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State of Andhra Pradesh Vs. Govinda Raja Rice Mill Contractors Co., Chebrolu - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtAndhra Pradesh High Court
Decided On
Case NumberA.O. Nos. 48, 72, 93 and 104 of 1962
Judge
Reported inAIR1965AP398
ActsCode of Civil Procedure (CPC), 1908 - Sections 144
AppellantState of Andhra Pradesh
RespondentGovinda Raja Rice Mill Contractors Co., Chebrolu
Appellant AdvocateG. Suryanarayana Murthy, Adv. for ;N.V.B. Shankar Rao, Govt. Pleader
Respondent AdvocateSankara Sastry and ;R. Veerabhadrayya, Advs.
Excerpt:
.....only on furnishing security, pursuant to the order of interim stay on 28-10-1953, the state deposited the costs amounting to rs, 2,804-0-9 on 4-11-1953 and that was also withdrawn by the plaintiff .the decree amount was also deposited rupees 2,684-10-3 on 14-6-1954, rs. also the state included its claim for interest by way of restitution on the costs as well as on the amount decreed as in the other suit. 219 of 1961, the plaintiff deposited on 1-7-1961, the entire amount of costs as well as the decree amount which he withdrew but not the interest on those two sums. in such a case the benefit if any, secured by the decree-holder or the detriment suffered by the other party would be referable not merely to the decree but to the subsequent order as well as .the present case will..........decree in appeal.(25) in taking the above view, they overruled a number of decisions of the madras high bench which took a contrary view. the full bench also reversed the decision in ramanatha v. pappu, air c. j. speaking for the court observed thus :'where a decree has been executed according to its terms, there will be really no scope for any distinction between the decree -holder getting the benefit and the other party suffering an injury, for the latter is consequent on the former, but different considerations will arise, if there is a impediment placed by an order of court to the execution of the decree according to its terms. in such a case the benefit if any, secured by the decree-holder or the detriment suffered by the other party would be referable not merely to the decree but.....
Judgment:

(1) C. M. As. 48 and 72 of 1962 are appeal and a cross appeal. Both of them arise out of a common order of the learned Subordinate Judge, Eluru in E. A. 287 of 1961 in O. S. 28 of 1951. The facts necessary for a proper appreciation of the contentions of the parties will now be stated.

(2) These two C. M. As. 48 and 72 of 1962 arise out of E. A. 287 of 1961 in O. S. 28 of 1951, while C. M. As. 93 and 104 of 1962 arise out of E. A. 219 of 1961 in O. S. 13 of 1952 on the file of the Subordinate Judge's Court, Eluru. These suits viz., O. S. 28 of 1951 were two of the batch of suits files against the Government by the rice millers in the Districts of East and West Godavari and Krishna who were authorised to procure paddy and rice from the producers and to sell them in the market at the price fixed by the Government . The difference between the price at which they were purchased and the price at which they were directed to be sold was asked to be made over to the Government. Several millers made over the difference in compliance with the orders of the Government, and later filed suits for the recovery of those amounts on the ground that they were entitled to the difference in price, but mot the Government.

(3) The trial Court in all those suits granted decrees, but on appeal a Bench of this Court consisting of Chandra Reddy, Officiating Chief Justice, as he then was, and Srinivasachari J. reversed the said decrees in State of Madras (Now Andhra Pradesh ) v. Jayalakshmi Rice Mill, : AIR1959AP352 and dismissed the suits on 8th March 1958.

(4) Against the decree in O. S. 28 of 1951 , the state preferred A. S. 34 of 1953 and also filed an application, C. M. P. No 4154 of 1953 on the file of the Madras High Court for stay of execution. Somasundaram, J., in his order dated 28-4-1953 granted an unconditional stay with regard to the realisation of the amount decreed, but directed that there shall be no stay as to costs. The state deposited the costs amounting to Rs. 3113-13-0 on 13-6-1953 and that amount was withdrawn by the plaintiff on 5-7-1953.

(5) Against the order in C. M. P. No. 4154 of 9153, L. P. A. No. 126 of 1953 was preferred and it was disposed of by a Bench of the Andhra High Court at Guntur consisting of Subba Rao, C. J. as he then was, and Krishna Rao, C. J. as he then was, and Krishna Rao, J. on 21-2-1953. By that judgment the Bench modified the order of Somasundaram J. and directed the Government to deposit the decretal amount within six weeks, and the same could be withdrawn by the plaintiff or furnishing security. Pursuant to that order, the State deposited towards the amount decreed the sum of Rs. 23,527-8-1 on 2-4-1955, and Rupees 11,023-3-0 on 4-4-1955, in all amounting to Rs. 34,550-11-1. As the plaintiff was unable to furnish security for those amounts they were allowed to lie in Court.

