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1922 Supreme(SC) 40
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD PHILLIMORE, LORD CARSON, AND SIR JOHN EDGE.
JAI BERHAM - Appellant
Versus
KEDAR NATH MARWARI - Respondents
On Appeal from the High Court at Patna.
Decided On : June 19, 1922.
Solicitors for appellants (1 to 5): Watkins & Hunter.
Solicitors for respondents (first and second parties): Barrow, Rogers & Nevill.
Under Section 144 of the Code of Civil Procedure, restitution requires placing parties in the position they would have occupied but for the reversed decree. Repayment of purchase money distributed to creditors is a condition for restoration, whereas optional payments made without court orders are not.
Headnote:(A) Code of Civil Procedure, 1908 - Section 144 - Restitution - Where a decree is varied or reversed, the Court of first instance shall cause such restitution as will, so far as may be, place the parties in the position which they would have occupied but for such decree - This duty is inherent in the general jurisdiction of the Court to act rightly and fairly according to the circumstances towards all parties involved - One of the highest duties of all Courts is to take care that the act of the Court does no injury to any of the suitors.
(B) Execution of Decree - Auction Sale - Restitution of Property - Where auction purchasers have paid purchase money into Court on the faith of a confirmation of sale, and such money has been distributed among creditors of the judgment-debtor to discharge debts, it is inequitable and contrary to justice that the judgment-debtor should be restored to the property without making good to the auction purchasers the moneys which have been applied for the judgment-debtor's benefit.
(C) Optional Payments - Payments made by auction purchasers to clear bonds charged on the property, where such payments were optional and made without any order of the Court, stand on a different footing from the deposit of purchase money and cannot be made a condition of restoration of the property to the judgment-debtors.
Facts of the case:
A sale of immovable property held in execution of a money decree was set aside by the highest court. The judgment-debtors applied for the restoration of the property along with mesne profits. The auction purchasers resisted the claim, contending that restoration should be conditional upon the repayment of the purchase price (which had been distributed to various decree-holders) and the sums paid by them to satisfy bonds secured upon the property. The lower court ordered restoration without these conditions, but the High Court modified this to allow a set-off of the purchase price against mesne profits.
Findings of Court:
The Court affirmed that the purchase price must be refunded or set off as a condition for restoration to ensure the parties are placed in the position they would have occupied but for the reversed decree. However, the payments made to discharge bonds were optional and not a condition for restoration. The Court further determined that no interest should be allowed on either the mesne profits or the purchase price to meet the equities of the case.
Issues: Whether the repayment of the purchase price and the amounts paid to discharge bonds are conditions precedent to the restoration of the property to the judgment-debtors under the principles of restitution.
Ratio Decidendi: The principle of restitution under Section 144 of the Code of Civil Procedure and the inherent jurisdiction of the Court require that the act of the Court should not injure any suitor. Since the purchase money was used to benefit the judgment-debtor by discharging their debts, the debtor must compensate the purchasers to regain the property. Optional payments made without court direction do not create a similar equitable right to a condition of restoration.
Result: Appeal and cross-appeal dismissed.
Legal Category Hierarchy
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practice and procedure
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civil procedure
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execution of decrees
- restitution
- auction sales
- mesne profits
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execution of decrees
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civil procedure
Judgement
Consolidated Appeal and Cross-Appeal (No. 7 of 1921) from a decree of the High Court (December 14, 1916) varying an order of the Subordinate Judge of Godda.
Upon an appeal to the Privy Council in 1913 (L. R. 411. A. 38.), a confirmation by the Subordinate Judge in 1904 of a sale of immovable property in execution of a money decree, and the sale certificate made thereunder, were set aside. The Order in Council reversed a decree of the High Court at Calcutta dismissing an appeal from the sale certificate. The present proceedings were commenced in 1915. The judgment-debtor (now represented by the first five appellants) petitioned the Subordinate Judge for restoration of the property, with mesne profits. The auction purchasers (now represented by the first two respondents) petitioned, claiming (inter alia) that the restoration of the property should be subject to the repayment to them of the purchase price, also the amount which they had paid to discharge two bonds secured upon the property. The facts appear more fully from the judgment of the Judicial Committee.
The Code of Civil Procedure, 1908, by s. 144, provides that where a decree is varied or reversed, the Court of first instance shall on application " cause such restitution to be made as will, so far as may be, place the parties in the position which they would have occupied but for such decree....."
The Subordinate Judge ordered the restoration of the property with mesne profits, making no order as to the purchase price or the amount paid in discharge of the bonds. An appeal to the High Court was allowed, the learned judges (Roe and Jwala Prasad JJ.) making a decree in the terms stated in the present judgment.
1922. Dunne K.C. and Kenworthy Brown for the appellants (judgment-debtors). That which was sold in 1904 was, as appears from the judgment of the Privy Council, part of the incumbered share of the property. The judgment of the Board did not affect that sale, and until it is set aside the purchasers are not entitled to the return of the price which they paid. Under s. 144 of the Code no order could be made which was not consequential upon the Order in Council.
De Gruyther K.C. and S. Hyam for the respondents (purchasers). The sale transaction was void, the parties never being ad idem, and under s. 65 of the Indian Contract Act the appellants were bound to restore the price. There was power under s. 144 of the Code to provide for the return of the price as a condition to the restoration of the property. But apart from that section, the Court had inherent jurisdiction to make the order as one equitably dealing with the position Rodger v. Comptoir dEscompte de Paris (L. R. 3 P. C. 465, 475.); Mookond Lal Pal v. Mahomed Sami Meah . (( 1887) I. L. R. 14 C. 484, 486.)
June 19. The judgment of their Lordships was delivered by
LORD CARSON. The question to be decided in this appeal arises out of an order on appeal made by His Majesty in Council dated December 19, 1913, which set aside an auction sale of certain landed property held on July 27, 1904, in execution proceedings in the Court of the Subordinate Judge of Godda. The case before this Board is reported at L. R. 41 I. A. 38.
Raja Thakur Barmha, since deceased, the predecessor in title of the appellants 1-5 (hereinafter referred to as the judgment-debtors) was the owner of a full 16-annas share of a village called Patsanda. Ten of the said shares were incumbered and six were unincumbered, save that two bonds had been executed by the Raja in favour of one Gobardhan Das and others, which purported to create a charge on a 3-annas share in the said mahal as security for the said Gobardhan Das for Rs.23,965 and Rs.532.
Six-annas share of the incumbered property was attached for a judgment debt in execution of a decree obtained by the respondents third party, and sold on July 27, 1904. The respondents first and second parties are the representatives of the original auction purchasers and are hereinafter referred to a
