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Nallaya Goundar Vs. Ramaswami Goundar and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai High Court
Decided On
Reported in(1958)2MLJ86
AppellantNallaya Goundar
RespondentRamaswami Goundar and anr.
Cases ReferredIn Raman Adiyoty v. Kannan Nambiar
Excerpt:
- .....as well as pavayee ammal in o.s. no. 566 of 1947. in execution of that decree he brought to sale the properties purchased by plaintiff as the properties of ramaswami goundan and pavayee ammal on the foot that they have been purchased benami in the name of pavayee ammal out of joint family funds and constituted joint family properties. athiappa goundan was impleaded as a defendant in o.s. no. 566 of 1947 but he was exonerated. in the execution sale marappa goundan, the father-in-law of ramaswami goundan, purchased the properties.5. when these properties were attached before judgment in o.s. no. 566 of 1947, the present plaintiff nallaya goundan intervened with a claim petition. the learned district munsif who enquired into the matter dismissed the claim petition on the ground that.....
Judgment:

Ramaswami, J.

1. This is a second appeal preferred against the decree and judgment of the learned District Judge of Salem in A.S. No. 264 of 1953 confirming the decree and judgment of the learned District Munsif of Sankaridrug in O.S. No. 43 of 1952.

2. The second defendant Pavayee Ammal has two sons, viz., Ramaswami Goundan and Athiappa Goundan. Ramaswami Goundan is the son-in-law of one Marappa Goundan. The plaintiff Nallayya Goundan is the father-In-law of Athiappa Goundan.

3. The plaintiff purchased under a registered sale-deed for Rs. 2000 on 14th August, 1947, the properties involved in this suit from Pavayee Ammal and her daughter on the foot that they belonged absolutely to Pavayee Ammal as her stridhanam properties.

4. The father-In-law of Ramaswami Goundan by name Muthu Goundan had obtained a decree against Ramaswami Goundan as well as Pavayee Ammal in O.S. No. 566 of 1947. In execution of that decree he brought to sale the properties purchased by plaintiff as the properties of Ramaswami Goundan and Pavayee Ammal on the foot that they have been purchased benami in the name of Pavayee Ammal out of joint family funds and constituted joint family properties. Athiappa Goundan was impleaded as a defendant in O.S. No. 566 of 1947 but he was exonerated. In the execution sale Marappa Goundan, the father-In-law of Ramaswami Goundan, purchased the properties.

5. When these properties were attached before judgment in O.S. No. 566 of 1947, the present plaintiff Nallaya Goundan intervened with a claim petition. The learned District Munsif who enquired into the matter dismissed the claim petition on the ground that Pavayee Ammal had borrowed Rs. 1000 under the suit promissory note and Rs. 1500 under another promissory note which formed the subject-matter of O.S. No. 626 of 1947, that she had conveyed all the properties belonging to her in favour of the claim petitioner without making any provision for any portion of the debt of Muthu Goundan, that there was no satisfactory evidence to show that the claim petitioner had been put in possession of the properties conveyed to him, and that considering the close relationship of the claim petitioner and Pavayee Ammal and also the fact that the sale-deed had come into existence just one month prior to the institution of the suit by Muthu Goundan, there was no doubt that the sale-deed had been executed only nominally in order to defraud her creditors. This claim order was not got set aside by the institution of a suit.

6. On 20th October, 1948, the plaintiff Nallaya Goundan deposited Rs. 1720, to the credit of O.S. No. 566 of 1947 for cancellation of the Court sale in favour of Marappa Goundan. The sale was set aside.

7. Then there was a partition suit between the sons of Pavayee Ammal in O.S. No. 67 of 1950 in which Pavayee Ammal was impleaded as the second defendant and the alienee from her, Nallaya Goundan, as the third defendant. In that suit in regard to this allegation the learned Subordinate Judge came to the conclusion:

I am inclined to believe the case of defendants 2 and 3 that the D schedule properties belong-exclusively to the second defendant and that they were not purchased from out of the income of the joint family properties. My finding therefore on additional issue (1) is that the D schedule properties are the separate properties of the second defendant and not the joint family properties of plaintiff and first defendant.

