1. This appeal is brought by special leave on behalf of the judgment-debtoragainst the judgment of the Orissa High Court, dated January 3, 1961 in LettersPatent Appeal No. 3 of 1959.
2. The deceased plaintiff filed Original Suit No. 500 of 1941 against theappellant-defendant in the Court of the Additional Munsif, Aska claiming Rs.970 on the basis of a promissory note. The suit was dismissed on August 17,1942. The plaintiff preferred an appeal No. 178 of 1942 before the DistrictJudge who allowed the appeal and set aside the decree of the Munsif and decreedthe suit ex parte of March 9, 1943. Against this decree of the appellate Court,the appellant filed Second Appeal No. 100 of 1943 in the Orissa High Courtwhich set aside the decree of District Judge on November 11, 1946 and remandedthe suit to the lower appellate court for disposal. The lower appellate courtin its turn remanded the suit to the trial court by its judgment, dated April11, 1947. In the meantime the original plaintiff died and the presentrespondents were brought on record as his legal representatives. The suit wasagain dismissed by the trial court on November 29, 1947 but on appeal theAdditional Subordinate Judge set aside the judgment and decree of the Munsif onNovember 30, 1948. The appellant carried the matter in Second Appeal No. 12 of1949 to the Orissa High Court which dismissed the appeal on August 27, 1954.
3. After the ex parte decree was passed in appeal No. 178 of 1942 by theDistrict Judge on March 9, 1943, the plaintiff executed the decree, attachedthe properties in dispute and himself purchased the properties in Courtauction. The plaintiff also took delivery of the properties on May 17, 1946 andsince that date the respondents have been in possession of the properties andenjoying the usufruct. After the decree of the High Court, dated November 11,1946 in Second Appeal No. 100 of 1943 the appellant made an application forrestitution in the Court of the Additional Munsif in Miscellaneous JudicialCase No. 34 of 1947. The plaintiff obtained a stay of the hearing of theMiscellaneous Judicial Case from the Court of the Additional District Judge buton March 30, 1948 the order of stay was discharged. In Civil Revision No. 75 of1948 the High Court also granted interim stay in the proceedings in the MiscellaneousJudicial Case at the instance of the plaintiff but the order of stay wasvacated by the High Court on April 28, 1949. Thereafter the present appellantgot the Miscellaneous Judicial Case stayed till disposal of his Second Appealafter remand. On July 12, 1956 the Miscellaneous Judicial case was allowed bythe Munsif and an order of restitution was made in favour of the appellant. Therespondents filed an appeal before the Subordinate Judge of Berhampur whoallowed the appeal and set aside the order of restitution. The appellant tookthe matter before the High Court in Miscellaneous Appeal No. 24 of 1958 whichwas allowed by P. V. Balakrishna Rao, J. on October 3, 1958 and it was orderedthat the restitution of the properties should be made to the appellant subjectto the condition that he must deposit the amount decreed in favour of theplaintiff- decree holder. The order of the learned Single Judge was, however,set aside in Letters Patent appeal by a Division Bench which held that theappellant was not entitled to restitution of properties sold in the executioncase.
4. The question presented for determination in this case is whether theappellant was entitled to restitution of his properties purchased byjudgment-debtor in execution of the decree passed by the District Judge on theground that the decree was set aside by the High Court and the suit wasremanded for re-hearing and fresh disposal under the provisions of s. 144 ofthe Civil Procedure Code which states as follows :
'144. (1) Where and in so far as a decree or orderis varied or reversed, the Court of first instance shall, on the application ofany party entitled to any benefit by way of restitution or otherwise, causesuch restitution to be made as will, so far as may be, place the parties in theposition which they would have occupied but for such decree or such partthereof as has been varied or reversed; and, for this purpose, the Court maymake any orders, including orders for the refund of costs and for the paymentof interest, damages, compensation and mesne profits, which are properlyconsequential on such variation or reversal.'