(6) As already stated the appeal against the decree in O. S. 28 of 1951 was allowed by this Court and the suit was dismissed on 8-3-1958. Pursuant to the decree of the High Court , on 6-3-1961, the state filed an execution petition No. 287 of 1961 for restitution, and claimed not only the amounts deposited as and towards the amount decreed and the costs, but also interest at 6 per cent on those amounts from the date of deposit till the date of repayment. Since the amount decreed was not withdrawn by the costs which he had withdrawn He had not deposited the interest on both the sums.

(7) the learned Subordinate Judge by his order dated 29-9-1961 awarded interest on the various sums representing costs as well as the amounts decreed but only upto the date of the disposal of the appeal on 18-3-1958 in the High Court . He observed that nothing prevented the state from withdrawing the amounts in deposit and granted restitution only to that extent.

(8) Aggrieved by this order, the State preferred C. M. A. 48 of 1962 contending that it was entitled to interest on costs not simply upto the date of the disposal of the appeal but ill the date of deposit viz., 1-7-1961. As regards the amount which was decreed and which is lying in court, the state contends that it is entitled to interest from the date of deposit till payment.

(9) Mr. Sankara Sastry, the learned counsel on behalf of the plaintiff raised the following contentions : The principle of the doctrine of restitution is that the party against whom restitution is claimed must have the benefit of the decree which is reversed, and that in any case his client did not have such benefit so far as the amount decreed is concerned. In amplification of this argument, he says that the decree amount was no doubt deposited by the Government , but as their instance the Court passed an order that the same should not be paid out to his client without furnishing security. That condition had prevented his client from withdrawing the amount and having the benefit of the decree and consequently he could not be made liable to pay any interest on those amounts.

(10) I must straightway point out that though the claim for interest on costs in both the cases was made from 13-6-53 till payment, it is now admitted that the costs having been withdrawn on 5-7-1953 about 23 days later, interest need be awarded only from the date of withdrawal. the State no doubt claimed interest till payment but the costs having been deposited on 1-7-1961, the interest thereon can in no event be allowed beyond 1-7-1961, as it is very well established that for any delay caused in a court issuing a cheque to the Government for the payment of that amount, the party cannot be made liable.

(11) Therefore, the question that remains for consideration is whether the plaintiff is bound to pay interest by way of restitution on costs from 5-7-1953 to 1-7-1961. The other question is whether the plaintiff is bound to pay interest by way of restitution on the decreed amount which is still in court, from the date of deposit till payment.

(12) In C. M. As. 93 and 104 of 1962 the facts are similar. But the High Court in its final order dated 7-5-1954 on C. M. P. 10453 of 1953 in A. S 821 of 1953 granted stay of execution of the decree on condition of the State depositing the amount decreed as well as costs, and also directed that the costs could be withdrawn by the plaintiff without furnishing security, and the amount decreed only on furnishing security, Pursuant to the order of interim stay on 28-10-1953, the State deposited the costs amounting to Rs, 2,804-0-9 on 4-11-1953 and that was also withdrawn by the plaintiff . the decree amount was also deposited Rupees 2,684-10-3 on 14-6-1954, Rs. 16,259-6-10 on 15-7-1954 and a further sum of 3012/- on 15-7-1954 in all amounting of Rs. 21, 956-1-1. These amounts were also withdrawn by the plaintiff on furnishing security.

(13) The decree of the trial Court in that suit was reversed by the High Court on 8-3-1958, and the State filed E. A. 219 of 1961 on 7-3-61 for restitution. In this E. A. also the State included its claim for interest by way of restitution on the costs as well as on the amount decreed as in the other suit. Subsequent to the filing of the E. A. 219 of 1961, the plaintiff deposited on 1-7-1961, the entire amount of costs as well as the decree amount which he withdrew but not the interest on those two sums.

(14) The learned Subordinate Judge by his order dated 29-9-1961 passed the same order as in the other case, and awarded interest from the dates of deposit of the various amounts to 8-3-1958 the date of disposal of the appeal. The State aggrieved by this order preferred C. M. A. 104 of 1962.