The second defendant has sold the D schedule properties to the third defendant under Exhibit B-10 on 14th August, 1947, for Rs. 2,000. The contention of the first defendant is that it is a sham and nominal document. Having regard to the finding on issue (1), the 1st defendant is not entitled to question the alienation in any way. If, on the other hand, additional issue (1) were to be found in favour of the first defendant, the evidence on record does not satisfactorily show that it was for anyfamily necessity, binding upon the plaintiff and the first defendant...

8. Nallaya Goundan has filed the present suit for recovery of the sum of Rs. 1720 with interest and has impleaded as defendants Ramaswami Goundan and Pavayee Ammal. But he claimed relief only agaiust the first defendant Ramaswami Goundan.

9. Both the Courts below held that the plaintiff was not entitled to the reimbursement asked for from Ramaswami Goundan and dismissed the suit. Hence this second appeal by the defeated Nallaya Goundan.

10. The sum and substance of the plaintiff's case is based upon the doctrine of unjust enrichment and which according to a bench decision of this Court (Raja-mannar, C.J., and Viswanatha Sastri, J.) in Mahalingam Chettiar v. Ramanathan Chettiar and others A.S. No. 665 of 1948 (Nadras High Court), can be equated to Sections 69 and 70 of the Indian Contract Act and which were the provisions relied upon for the appellant by his advocate in the lower appellate Court.

11. This doctrine of unjust enrichment has been the subject of a detailed discussion by me in S.A. No. 1245 of I954 in which I delivered judgment on 30th July, 1957.

12. The doctrine of unjust enrichment has been developing in all systems of Civil jurisprudence notably in France and Germany and what is more important to us in the English and American systems of Civil jurisprudence. For an exposition of the French Law of unjust enrichment: see The Law Quarterly Review, No. CCXVII, Volume LV, 1939, at page 50, and for an exposition of the German Law see the Canadian Bar Review, Vol. 16(1938) at page 254. In regard to the English system of jurisprudence the doctrine of unjust enrichment was based on assumpsit or had and received,, and equity, by Lord Mansfield in. Moses v. Macferlan (1760) 2 Burr. 1005, and Towers v. Barett I.T.R. 133 at 134. It subsequently, underwent a change with the decision in Sinclair v. Brougham L.R. 1914 A.C. 398, by Lord Sumner in 1913 whereunder liability was based upon implied agreement and finally has come to be rested more and more on the doctrine of restitution ; Morgan v. Askcrqft L.R. (1938) K.B. 349, Berg v. Sadler L.R. (1937) 1 K.B. 158, Fibrosa Case L.R. (1943) A.C. 32, Transvudl & Delgoa Bay Investment Co. Ltd. (1944) 1 All. E.R. 579 , United Australia Ltd. L.R. (1941) A.C. 1, Nelson v. Larholt (1947) 2 All. E.R. 751, Reading Case (1948) 2 All. E.R. 27, in Court of Appeal Reading y. Attorney-General (1949) 2 All. E.R. 68, in House of Lords Reading v. Attorney-Genera (1951) 1 All. E.R. 617 A detailed exposition of this development in the doctrine of unjust enrichment which is nothing more than that when can a person who got unjustifiably enriched at the expense of another be compelled to make restitution will be found in the standard commentaries on Contracts and Torts by Cheshire, Chitty Anson and Winfield; Cheshire and Fifoot Law of Contracts, Fourth Edition (1956) at p. 548 and foil.; Chitty on Contracts, Twenty-first edition (1955), Vol 1, at pp. 78, 79, Anson's Law of Contract, Twentieth edition (1952), Ch. XXI, p. 422 and foil.; Winfield: The Law of Torts (1931) Chapter 7.

