the petitioning creditors was good enough to refer me to the decision of this
appeal Court in Tyabji, Dayabhai and Co. Vs. Jetha Devji and Co., in which the law applicable in India to a solicitor''s lien was discussed at
length. Having regard to that decision Mr. Munshi informed me that the only point which he felt to be now open to him for argument was the
question whether the lien here claimed by the attorneys can prevail over a claim to a set-off by the petitioning creditors against that Solicitors'' lien.
Mr. Munshi stated that that alleged right to set-off arose in this way. The petitioning creditors had obtained a decree against the debtor. The
amount of that decree had not been paid, and on that decree they presented their petition for an adjudication order against the debtor. The
question for determination, according to Mr. Munshi, therefore, was whether the petitioning creditors having been ordered in the insolvency
proceedings to pay costs to the debtor were entitled to claim a set off in respect of the sum payable by the debtor to them under the decree so as
to defeat the lien claimed on this summons by the debtor''s attorneys.
4. Mr. Munshi was then good enough to refer me to a case, Ex parte Cleland, In re Davies (1867) 2 Ch. 808 : 36 L.J. Bk. 45 : 17 L.T. 187 : 15
W.R. 1160, and with the candour which he always shows to the Court in presenting his cases informed me that if it should be my opinion that that
decision was applicable to the facts of this case, he did not feel himself in a position to argue the matter further.
5. Upon that Mr. Forbes who appeared in support of the summons referred me to Cordery on Solicitors, 3rd Edition, page 376. There the learned
author of that work says as follows:
But a set-off will not be allowed, to the prejudice of the Solicitor''s lien, where the costs are incurred in independent proceedings. Thus, costs
ordered to be paid by a petitioning-creditor to a debtor, where an adjudication in bankruptcy was set aside, were not set-off to the prejudice of
the Solicitor''s lien against the debt due to the petitioning creditor.
6. In support of that proposition, the case which Mr. Munshi had been good enough to refer me to, is cited. It appears from that case that an
adjudication in bankruptcy had been obtained by D against C. That adjudication was subsequently set aside and D was ordered to pay C his
costs. Later, D executed an assignment to trustees for his creditors in the form of schedule D to the English Bankruptcy Act, 1861. The costs in
question were subsequently taxed. At the date of the deed, C owed D a sum exceeding the amount of the taxed coats which D had been ordered
to pay to C. It was held that C''s Solicitor was entitled to a lien on the costs ordered to be paid to C by D, and, therefore, the debt due from C to
D could not be set off against them. In the course of his judgment, Lord Justice Cairns said this (page 812 Pages of (1867) 2 ch.-[Ed.]):
The debt or claim, therefore, for costs, is not the debt or claim of Cleland alone, it is in the view of a Court of Equity, and upon the principles of a
Court of Equity, a debt or claim which has been assigned or encumbered, and the persons entitled to it now are not Cleland alone, but Cleland and
his Solicitor, the claim of the Solicitor being paramount to that of Cleland. That consideration, in my opinion, renders it impossible that the costs
can be set-off against the debt. It would be impossible, as I have already stated, that there could be such a set-off out of bankruptcy, and still
clearer is it that there could be no such set-off in bankruptcy.
7. Later, in his judgment at page 813 Pages of (1867) 2 ch., Lord Justice Cairns said:
The costs, though recoverable in the name of Cleland, and though ordered to be paid to Cleland by name, are paid to him, not for his own benefit,
for he could not take the money and spend it; but are to be paid to him subject to the lien of his Solicitor, and are, therefore, to be held by him,
either in whole or in part, as a trustee for his Solicitor. In my opinion, therefore, there was no set-off which could be asserted under this deed, or at
the time of the execution of the deed.
8. In my opinion, the law with regard to set-off as against a Solicitor''s claim for a lien as thus laid down in England is applicable to India. The costs
ordered to be paid by the petitioning creditors to the debtor would, if paid to him, be received and held by him as a trustee to the extent of his
attorneys claim for their costs. That being so I am clearly of opinion that no set-off is permissible by the petitioning creditors against the money
ordered to be paid at any rate to the extent of the lien for costs of the applicants. It follows, therefore, that this summons must be made absolute.
9. On the question of costs, Mr. Munshi submitted to me that inasmuch as this appeared to be a matter of first impression in India, it would be
reasonable that there should be no order as to costs. Mr. Forbes strenuously opposed this submission, and contended that an order for costs
should be made in his favour. On the whole, I am of opinion that, this being a matter of first impression, which was expressly adjourned into Court
for argument, the fair order will be that there should in the circumstances be no order as to costs. That accordingly will be the order made.
