Gauridutt Ganesh Lal vs Madho Prasad and Others

Rowland, J.—The appellant here is the plaintiff who brought a money, suit against seven persons against whom be obtained a decree in the first Court.

On appeal to this Court, the decree was reversed as against defendants 8 to 7. In the meantime the plaintiff had taken out execution of his decree of which the defendants asked for stay. The stay was allowed on condition of their giving security which was ordered to be in the form of cash to the extent of half the decretal amount and of immovable property for the remainder. This was the effect of an order passed in this Court on 18th April 1934.

The Court further ordered that the plaintiff was not to withdraw the amount without giving security to the satisfaction of the lower Court. The respondents in this appeal who were defendants 8 to 7 made deposits amounting to Rs. 33,310-11-3 by several payments between the dates, 15th May 1934 and 7th August 1934. They also furnished security in immovable property for the remainder of the decretal amount. The plaintiff was also called upon before drawing the amount in deposit to furnish security and there were objections by each party as to the sufficiency of the security offered by the other. Eventually, an order was passed in the lower Court permitting the plaintiff to draw the amount of cash in deposit on 2nd July 1936.

A petition by the respondents on 4th July 1936 to stop payment with a view to getting the above order revised by the High Court was rejected and the plaintiff drew the money on 9th July 1936. The appeal was heard in the High Court on 5th May 1938 and the two Judges who heard it were of different opinions with the result that the case was referred to a third Judge whose opinion was delivered on 6th February 1989 followed by the final judgment and order of the Court on 23rd February 1939. The respondents then applied for restitution of the amount deposited by them which the lower Court has allowed together with interest at rupee one per cent, per month, this being the rate of interest which the lower Court considered reasonable. Interest has been allowed with effect from the dates of deposit to date of realization.

In this appeal it is not disputed that the respondents are entitled to repayment of the principal amount; nor is it seriously argued before us that they are not entitled to reasonable interest. It is said, however, that the interest to be allowed should run not from the date of the deposit but from the date of withdrawal of the money by the plaintiff appellant or perhaps from the date when there was no longer any obstacle preventing him from withdrawing the money. It is also said that the rate of interest should not have exceeded six per cent, which is the ordinary court-rate of interest. We have been shown cases such as Rajendra Kumar and Others Vs. Rajendra Nath and Others, , Ashutosh Goswami v. Upendra Prasad AIR 1917 Cal. 188, in which interest was allowed not from the date of the deposit of the money in Court but from the date of withdrawal.

On the other hand, the respondents have relied on Shanmuga Sundara v. Rathavelu AIR 1933 Mad. 33 in which intrest was allowed from the date of the deposit of the money into Court. In this case Reilly J. read Section 144, Civil P.C., as requiring the Court to give such restitution as would restore to the injured party what he has lost and not primarily to deprive the other party of what he has wrongfully gained. He said: "The party who is to be assisted by the Court must be put into the position which he would have occupied but for the wrong decree" and this decision was followed by a single Judge of the same. Court in Sitaramayya v. Pedda Venkanna AIR 1940 Mad. 15, even in a case where the decree, holder had not been able to draw the amount deposited by the judgment-debtor. The money had lain in the Court until the decree was reversed. Nevertheless the judgment-debtor on the decree being set aside was not only held entitled to withdraw the money which he had deposited as security but to realise interest thereon from the decree-holder.

In my opinion some of the observations in those two Madras cases are open to question. The language of Section 144 calls upon the Court to "cause such restitution to be made as will, so far as may be, placed the parties in the position which they would have occupied but for such decree" and this is not to be read as if "parties" was to be read in the singular and as referring only to the applicant party. Lapse of time and intervening events may have made it impossible to restore both the parties to their original position, but the court will see how nearly it can approximate to doing this with the minimum of injustice and hardship to either party.

For the principle generally applicable in dealing with restitution the leading case is Rodger v. The Comptoir D''Escompte De Paris (1871) ILR 3 P.C. 465. In this case their Lordships in awarding not only restitution of the principal but also interest pointed out that unless interest was awarded the petitioners would recover their money without the ordinary fruits which are derived from the enjoyment of money and, on the other hand, those fruits would have been enjoyed or may have been enjoyed by the person who by mistake and by wrong obtained possession of the money under a judgment which has been reversed. In that case the money had passed by payment from the hands of the one party directly to the hands of the other so that no question arose as to the date from which interest was to be allowed; but their Lordships do not appear to have considered it irrelevant that the opposite party had obtained possession of the money.

In Jai Berham v. Kedar Nagth Marwari AIR 1922 P.C. 269 their Lordships of the Judicial Committee were dealing with the consequences of the setting aside on appeal of an execution sale of immovable property. In the proceedings by petition for restitution their Lordships had regard not only to the position and interest of the original owners of the property but also to those of the auction purchasers and the upshot of the matter was that the purchasers were held entitled to be paid the excess of the purchase price over the mesne profits. The matter of interest was likewise dealt with having regard to the interests of both parties by saying that the equities of the case would be met by disallowing cross claims to interest both upon the purchase price and on the mesne profits. I think we may gather from these decisions that the matter is one for the discretion of the Court to be exercised in the light not solely of the interests and the position of the one party but of both and that the duty of the Court is, so far as may be, to do justice to the interests of both sides.

