1. The legal representatives of the original plaintiff-decree-holder-purchaser have filed this Letters Patent Appeal against the judgment dated 3rd October 1958 of a single Judge of this High Court in Misc. Second Appeal No. 24 of 1958 arising out of restitution proceeding under Section 144 of the Civil Procedure Code.
2. The chequered career of the case is interesting to he narrated. The original plaintiff brought Money Suit No. 500 of 1941 for recovery of a sum of Rs. 970/-. The suit was dismissed on 17th August 1942. The plaintiff filed an appeal before the District Judge of Ganjam against the aforesaid decree of dismissal, and the appeal was allowed on the 2nd March 1943. The defendant, therefore, appealed to the High Court, the second appeal being numbered as S. A. 100 of 1943 filed on 19th July 1943.
The High Court by its judgment dated 11th November 1946 set aside the judgment and decree passed by the lower appellate Court and remanded the case to the lower appellate Court for further hearing. The learned Judge disposing of the second appeal gave discretion to the lower appellate Court that if it thought fit the case may be remanded to the trial court. The lower appellate Court, therefore, remanded the case for retrial of the suit by the trial Court.
This order of remand by the lower appellate Court was passed on 11th April 1947. After receiving the case on remand, the learned Munsif dismissed the suit on 29th November 1947 against which the plaintiff again came up in appeal to the District Judge which was numbered as M.A. No. 49 of 1947. The appeal succeeded and the suit was decreed on 29th November 1948 for recovery of a sum of Rs. 1300/- and odd including cost. The defendant, therefore, again came up to the High Court in Second Appeal No. 112 of 1949 which was eventually dismissed on 27th August 1954 and the decree passed by the lower appellate Court in favour of the plaintiff was confirmed.
3. The more important part of the history of the proceedings necessary for appreciating the question of restitution is as follows:
4. During the pendency of S.A. 100/43 which was filed on 19th July 1943, the plaintiff-decree-holder started execution case No. 94 of 1945 praying for sale of immoveable properties with an area of 24 acres belonging to the judgment-debtor. The properties were sold on the 29th October 1945 for a sum of Rs. 1600/- and purchased by the decree-holder himself who took delivery of possession through court on 17th May 1946.
It is to be noted, during the pendency of S.A. No. 100/43 the defendant judgment-debtor filed a petition for stay of execution which was granted on terms that the defendant would furnish security to the extent of Rs. 1500/-. The terms not having been complied with the interim stay order was vacated and the properties were eventually put to, sale. The defendant further put in a petition for stay before the Court of the first instance that the confirmation of sale may be stayed. This was allowed on terms which not having been complied with the prayer was refused ultimately.
4A. Now after the disposal of S.A. 100/43 when the decree passed by the lower appellate Court) was set aside and the case was remanded, the defendant put in a petition for restitution on 15th February, 1947 which was numbered as M. J. C. 34 of 1947. The M. J. C. was kept pending at the instance of either of the parties as each party succeeded or failed at different stages. It is important to note that the defendant-judgment-debtor made no payment whatsoever towards the decree which was ultimately passed against him till he was called upon by our learned brother in his judgment dated 3rd October 1958.
The restitution proceedings have been started at the instance of the defendant-judgment-debtor on the grounds that the sale held in execution of the decree passed by the lower appellate Court in the first instance is null and void and restitution must be allowed under the provisions of Section 144, C. P. C, inasmuch as the decree was reversed by the judgment of the High Court in S.A. 100/43 passed On 11th November 1946 wherein the High Court having set aside the decree of the lower appellate Court remanded the case for further hearing; and even though a decree was ultimately passed in favour of the plaintiff, it is a new decree and the old decree in execution of which the properties were sold was no longer existing and as such the defendant is entitled to restitution.
The decree-holder could put the properties again for sale in view of the position that he ultimately got a new decree in his favour on 29th November 1948; but nevertheless the sale dated 29th October 1945 having taken place on the basis of a decree which was reversed cannot stand. The decree-holder's ground is on the position that the decree ultimately stood as a valid decree and so the defendant-judgment-debtor is not entitled to any restitution.
5. The defendant's contention, however, found favour in the Court of the first instance but was negatived by the lower appellate Court, that is, the Subordinate Judge of Ganjam in Misc. Appeal No. 78 of 1956 On 25th February 1958. The defendant brought the miscellaneous second appeal in the High Court which having been allowed by the judgment of our learned brother the present Letters Patent Appeal has been brought by the appellant-decree-holders. It may be mentioned, the original plaintiff-decree-holder having died the present appellants are the legal representatives of the original plaintiff-decree-holder.