5. On behalf of the respondents Mr. Aggarwala made the submission that afterthe suit was re-heard a decree was passed in favour of the respondents and thatdecree was eventually affirmed by the High Court, and the appellant was,therefore, not entitled to restitution under the provisions of this section. Weare unable to accept this argument as correct. The properties of the appellantwere sold in execution at the instance of the respondents who were executingthe ex parte decree passed by the District Judge on March 9, 1943. In thisexecution case, the properties of the appellant were sold and the respondentsgot delivery of possession on May 17, 1946. It is true that the suit waseventually decreed after remand on August 27, 1954 by judgment of High Court,but we are unable to accept the argument of the respondents that the executionsale held under the previous ex parte decree which was set aside by the HighCourt, is validated by passing of the subsequent decree and therefore theappellant is not entitled to any restitution. It is evident that theapplication for restitution was filed by the appellant in 1947 in MiscellaneousJudicial Case No. 34 of 1947 before the passing of a fresh decree by the HighCourt in the Second Appeal. At the time of the application for restitution,therefore, the appellant was entitled to restitution, because on that date thedecree in execution of which the properties were sold had been set aside. Weare of the opinion that the appellant is entitled to restitutionnotwithstanding anything which happened subsequently as the right to claimrestitution is based upon the existence or otherwise of a decree in favour ofthe plaintiff at the time when the application for restitution was made. Theprinciple of the doctrine of restitution is that on the reversal of a decree,the law imposes an obligation on the party to the suit who received the benefitof the erroneous decree to make restitution to the other party for what he haslost. This obligation arises automatically on the reversal or modification ofthe decree and necessarily carries with it the right to restitution of all thathas been done under the erroneous decree; and the Court in making restitutionis bound the restore the parties, so far as they can be restored, to the sameposition they were in at the time when the Court by its erroneous action haddisplaced them from. It should be noticed, in the present case, that theproperties were purchased by the decree- holder himself in execution of theex-parte decree and not by a stranger auction-purchaser. After the ex partedecree was set aside in appeal and after a fresh decree was passed on remand,the sale held in execution of the ex parte decree becomes invalid and thedecree-holder who purchased the properties in execution of the invalid decreeis bound to restore to the judgment-debtor what he had gained under the decreewhich was subsequently set aside. The view that we have expressed is borne outby the decision of the Judicial Committee in Zain-Ul-Abdin Khan v. MuhammadAsghar Ali Khan I.L.R. 10 All. 166. in which a suit was brought by thejudgment-debtor to set aside the sale of his property in execution of the decreeagainst him in force at the time of the sale, but afterwards so modified, asthe result of an appeal to Her Majesty in Council, that as it finally stood, itwould have been satisfied without the sales in question having taken place. Thejudgment-debtor sued both those who were purchasers at some of the sales, beingalso holders of the decree to satisfy which the sales took place, and those whowere bona fide purchasers at other sales, under the same decree, who were noparties to it. The Judicial Committee held that, as against the latterpurchasers, whose position was different from that of the decree -holdingpurchasers, the suit must be dismissed. At page 172 of the Report, Sir, B.Peacock observed as follows :
'It appears to their Lordships that there is agreat distinction between the decree-holders who came in and purchased undertheir own decree, which was afterwards reversed on appeal, and the bona fidepurchasers who came in and bought at the sale in execution of the decree towhich 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'.
6. The same principle has been laid down by the Calcutta High Court in SetUmedmal and another v. Srinath Ray and another I.L.R. Cal 27 Cal. 810. wherecertain immovable properties were sold in execution of an ex parte decree andwere purchased by the decree-holder himself. After the confirmation of thesale, the decree was set aside under s. 108 of the Civil Procedure Code, 1882,at the instance of same of the defendants in the original suit. On anapplication under s. 244 of the Civil Procedure Code, 1882 having been made bya prior purchaser of the said properties in execution of another decree, to setaside the sale held in execution of the ex-parte decree the defence was thatthe application could not come under s. 244 of the Civil Procedure Code, 1882,and that the sale could not be set aside, as it had been confirmed. It was heldby the Calcutta High Court that the ex-parte decree having been set aside thesale could not stand, inasmuch as the decree-holder himself was the purchaser.At page 813 Maclean, C.J. stated :
'As regards the second point, viz., whether,notwithstanding the confirmation, the sale ought to be set aside, the fact thatthe decree-holder is himself the auction purchaser is an element ofconsiderable importance. The distinction between the case of the decree-holderand of a third party being the auction purchaser is pointed out by theirLordships of the Judicial Committee in the case of Nawab Zainalabdin Khan v.Mahommed Asghar Ali I.L.R. 10 All., 166, and also in the case of Mina KumariBibee v. Jagat Sattani Bibee I.L.R. 10 Cal., 220, which is a clear authorityfor the proposition that where the decree-holder is himself the auction-purchaser, the sale cannot stand, if the decree be subsequently set aside. I amnot aware that this decision, which was given in 1883, has since beenimpugned'.