13. Parallel to this had been similar development in the United States of America beginning with restitution on the principle of 'had and received' (Keener) then on the principle of implied contract (Woodward) and finally on the doctrine of restitution (restatement) itself. These developments can (be followed in Keener on 'Quasi-Contracts' (1893) at pages 19 and 20 and by Professor Woodward in his Law of Quasi-Contracts (1913) and in the publication of the American Law Institute, Washington D.C., viz., Restatement of the Law of Restitution (Quasi-contracts and Constructive Trusts)(1937). {See also Pomeroy: Equity Jurisprudence (1919) 4th edition; Story: Equity Jurisprudence, 14th edition, 1918; Williston: Contracts, Revised edition (1936-1938).

14. The doctrine of restitution may now be summed up in the language of the Restatement of the Law of Restitution, in Chapter I, Section 1, at page 12 and following:

A person who has been unjustly enriched at the expense of another is required to make restitution to the other. A person is enriched if he has received a benefit.

A person confers a benefit upon another if he gives to the other possession of or some other interest in money, land, chattels, or choses in action, performs services beneficial to or at the request of the other, satisfies a debt or a duty of the others, or in any way adds to the other's security or advantage ... saves the other from expenses or loss. The word 'benefit' therefore - denotes any form of advantage...

Even where a person has received a benefit from another he is liable to pay therefor only if the circumstances of its receipt or retention are such that, as between the two persons, it is unjust for him to retain it. The mere fact that a person benefits another is not of itself sufficient to require the other to make restitution therefore...

Ordinarily the benefit to the one and the loss to the other are coextensive, and the result of the remedies given under the Rules stated in the restatement of this subject is to compel the one to surender the benefit which he has received and thereby to make restitution to the other for the loss which he has suffered...

Where benefit and loss do not coincide...the amount of recovery is usually limited to the amount by which he has been benefited...

A person who officiously confers a benefit upon another is not entitled to restitution therefor.

15. The Indian Law on this subject is to be found in the following decisions : In Heramba Chandra Pal Chowdhury v. Kasi Math Sukul (1905) 1 C.L.J. 199, a bench of the Calcutta High Court held following Reid v. Rigby L.R. (1894) 2 Q.B. 40, that if the implied authority of an agent to raise a loan is not established, but it is proved that the sum borrowed or a portion thereof has been applied for the benefit of business, the creditor is entitled to be reimbursed by the principal to the extent he has been benefited.

16. In Ghasiram v. Raja Mohan Bikram Ska (1907) 6 C.L.J. 639, a Bench of the Calcutta High Court held, similarly follwing the previsous decision cited above, and the English decision in Ballantyne v. Maclver L.R. (1906) 1 K.B. 183.

17. In Goolabchand v. Miller : AIR1938Mad966 , a Bench of this Court consisting of Varadachariar and Pandrang Row, JJ., observed as follows at pages 694-695:

It is only when the contract as such cannot be enforced against the principal that the lender has to fall back on the equitable Rule founded on the theory of 'unjust enrichment'. Though the authorities have not been uniform as to the precise basis of the Rule, the Rule itself is now well established that, where by any wrongful or unauthorised act of an agent the money or property of a third person comes to the hands of the principal or is applied for his benefit, the principal is liable jointly and severally with the agent to restore the amount or the value of such money or property see Bows-tead, Article 103). In some cases, the plaintiff's right was based on the count for money had and received or the theory of failure of consideration, and sometimes on the analogy of the count for money paid to the use of the defendant. Again, the theory of subrogation was at one time suggested as the analogy but it was later on pointed out that the analogy was not true. (In re Wrexham Mold and Connah's Quay Railway Co. L.R. (1890) 1 Ch. 440. It was also suggested that in such cases, there was really no borrowing at all, because there was no addition to the principal total liability, but merely a substitution of liability to another (the lender) in place of the pre-existing liability to another (the person paid off). Other cases have supported the claim only on grounds of equity; and in In re Wrexham, Mold and Connah's Quay Railway Co. L.R. (1890) 1 Ch. 440 two of the Lords Justices observed that the effect of the Rule was to make the borrowing valid to the extent to which the principal has received the money or the benefit of its application.