(15) The State contended that the Subordinate Judge was not justified in granting interest only upto the date of the judgment of the High Court , and should have awarded interest on both the sums till they were deposited in the Court, or paid to the Government.

(16) Mr. Sankara Sastry, the learned counsel for the appellant contended that the relief of restitution is an equitable relief and that enough the Court has power to award interest, it has the discretion to ward interest not exceeding 6 per cent and that the interest claimed by the Government should be reduced.

(17) It will thus be seen that the questions for consideration arising in all these appeals are as follows :

1. Whether the claim for restitution can be awarded only when the party against whom it is demanded had the benefit of the benefit of the decree which was reversed ?

2. Whether the party against whom the restitution is claimed is prevented from with during the amount deposited by reason of the condition that the amount can be withdrawn only, on furnishing security for the party is unable to furnish security he could nevertheless be made liable to pay interest; and

3. Whether it is necessary for the party claiming restitution to prove that the amount claimed as restitution to prove that the amount claimed as restitution represents the losses it actually suffered?

(18) Before examining the authorities cited on either side and the respective contentions in detail it may be useful to quote 8. 144 of the Code of Civil Procedure which is in the following terms :

'Where and in so far as a decree is varied or reversed, the Court of first instance shall, on the application of any party entitled to any benefit by way of restitution or otherwise 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 or such part thereof as has been varied or reversed ; and for this purposes, the Court may make any order, including orders, for the refund of costs and for the payment of interest damages compensation and mesne profits, which are properly consequential on such variation or reversal.'

(19) A perusal of the section makes it clear that the object of restitution is to place the parties, so far as may be, in the position which they would have occupied but for the decree which had been varied or reversed. For this purpose, the court may order refund of costs and payment of interest, damages, compensation and mense profits, which are properly consequential on such variation or reversal. The granting of restitution however is not discretionary. The principle of the doctrine is that on the reversal of a decree in appeal, the law imposes on obligation on the party to the suit who received the benefit of the erroneous decree to make restitution to the other party for what he has lost. It arises automatically on the reversal or modification of the of the decree and necessarily carries with it right to restitution of all that has been done under the erroneous decree; and the Court in making restitution is bound to restore the parties so far as they can be restored to the same position they were in at the time when all Court by its erroneous action had displaced them from it.

(20) The Privy Council in Guran Ditta v. T. R. Ditta 1935 All. L. J./ 251 : 37 Bom L. R. 162 : 153 Ind Cas 654 : AIR 1935 PC 12 held that the duty of the Court when awarding restitution under section 144 of the Code is imperative. It shall place the applicant in the position in which he would have been if the order had not been made and for this purpose the Court is armed with powers (the 'may' is empowering not discretionary) as to mesne profits interest and so forth. As long as in 1871, the Judicial Committee in Rodger v. Comptoir D'Escompte de Paris (1871) 3 PC 465 : 24 LT 111 made it clear that interest is part of normal relief given in restitution and this decision was followed by the Courts in India. The remedy of restitution essentially involves interest also and Court can grant interest.

(21) In Mulla's Civil Procedure Code at page 452 the learned commentator relied upon Shanmugasundara v. Ratnavelu, ILR 55 Mad 1025 : (AIR 1933 Mad 33(2) ) and stated that if the applicant has paid money into Court by way of security to obtain a stay of execution he will be entitled to interest as for the use of the money of which he has been deprived, although the opposite party has not withdrawn the money.

(22) Mr. Suryanayanamurthy, the learned counsel for the Government Pleader much reliance on this decision and contended that even thought the opposite party could not withdraw the amount on account by his inability to fulfil the condition imposed by the Court, the party claiming restriction would none the less be entitled to interest.

(23) It is no doubt true that in AIR 1933 Mad 33(2) Anantakrishna Iyer J. took that view and gave some reasons for that conclusions

(24) Mr. Shankara Sastry, the learned counsel for the plaintiff answered by saying that the decisions in AIR 1933 Mad 33(2) was expressly overruled by a Full Bench of the Madras High Court in Pappu Reddiar v. Ramanath Iyer, : AIR1963Mad45 (FB). In that case the Full Bench held that restitution, conceived in the light of doing justice between the parties, will necessarily have to depend on the facts and circumstances of each case and cannot be reduced to the form of an inflexible rule that Courts should have regard only to the detriment suffered by one party, and not to the position of the other. The granting of restitution under S. 144 Civil Procedure Code, should be consistent with justice to both the parties. Their Lordships further held that where a sum of money is deposited in court to answer a decree, but a restrictions is placed to the unconditional withdrawal of the same in terms of the decree, by reason of which the decree-holder is either unable or unwilling to obtain the use of money in such a case it cannot be taken as an invariable rule that the decree-holder should interest on the amount lying in Court on the reversal of the trial Court's decree in appeal.