6. It is worth while to quote the provisions of Section 144 C. P. C. which run as follows:
'Section 144, (1) Where and in so far as a decree is varied or reversed, the Court of the 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 purpose, the Court may make any orders, 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,
(2) No suit shall be instituted for the purpose of obtaining any restitution or other relief which could be obtained by application under Sub-section (1).'
This Section was introduced in the New Civil Procedure Code of 1908 and the corresponding section of the Old Code of 1882 is Section 583. There has been a distinct change in the new Section 144 by clarifying and defining the scope and limitations of the principle of restitution which were left vague and undetermined in the old Section which runs thus;
'Section 583. When a party entitled to any benefit (by way of restitution or otherwise) under a decree passed in an appeal under this chapter desires to obtain execution of the same, he shall apply to the Court which passed the decree against which the appeal was preferred; and such court shall proceed to execute the decree passed to appeal, according to the rules hereinbefore prescribed for. execution of decrees in suit.'
7. Our learned brother has relied upon a few decisions which we are going to discuss below. Mr. G.G. Das, appearing on behalf of the respondent, also has placed these decisions in extenso before us and strongly urges the position that the decisions support his contention that as soon as the decree in execution of which the sale had taken place is set aside the sale becomes void automatically and the fact that a subsequent decree is passed on the same cause of action, that does not affect; the position as it is entirely a different and separate decree.
The oldest and the leading case on the subject is the case of Zain-Ul-abdin Khan v. Muhammad Asghar Ali Khan reported in ILR 10 All 166 (P. C.). In that case it was laid down that a sale having duly taken place in execution of a decree in force at the time cannot be set aside as against a bona tide purchaser, not a party to the decree, on the ground that, on further proceedings, the decree has been, subsequently to the sale, reversed by an appellate-Court.
Their Lordships of the Privy Council laid down in very clear unambiguous terms that the position of decree-holder-purchaser and that of third party purchaser stand entirely on different footings. While their Lordships set aside the sales where the decree-holder himself was the purchaser, they confirmed the sales where third parties were the purchasers and did not allow restitution. Their Lordships of the Privy Council made a distinction in the position arising in the case of sales where the decree-holder was the purchaser and the sales where the third parties were the purchasers. It is worthwhile to quote a paragraph of the judgment which runs as follows:
'It appears to their Lordships that there is a great distinction between the decree-holders who came in and purchased under their own decree, which was afterwards reversed in appeal, and the bona fide purchasers who came in and bought at the sale in execution of the decree to which they were no parties, and at a time when that decree was a valid decree, and when the order for the sale was a valid order.'
No other point arose for their Lordships determination nor was determined. But it is clear from the ratio decidendi of the judgment that it can never be held that simply because the decree in execution of which the property was sold was set aside on appeal, the sale must necessarily be deemed as a void sale apart from any other consideration. If this contention is accepted there will be no ground for making a distinction between third party-purchaser and decree-holder-purchasers and the sales in favour of all must be nullified as being without foundation.
8. A further clear position also arises from this decision that in the matter of restitution, equitable considerations are relevant and essential. It is only on consideration of different equities arising in the case of purchases by third parties and those by the decree-holders that their Lordships laid down the conclusion as aforesaid. This decision of their Lordships of the Privy Council was followed in a later decision of the Calcutta High Court in the case of Seth Umedmal v. Srinath Roy reported in ILR 27 Cal 810. The leading judgment was of Maclean C.J.
There certain immoveable properties were sold in execution of an ex parte decree and were purchased by the decree-holder himself; after the confirmation of the sale, the decree was set aside under Section 108 C. P. C. corresponding to Order 9, Rule 13 of the New Code at the instance of some of the defendants in original suit; on an application under Section 244, C, P. C. (that is, under Section 47 of the new Code) having been made by a prior purchaser of the said properties in execution of another decree, to set aside the sale held in execution of the ex parte decree the defence was that the application could not come under Section 244 C. P. C. and that the sale could not be set aside as it had been confirmed.
Their Lordships held that the case was one under the provisions of Section 244 and that the ex parte decree having been set aside the sale could not stand inasmuch as the decree-holder himself was the purchaser. As in that case the decree-holder was himself the purchaser, with great respect we must observe, Maclean C. J. following the decision of their Lordships of the Privy Council in ILR 10 All 166 (PC), concluded that the sale could not stand inasmuch as the ex parte decree had been set aside while observing that the subsequent decree passed on the basis of the same cause of action did not affect the position.