7. The same view has been expressed in Raghu Nandan Singh v. Jagdish Singh14 CWN 182. where it was held that if an ex-parte decreehas been set aside, it cannot by any subsequent proceeding be revived and if adecree is passed against judgment- debtors on re-hearing, it is a new decreeand does not revive the former decree. The same opinion has been expressed inAbdul Rahaman v. Sarafat Ali 20 CWN 667 in which it waspointed out that as soon as an ex-parte decree was set aside, the sale, wherethe decree-holder was the purchaser, falls through and was not validated by afresh decree subsequently made. The same principle was reiterated by the BombayHigh Court in Shivbai Kom Babya Swami v. Yesoo.I.L.R. 43 Bom 235. In thatcase, an ex-parte decree was passed against the defendant, in execution ofwhich the defendant's house was sold and purchased by the plaintiffdecree-holder. The ex-parte decree was subsequently set aside; but at theretrial, a decree was again passed in plaintiff's favour. In the meanwhile, thedefendant applied to have the sale of the house set aside. It was held, inthese circumstances, by the Bombay High Court that the previous sale of thehouse in execution under the previous decree which had been set aside shoulditself be set aside as being no longer based on any solid foundation; butsubject in all the circumstances to the condition that the defendant should payup the amount due under the second decree within a specified time.
8. On behalf of the respondents reference was made to the decision of thisCourt in Lal Bhagwant Singh v. Rai Sahib Lala Sri Kishen Das. : 4SCR559 But the ratio of that case has no application to the present case. Itshould be noticed that the decree in that case was affirmed at all stages ofthe litigation except that the amount of the decree was slightly altered fromRs. 3,38,300 and odd to Rs. 3,76,790 and odd which amount was ultimatelydecreed by the privy Council in the appeal which the judgment-debtor preferredfrom the decision of the Oudh Chief Court which restored the decree of thetrial Judge who decreed a sum of Rs. 3,88,300. It was held by this Court thatthe Privy Council held merely restored the amended decree without altering theprovision as to payment by instalments or extending the time for payment byinstalments and its decree did not in any way alter the position of the partiesas it stood under the amended decree, and, the sale was not in consequence ofany error in a decree which was reversed on appeal by the Privy Council and sothe judgment-debtor was not entitled to restitution. In the present case thematerial facts are manifestly very different.
9. For the reasons expressed, we are satisfied that the appellant isentitled to restitution of the properties sold in execution of the ex-partedecree subject to equities to be adjusted in favour of the respondent-decreeholders. We order that the appellant should be restored back to possession ofthe properties sold in the execution case subject to the condition that hedeposits the amount of Rs. 970 in the Court of the Munsif, Aska within twomonths from this date. If no deposit is made within this time this appeal willstand dismissed with costs. But if the appellant makes the deposit within thetime allowed the sale of the properties in the execution case will be set asideand the respondents will make over the possession of the properties sold to theappellant. The appellant will not be entitled to any past mesne profits but ifthe respondents do not deliver the possession of the properties the appellantwill be entitled to the future mesne profits from the respondents from the dateof deposit till the actual date of delivery of possession. Learned Counsel forthe appellant has informed us that the deposit has already been made by theappellant in pursuance of the order of the learned Single Judge of the HighCourt, dated October 3, 1958. If the deposit has already been made theappellant will be entitled to take possession of the properties through theexecuting court and to future mesne profits from the date of this judgment tillthe actual date of delivery of possession.
10. We accordingly allow the appeal to the extent indicated above. In thecircumstances of the case we do not propose to make any order as to costs.
11. Appeal allowed in part.