(25) In taking the above view, they overruled a number of decisions of the Madras High Bench which took a contrary view. The full bench also reversed the decision in Ramanatha v. Pappu, AIR C. J. speaking for the court observed thus :

'Where a decree has been executed according to its terms, there will be really no scope for any distinction between the decree -holder getting the benefit and the other party suffering an injury, for the latter is consequent on the former, But different considerations will arise, if there is a impediment placed by an order of court to the execution of the decree according to its terms. In such a Case the benefit if any, secured by the decree-holder or the detriment suffered by the other party would be referable not merely to the decree but to the subsequent order as well as . The present case will illustrate what we mean. Although the decreed of the trial court directed the respondent to pay unconditionally the sum of R. 10543-12-0 , the operation of that decree of that was stayed by this Court. As a part of that decree was stayed by this Court. As a part of that order the respondent was directed to deposit the sum in court the appellant was entitled to draw the same only on furnishing security. He was not however bound to do so. In certain cases a party situate in his position may not even be able to find the security. If under these circumstances the appellant did not draw the money it could not really be a case of restitution against him.

(26) Thus it would be seen that according to the Full Bench decision of the Madras High Court , the very fact that a condition as to furnishing security was imposed by an order of the Court would mean that the decree-holder was prevented from having the benefit of the decree by reason of an impediment placed, though it be by an order of the Court and under those circumstances the decree holder was not bound to furnish security and withdraw the amount . If he was unable to withdraw because of his inability to furnish security, it could not really be a case of restitution against him. There can therefore be little doubt that in view of the Full Bench decision the decision in AIR 1935 Mad 33(2) and the other cases taking that view are rendered nugatory.

(27) Sri Sankara Sastry, the learned counsel for the plaintiff therefore, submitted that in the light of the Full Bench decision his contention must be upheld and that in respect of the amount deposited in court and not with drawn by the decree-holder by reason of his inability of furnish security, he should not be made liable for interest.

(28) I may add that the learned counsel also submitted that the reasoning of the learned Judges in AIR 1933 mad 33(2) was not sound, as the cases on which they relied were not really authorities for that principles. he also submitted that the Bench in AIR 1933 Mad 33(2) lost sight of the important fact, that in (1871) 3 PC 465 the basis of liability for restitution was made to rest on the fact of benefit derived by the decree-holder, while in the instant case the plaintiff did not derive any benefit. Therefore he contended that AIR 1933 Mad 33(2) (supra) ought not to be followed and that the decision of the full bench alone should be followed.

(29) Sri Suryanarayanamurthy the learned counsel for the Government Pleader relied on the decisions of this Court reported in Veeriah v. Nagiah , : AIR1959AP547 (FB) and Subbarayudu v. State , : AIR1955AP87 (FB) and also upon the judgment of the referring Judges Umamaheswaram and Jaganmohan Reddy JJ. at P. 636 (of Andh LT) : at P 549 of AIR) when they observed thus:

'It may also be pointed out that Subba Rao, C. J. pointed out that if a judgment of a Division Bench of the Madras High Court is reversed by a Full Bench of the Andhra High Court might, if they agree with the decision of the Full Bench, refer the matter to a full Bench of the Andhra High Court (now Andhra Pradesh High Court ). As we are prima facie inclined, on a plain reading of the terms of the section, to agree with the Full Bench decision of the Madras and Nagpur High Courts and the Decisions of the Bombay and Allahabad High Courts in preference to the view of the Orissa and Vindhya Pradesh Courts, and we consider that there should be an authoritative ruling on this important question, the matter is referred to a Full Bench.'