With very great respect we must note that the proposition so broadly and widely stated without considering the different equities arising in the case cannot stand. Moreover this decision was on the basis of the provisions of restitution as contained in S. 583 of the Old Code which as we have stated above are too vague and have been clarified and well defined in the provisions of Section 144 of the new Code of the year 1908.
We may note, this decision, of Maclean C.J. has been followed in several subsequent decisions of the same court and also some other High Courts. In those subsequent decisions also the implications of ILR 10 All 168 (PC) were never discussed; but it was laid down as a very wide proposition that as soon as the ex parte decree is set aside the sale also falls through automatically.
We will first refer to a decision of their Lordships of the Madras High Court reported in AIR 1916 Mad 706(2), Sobhanadri Appa Row v. Govindaraju. There the purchase by the decree-holder of immoveable properties belonging to the judgment-debtor in execution of an ex parte decree was held to be ipso facto void when the ex parte decree is afterwards set aside. There the judgment is too cryptic and consists of only a few lines, but it is simply based upon the dictum laid down in ILR 27 Cal 810.
We will next take up the case of Raghunandan Singh v. Jagdis Singh, reported in 14 Cal W. N. 182. In that case a decree was passed against several defendants and in execution of the decree the property was sold and purchased by the decree-holder. Subsequently some of the defendants-applied to have the decree set aside under S. 108 of the old Code. The decree as against them was get aside on the 14th August. On 19th of the same month the sale that ensued on the decree was set aside as against them. Four months after on retrial a decree was made against them again after the suit! was reheard.
The decree-holder wanted to invoke the provisions of Section 144 of the new Code to set aside the order by which the original sale was set aside as the petition for revival had been allowed. Their Lordships observed that the decree-holder was not entitled to invoke the provisions of Section 144 of the new Code. The facts, as stated above, are entirely different. There is no denial of the position that, the subsequent decree passed cannot be taken to be a revival of the previous ex parte decree. It is an independent decree, but that is not sufficient for bringing in aid the provisions of Section 144 by the judgment-debtors.
9. We are emphatically of the view that in order that the benefit ol: the provisions of Section 144 can be availed, of by the judgment-debtor, different equitable considerations must necessarily arise and are essential to be considered for refunding or granting protection to the judgment-debtor. Apart from these equitable considerations, simply because the ex parte decree has been set aside the judgment-debtor cannot in all events be allowed the advantage of restitution and the decree-holder should never in all cases be driven to a further proceeding of execution of the new decree.
On a careful reading of the provisions of Section 144, which well defined the principle of restitution, it can never be held that simply because the ex parte decree is set aside the principle of restitution comes in aid of the judgment-debtor. While laying down this position we are Supported by very great authorities, particularly a decision of the highest Tribunal in India, even though the facts in those cases are not exactly similar to those with which we are confronted.
Before coming to those decisions we should notice another decision of the Calcutta High Court which has been strongly relied upon by Mr. G. G. Das, that is, Abdul Rahaman v. Sarafat All, 20 Cal W. N. 667 : (AIR 1916 Cal 710). Here also a very wide and bold proposition has been laid down following the two aforesaid leading decisions reported in ILR 10 All. 166 and ILR 27 Cal 810. Their Lordships laid down :
'As soon as the ex parte decree is set aside, the sale where the decree-holder is the purchaser falls through and is not validated by a fresh, decree subsequently made.'
We may note, their Lordships did not at all discuss the several features and implications and equitable considerations underlying the well defined provisions of Section 144 of the New Code. We may repeat here with profit that if this bold proposition is accepted that the sale becomes automatically null and void as the foundation decree is set aside, there is no rhyme or reason to draw out a distinction between a decree-holder-purchaser and a third party purchaser which can be made only on grounds of equity and substantial justice underlying the principles of Section 144.
We will immediately refer to a decision of Rankin C. J. sitting with Pearson, J. in the case of Doyal Sarkar v. Tari Deshi, reported in AIR 1933 Cal 303. Rankin, C. J. has elaborately discussed the underlying principles of the provisions of Section 144 and the discussions do clearly support our view even though the facts are not similar iN that case the original decree of the trial Court was dated 30th November 1922 for possession of the lands claimed and for Rs. 49/- and odd for costs.
The decree was appealed against and the appellate Court varied it by disallowing the plaintiff's claim to a portion of the lands in dispute and reduced the costs from Rs. 49/- to Rs. 36/- and odd. But in the meantime the plaintiff levied execution of the trial court decree and in execution of the decree for costs put up to sale and himself purchased two votes of the lands of the defendants.