In Mahalingam Chettiar v. Ramanathan Chettiar and Ors. Appeal No. 655 of 1948 (Madras High Court), it was held:

It was first contended that the case fell within the doctrine of unjust enrichment. The basis of the doctrine is that if a person has received any property or benefit from another it is just that he should make restitution as otherwise he would be unjustly enriched at the expense of the other. This doctrine so far we are concerned is embodied in Sections 69 and 70 of the Indian Contract Act and it is generally recognised that these Sections are much wider in scope than the doctrine as applied in England and go far beyond it. Mr. Rajah Ayyar referred to the following passage in Leake on Contracts (Eighth Edition) which may be taken as an accurate statement of the English Law.

A debt for money paid arises where a person has paid money for another under circumstances and upon occasions which make it just and equitable that it should be repaid ; a debt or promise to pay is then implied in law, without any actual agreement to that effect.

18. Bearing these principles in mind, if we examine the facts of this case on the doctrine of restitution, we find that the plaintiff has to fail because the person unjustrly enriched on the fact of his allegations is Pavayee Ammal from whom the properties had been purchased by him and whose claim that they were the stridhanam properties he supported and which claim had been upheld by the learned Subordinate Judge in the partition suit. He cannot get restitution on the doctrine of unjust enrichment from Ramaswami Goundan.

19. The appellant, however, rested his case in the lower Court on Section 69 of the Indian Contract Act and rests his case on Section 72 of the Contract Act here. This change of Section was objected to as taking a new ground in the second appeal. But as pointed out in Satyam v. Perraju : AIR1931Mad753 the provision of law quoted in a petition under which it is purported to be filed should not be taken to be conclusive as regards the meaning and scope of the petition as against the clear words of the petition itself. In other words, we must look to the substance and not the form. I shall first deal with the claim for restitution rested by this appellant on Section 69. The following passage from Pollock and Mulla's Indian Contract Act and Specific Relief Act, (Eighth Edition) 1957, at page 414, is apposite:

This Section (69) only applies to payments made bonafide for the protection of one's own inter-rest. A person may be interested in the payment, but if in making the payment he is not actuated. by the motive of protecting his own interest, he cannot recover under this Section (69). Thus, where A purchases property from B, but the sale is fictitious, A cannot recover from B money paid by hint to save the property from being sold in execution of a decree against B : Janaki Prasad v. Baldeo I.L.R.(1908)All. 167. It is otherwise, however, if the sale is bonafide Subramania Iyer v. Rengappa (1909) 19 M.L.J. 750 : I.L.R. 33 Mad. 232

Again at pages 415-416:

It is enough for a person claiming under the provisions of this Section to show that he had an interest in paying the moneys claimed by him at the time of payment. Thus moneys paid by a person, while in possession of an estate under a decree of a Court to prevent the sale of the estate for arrears of Government revenue may be recovered by him under this Section, even though the decree may be subsequently reversed and he may be deprived of possession : Sety Fakir v. Chand Bewa : AIR1928Cal389 Jagannath v. Chunnilal : AIR1940All416 ,Subba Gowda, In re A.I.R. 1950 Mys. 6 and Hirday Narain v. Haricharan : AIR1952Pat81 . In Dakshina Mohun Roy v. Saroda Mohan Roy I.L.R.(1893) Cal. 142 ; L.R. 20 I.A. 160 , the Privy Council said : 'It seems to their Lordships to be common justice that when a proprietor in good faith pending litigation makes the necessary payment for the preservation o the estate in dispute, and the estate is afterwards adjudged to his opponent, he should be recouped what he has so paid by the person who ultimately benefits by the payment if he has failed through, no fault of his to reimburse himself out of the rents.

20. In Ram Tuhul Singh v. Bisweswar , the Privy Council in dealing with the rights of parties making payments, observed:

It is not in every case in which a man has benefited by the money of another that an obligation to repay that money arises. The question is not to be concluded by nice considerations of what may be fair and proper according to the highest morality. To support such a suit there must be an obligation express or implied to repay. It is well settled that there is no such obligation in that case of a voluntary payment by A of B's debt.