(30) Mr. Suryanarayanamurthy therefore contended that the only course left is to refer this question to a bench of this Court. Though the principle stated above cannot be taken exception to, there is no necessity to refer this case to a Bench for the following reasons :

(31) The Bench consisting of the Chief Justice and Kumarayya J., in L. P. A. No. 47 of 1962(Andh Pra) considered the liability to pay interest in similar circumstances. their Lordships after referring to Peria Karuppan v. Veerappa, ILR (1944) Mad 336 : (AIR 1944 Mad 46) and South Indian Rly. Co., Ltd v. Mayilvahanan. (1942) 2 Mad LJ 803 : (AIR 1943 Mad 334) Summed up the position thus :

'In our opinion the doctrine of the South Indian Rly. Co., Ltd. , 1942 -2 Mad LJ 803 : (AIR 1943 Mad 334) is applicable to the instant case. We think that the person who was responsible for the money being deposited into Court should bear the loss in the shape of interest. If the decree holder was mainly responsible for the money being brought into Court, interest ceases to run from the date of the deposit. If on the other hand the judgment debtor as in the case of ILR (1944) Mad 336 : (AIR 1944 Mad 46) had voluntarily deposited the money into Court with a request that the decree-holder should be called upon to draw it out on furnishing security and if the decree-holder is unable to comply with this request, interest does not cease to run on the decretal amount. since this case falls under the first category, there is no liability on the part of the respondent to pay interest subsequent to the deposit.'

(32) It is no doubt true that the facts are not strictly those arising in the case of a restitution but the general principle laid down in that case cannot be understood to be different from what was laid down by the Full Bench of the Madras High Court in : AIR1963Mad45 (FB) , viz. , that in case what the Court has to consider is whether the inability of the party to draw the amount deposited in Court is due to an impediment created by the other party, or by any condition imposed by the Court. According to this decision, where the party is unable to withdraw the amount by reason of his inability to furnish security ordered by the Court, and the amount remains in deposit in Court, he cannot be made liable for interest. This principle seems to be highly just and equitable, as explained by their Lordships of the Madras High Court in that Full Bench case. The party claiming restitution for his own reasons, justified or unjustified, puts an obstacle against the other party from drawing the money, an obstacle which the party did not or could not surmount. In those circumstances there was no payment to or a benefit derived by , the other party, though the amount may continue to be in deposit. The detriment suffered by the party claiming restitution, in such a case, in the words of Ramachandra Iyer, C. J was the result of a safeguard of his own making. he could have applied to the Court to invest the deposited amount in interest bearing securities, since the appellant did not withdraw the amount. In view of this Bench decision, which also agrees with the Full Bench decision of the Madras High Court just referred to, I am of opinion that there is no need for referring this case to a Bench.

(33) The Principles laid down above may now be applied to the facts of the present case. The amount of costs in both the cases having been deposited and having been withdrawn, the liability to pay interest cannot be questioned, as the duty to award interest on sums which have to be restituted is now made statutory obligation under Section 144 C. P. C. though the rate of interest can be determined by the Court under S. 34 of the Code of Civil procedure.

(34) Mr. Shankar Sastry however argued that though the interest may be awarded, there are several circumstances in this case which do not warrant the maximum rate of 6 per cent provided for by S. 34 being granted, but something less. He cited a case of Madras High Court in Lokambal Achi v. Srinivasa Pillai, : AIR1961Mad160 to the effect where interest was allowed only at the rate of 3 per cent. He also added that interest on Government securities is not more than 4 per cent. The Judgment of Balakrishna Iyer, J. cannot be said to have laid down any rule of law. On the facts of that case the learned Judge felt that interest at the rate of 3 per cent would meet the ends of justice. I cannot therefore accept that decision as a judicial precedent, apart from its not binding me. In the circumstances of the present case I think it would be just if the costs withdrawn in both the cases, and also the decree amounts which were withdrawn, should carry interest at the rate of 4 per cent from the date of the withdrawal till the date of depositing into Court, or till payment by the plaintiffs to the Government . As regards the decretal amount not withdrawn i. e., in O. S. 28 of 1951, for the foregoing reasons I hold that the Government is not entitled to claim any interest by way of restitution.

(35) The view of the Subordinate Judge in both the cases that interest should be awarded only up to the date of the judgment of the High Court is erroneous, and does not accord with any principle. No reasons have been given how that date had been fixed. Once he came to the conclusion that interest was payable he should have awarded interest till re-deposit. The amount was not certainly paid on the date of the judgment and so long as the Government could not apply for withdrawing the amount, it is entitled to claim interest. Therefore I modify the order of the learned Subordinate Judge and hold that interest should be paid till the date of re-deposit or payment as stated above.

(36) In the result C. M. As. 48, 72, 93 and 104 of 1962 are partly allowed, and the decrees in E. A. 287 of 1961 and E. A. 219 of 1961 are modified as stated above. In the Circumstances I direct both parties to bear their costs throughout.

(37) No orders are necessary on the C. M. Ps

(38) Appeals allowed partly.


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