There is a decision of this Court in Ram Gobardhan Das v. Ramanand Jurimull AIR 1929 Pat. 593 in which the facts were that execution had been stayed on the judgment-debtor furnishing cash security to the extent of the decretal amount, costs and interest. He made the required deposit on 14th March 1924 and it was withdrawn from Court by the plaintiff on 11th December 1924. Subsequently the original decree was set aside and the suit dismissed. The judgment-debtor had filed a petition objecting to the withdrawal of the money by the decree-holder. That e petition was dismissed on 29 March 1924 and it was held that the proper course was to pass an order allowing interest from 30th March 1924, that being the date after which there was no obstacle to the plaintiff drawing the money. If he delayed in drawing it, it was his own negligence for which he should suffer.

In this case there are observations by Amar Nath Chatterji J. to the effect that Section 144, Civil P.C., provides that "a party" should be placed in the same position which would have been occupied but for the decree. It is not clear whether the learned Judge regarded this Section in the manner in which it has been regarded in the Madras decisions as being framed from the point of view of one party only, namely, the aggrieved party and not of both parties, as this aspect of the matter is not pursued, the attention of the learned Judge being rather directed to the latter part of the Section which empowers the money to make orders including orders for payment of interest which are properly consequential on the variation or reversal of the decree. The point, he said, was whether the payment of interest claimed was or was not properly consequential on the reversal of the decree.

I think it quite consistent with this to hold that there is no hard and fast rule that interest must be allowed from the date of deposit or yet that it must be withheld until the date of withdrawal or any other date. Indeed in Dorab Ally Khan v. Abdool Azeez 4 Cal. 229 an order was made for the refund of the money paid out with interest at six per cent, from the date of the refund order to the time of payment. The Court will do what seems just having regard to all the circumstances of the case and on the facts before us it is clear that the delay from August 1934 to July 1936 was not merely time wasted by the plaintiff during which he was free to draw the money but failed to do so. To a large extent this intervening period was occupied in resisting objections by the judgment, debtors who were endeavouring to postpone or defeat altogether the plaintiff''s application to draw the, money. Certain portion of the time, it is true, had necessarily to be spent in the checking of the security offered by the plaintiff, but as far as that goes there are no indications in the order sheet that the plaintiff was at any stage unnecessarily dilatory. Considering all the circumstances generally I think it would be fair to the parties that interest should be allowed as was done in Ram Gobardhan Das v. Ramanand Jurimull AIR 1929 Pat. 593 with effect from the date on whieh there was no longer any obstacle to the withdrawal of the money by the plaintiff. ''Chat is to say, with effect from 5th July 1936.

The next point is as to the rate of interest. It has been argued for the appellant that the proper rate of interest to be allowed should be six per cent., this being the interest ordinarily allowed on mesne profits, as in AIR 1935 49 (Privy Council) and in AIR 1937 143 (Privy Council) in which the above case was referred to. In both cases, the Privy Council reduced interest which had been allowed by the High Court at 12 per cent, to 6 per cent. In Ashutosh Goswami v. Upendra Prasad AIR 1917 Cal. 188 the interest which had been allowed by the Subordinate Judge at 12 per cent, in a restitution case was reduced by the High Court to 6 per cent. For the respondents, on the other hand, it is urged that there is no hard and fast rule. The Court will allow such interest as it considers just and it was so held in this Court in Indra Chand Bothra v. Forbes AIR 1917 Pat. 696. Nevertheless there are observations in the Privy Council decisions which make it clear that unless very special circumstances are shown the court-rate of 6 per cent, will ordinarily be considered an adequate rate of interest and it does not seem to me that in the present instance there is sufficient reason for departing from the usual practice and allowing interest at a higher rate than this. The order of the Court below must therefore be to this extent modified, interest at 6 per cent, only being allowed.

We have been asked further to give some direction as to the course of further proceedings in the lower Court. The form in which the respondents are executing their application for restitution is by putting up for sale the properties hypothecated by the plaintiff, appellant. He is anxious to satisfy the demand and for this purpose desires to be allowed to raise the money by sale or hypothecation of those properties by private treaty. In dealing with such an application the Court will, of course, take all the precautions provided for in Order 2l, Rule 83(2) to ensure against any danger of the proceeds not being available to satisfy the execution claim; but subject to this there seems no valid reason why permission should not be given to the plaintiff to arrange for the satisfaction of the decretal amount in this manner. The property however has, we understand, been put up for sale and the proceedings cannot obviously be postponed indefinitely while the plaintiff is looking for a purchaser or mortgagee.

The order I would propose is that the completion of the sale be stayed for 15 days during which time if the plaintiff brings into Court half the amount due the sale shall be further postponed for three months within which time the plaintiff must bring into Court the remainder: failing fulfilment of these conditions, the sale will proceed forthwith. The plaintiff through his advocate waives any objection to the sale proclamation and waives the demand for a fresh proclamation. There will be no order for costs in this appeal.

Ghatterji, J.

I agree.