21. To sum up, this interest may range all the way from an honest belief that one's own interest requires that the payment should be made though it may not be such as would stand the test of a judicial trial Munni Bibi v. Trilok Nath I.L.R.(1931) All. 140, to a legal proprietary interest in the property in respect of which the payment is made Govindaram v. State of Gondal (1950) 2 M.L.J. 1 I.L.R. 77 IndAp 156 : A.I.R. 1950 P.C. 99 . It is a question of fact to be decided in the circumstances of each case.

22. Bearing these principles in mind, if we examine the facts of this case we find, firstly that this Nallaya Goundan cannot be held to be a person interested in the payment of money and secondly, that the payment by itself was not made bona fide for the protection of one's own interest. The sale-deed in his favour has been held in the claim proceedings to be a sham transaction and that this Nallaya Goundan was never put in possession of the properties and that it was brought about nominally to defraud creditors. Nallaya Goundan did not file a suit to set aside the decision in the claim proceedings and it became final. In fact the learned Subordinate Judge himself in the partition suit has held that by reason of these properties being stridhanam properties of Pavayee Animal the sons could not challenge the alienation and if the properties are held to be joint family properties the alienation was not for purposes binding on the co-parcenary. Therefore, looked at from any point of view under Section 69 of the Contract Act, Nallaya Goundan was not a person interested in the payment of the money and the payment made by him was not bond' fide for the protection of one's own interest.

23. On the facts of this case the decision in Dhanammal v. Veeraraghavaulu (1922) 44 M.L.J. 325 : A.I.R. 1923 Mad. 487, is irrelevant and the decisions in Satyam v. Perraju : AIR1931Mad753 and Venkatadrl Apparao v. Verikatw Kutumbarao : AIR1941Mad635 are not applicable.

24. In regard to the invocation of Section 72 of the Indian Contract Act, the follow-I ing passage from Pollock & Mulla (Ibid) at page 439 is again apposite for the Investigation on hand.

The cases where money is deposited to have a sale set aside under Order, 21 Rule 89, Civil Pro-is cedure Code, may be conveniently considered in this place. There has been a conflict of decisions I on the question whether money so deposited can be recovered by the person making the deposit from I the decree-holder. The High Court of Bombay in Shankcrrao v. Vadilal I.L.R.(1932)Bom. 601 took the view that it was not I recoverable, following an earlier Bombay decision, as well as one in Patna and Madras, though one I of the Judges indicated that, if the matter had been res integra, he might have decided otherwise. Two later decisions in Madras, Satyam v. Perraju : AIR1931Mad753 and Pappu Reddiar v. Pichu Ayyar : AIR1938Mad493 held that the money was recoverable, though the Bombay cases were not cited in the course of the argument. The I various conflicting authorities were however reviewed in Raman Adiyoty v. Kannan Nambiar : AIR1940Mad725 in the same Court and the decisions just cited were affirmed on the ground that the money in such circumstances is in fact paid under compulsion and that Section 72 gives a statutory right to recover it, the right not resting merely on consideration of justice and equity. It is submitted that this is the right I view

25. In Raman Adiyoty v. Kannan Nambiar : AIR1940Mad725 ,atanjali Sastri, J., (as he then was) held:

The right to recover the money paid to raise an attachment or to set aside a sale does not depend upon any conditions annexed to such payments when made, but arises out of the compulsion of law : involved in such cases. It is a statutory right under Section 72, Contract Act. If a judgment-debtor or any other person bound by a decree makes a deposit under Order 21, Rule 89 to have a sale of hit property held in execution set aside, the payment must be regarded as involuntary payment and his claim for restitution made either under Section 144, Civil Procedure Code, or under the general law after the decree has been reversed in appeal or set aside in a suit brought for the purpose, is sustainable.

26. On the facts of this case, this decision is certainly not applicable:

In the result, the decree and judgment of the lower appellant Court have got to be affirmed and are hereby affirmed and this second appeal is dismissed and in the circumstances of this case without costs.


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