After the decree of the trial court was varied and defendants sought for restitution and their Lordships rejected the claim of the defendants for restitution holding that the judgment-debtors cannot obtain relief by way of restitution unless they are able to show that the sale was in substance and in truth a consequence of the error in the original decree. While discussing the provisions of Section 144(1), their Lordships observed:
'On this section, I think it is important to notice the words 'in so far as a decree is varied or reversed' and the correlative words 'such part thereof as has been varied or reversed.' It is also noticeable that what the court is required to do is 'so far as may be to place the .parties Sn the position which they would have occupied but for such decree or such part thereof as has been varied or reversed.' The section would seem to give a clear direction to the court to ask itself in the present case, what, if the original decree for costs in the trial Court had been a decree for Rs. 36-7-9 instead of for Rs. 49-8-6 would today have been the position of the defendants.
In another part of the judgment their Lordships observed :
'The object of restitution seems to be in no way obscure. It is to restore the parties, so far as may be, to the position in which, according to the ultimate decision they ought to be, setting aside, so far as is possible, all consequences produced by any erroneous action of the Court.'
It appears clear to us that the language of the provisions of Section 144 does not admit of the position that the ultimate result of the case is to be completely ignored and restitution is to be allowed merely because the decree in execution of which the sale took place was varied and reversed. Indeed in the case before Rankin, C. J. the original decree was only varied and not reversed; but the language of Section 144 does not make out any distinction in principle as between a case of reversal, variation or modification of the decree.
Rankin, C. J. had relied upon a previous Bench decision of the Madras High Court reported in AIR 1922 Mad 96, Sundaram Reddi v. Raghava Reddi in laying down the aforesaid construction of the provisions of Section 144. The value of this authority gains considerable strength and finality to us inasmuch as the view has been fully accepted by their Lordships of the Supreme Court reported in AIR 1953 SC 136, Bhagwant Singh v. Sri Kishen Das. It was observed :
'An order of restitution in the manner asked for in the circumstances of this case would be contrary to the principles of the doctrine of restitution which is that on the reversal of a judgment the law raised an obligation on the party to the record who received the benefit of the erroneous judgment to make restitution to the other party for what he had lost and that it is the duty of the Court to enforce that obligation unless it is shown that restitution would be clearly contrary to the real justice of the case. The decree-holder in the present case has derived no advantage to which he was not entitled and the judgment-debtor has lost nothing.'
Earlier Mahajan, J. had observed :
'If this sale is set aside and possession of eight villages is restored to the judgment-debtor and mesne profits are decreed in this favour, the decree-holder would be deprived of the fruits of his decree which is certainly not the purpose of restitution in law or equity; it would place the judgment-debtor in a position of advantage to which he is not entitled.'
From these observations we receive clear guidance for deciding the present case. Here also the judgment-debtor had asked for mesne profits from the date of delivery of possession through Court till the date of delivery of possession in favour of the judgment-debtor on the basis of restitution. The ultimate result of the case has finally concluded the position that the plaintiff's claim was just and legal, He obtained a decree on the basis of his just claim! in the first instance and the property was sold in execution, of the decree.
The High Court in the earlier S. A. No. 100/43, set aside the decree and sent back the case giving opportunity to the judgment-debtor for proving the claim to be unjust. That defence was finally, negatived. The judgment-debtor, as we have indicated, did not make any payment towards the original decree or the ultimate decree which was for a much larger sum until he was called upon by the order of our learned brother as a condition for restitution.
By allowing restitution we clearly place the decree-holder in a position to be deprived of all the benefits of the decree inasmuch as he would be liable to pay mesne profits from the date of his taking over possession. It is important to note that ho was not at fault at any time whatsoever. He only availed of the legal remedies on the basis of the decree which was valid at the time. By restitution the judgment-debtor would be placed in an unduly advantageous position by being allowed to recover mesne profits which would exceed by far the decretal amount.
We are clearly and emphatically of the view that, these features and equities are essential to be considered in applying the principles of restitution as codified in Section 144 and not simply to allow restitution mechanically, completely ignoring the substantial justice between the parties, simply because the original decree in execution of which the property was sold had been reversed at a particular stage, which was not the final result of the matter of controversy between the parties as to whether the claim was just and legal or otherwise.
10. In the result, therefore, the appeal must succeed, the judgment of our learned brother is set aside, the petition for restitution filed by the respondent is dismissed and it is ordered that the sale dated 29th October, 1945 wherein the decree-holder was the purchaser must stand. But in the circumstances of the case we further order that the parties are to bear their own costs throughout the proceeding of restitution.
11. I agree.