J.P. Rego vs Ananthamathi and Others

The question in this appeal relates to the restitution by the appellant of a sum of Rs. 9,000 with interest to respondents 1 to 3. The sum in

question was paid to him in these circumstances. O.S. No. 42 of 1931, on the file of the Subordinate Judge of South Kanara was a suit to enforce

a mortgage executed by the first defendant in favour of the plaintiff. The second and third defendants in the suit belonged to the same joint family as

the first defendant, but relief was sought by the plaintiff against the first defendant alone on the ground that the property mortgaged was the self-

acquired property of the first defendant and that he had taken the amount advanced under the mortgage for his own purposes. The contention of

the defendants, was that the property was family property and that there was no family necessity for the loan secured by the mortgage of it. The

suit was decreed for the plaintiff on 10th August, 1932, and in execution of his decree he brought the property to sale and purchased it himself for

Rs. 7,200. The defendants, however, deposited the requisite sum under the provisions of Order 21, Rule 89, a sum which, with incidental charges

amounted to Rs. 11,470-10-5, and the sale was set aside. The appellant held a decree (in O.S. No. 71 of 1930), against the plaintiff in O.S. No.

42 of 1931 and in R.E.P. No. 126 of 1935, he applied for the attachment of Rs. 9,000 out of the sum of Rs. 11,470 in Court. Attachment was

ordered. The appellant then applied for the transfer of the attached sum of Rs. 9,000 to his execution petition in O.S. No. 71 of 1930. The transfer

was ordered on 7th August, 1935, and on the same date payment of this sum of Rs. 9,000 to him was made.

Meanwhile, an appeal (A.S. No. 21 of 1933), was pending in the High Court against the decree in O.S. No. 42 of 1931. Judgment in this

appeal was delivered on 9th November, 1937. It was held that the mortgaged property was family property, and, as it had never been the

plaintiff''s case that the mortgage was for purposes binding on the family, the result was that the suit was dismissed. Relying, therefore, on the

decree of the High Court appellants 1 to 3 in O.S. No. 42 of .1931, applied as petitioners in E.P. No. 170 of 1938, the petition out of which the

present appeal arises, for restitution of the sum of Rs. 11,470 deposited by them under the provisions of Order 21, Rule 89, with interest. They

prayed (i) for the recovery of the whole amount of Rs. 11,470 from the plaintiff in O.S. No. 42 of 1931, with interest at six per cent. from 5th

April, 1935 till 5th September, 1938 and (ii) for the recovery of Rs. 9,000 from the present appellant with interest at six per cent. from 26th July,

1935 to 5th September, 1938. The learned Subordinate Judge directed that the plaintiff should refund a sum of Rs. 2,470-10-5 with interest at 5

per cent. from 5th April, 1935, until the date of payment, and that the present appellant should refund the sum of Rs. 9,000 with interest at 5 per

cent. from 9th August, 1935 until the date of payment. The appeal now under consideration is by the decree-holder in O.S. No. 71 of 1930 to

whom the sum of Its. 9,000 was paid. Defendants 1 to 3 in O.S. No. 42 of 1931, are respondents 1 to 3 in the appeal, and the plaintiff in that suit

is the fourth respondent. They will hereinafter be referred to by the designation of respondents 1 to 4,, respectively.

We have not received in the determination of this appeal any assistance from the order of the learned Subordinate Judge for the reason that his

consideration of the petition has proceeded on a mistake of fact which is fundamental in regard to the issue involved in the case. In paragraph 5 of

his order he states that the appellant attached the decree in O.S. No. 42 of 1941. This is not correct. The appellant did not attach the decree. He

attached part of the sum deposited under Order 21, Rule 89, which, if the attachment had not been made, would have been payable to the 4th

respondent. Section 144 of the CPC reads:

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 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.

There is clear authority Anganna Reddi and Others Vs. Subbaroya Chettiar and Another, that a penson who has attached a decree is the

representative of the original decree-holder and will be liable, in an appropriate case, to make restitution* under the* provisions of Section 144.

He is in fact a ''party'' within the meaning of the section. As, however, the present appellant did not attach the decree he is not a party to it. His

position is merely that of a third party to whom, by order of Court indeed and that is important, money otherwise payable out to the decree-holder

has been paid* which, if it had remained in his hands, there is no doubt that the decree-holder would have been obliged to restore. The question,

therefore, is whether in law a person in the position of the appellant, not in any technical sense a party to the decree, can be compelled to make

restitution of the money paid to him.

Apart from Anganna Reddi and Others Vs. Subbaroya Chettiar and Another, which need not be again referred to, other cases cited which

relate to the exercise by Courts of their inherent powers in cases which do not strictly fall within the scope of Section 144, CPC are Amba Lal v.

Ramgopal Madhoprasad ILR (1932) All. 221 Rajarao v. Ananthanarayanan Chetti (1921) 42 M.L.J. 308 Govindappa Vs. Hanumanthappa,

Palaniappa Chettiar v. Ramanathan Chettiar (1934) 67 M.L.J. 49 : ILR Mad. 849 and (Firm) Ratnaji Chandanmall Vs. Kolli Ramakrishnayya, .

The effect of these decisions and others which might, if necessary, be cited, is beyond question that the Courts in ordering restitution after a decree

has been varied or reversed have not considered themselves to be confined to cases which fall strictly within the provisions of Section 144, Civil

Procedure Code. They have considered that the inherent jurisdiction vested in them by virtue of Section 151, CPC may be invoked where an

order of Court would otherwise do injury to one of its suitors. Amba Lal v. Ramgopal Madhoprasad ILR (1932) All. 221'', was a case in which in

execution of a simple money decree, the decree-holder purchased the shares of the judgment-debtors in certain joint family properties. There

were, however, other decree-holders entitled to rateable distribution and the amounts due to them were paid out of the sale price. Subsequently, it

was held on appeal that a partition set up by the judgment-debtors was valid so that most of the properties were released from the sale. The

decree-holder then sought to recover by way of restitution the excess amounts paid to the attaching decree-holders. It was held that, even if

Section 144, did not apply, the Court could grant restitution in exercise of its inherent powers u/s 151 of the Code of Civil Procedure. Rajarao v.

Ananthanarayanan Chetti (1921) 42 M.L.J. 308 is a case relied on for the appellant since in that case it was held that restitution should not be

ordered. The facts were that certain properties attached and brought to sale in execution of a decree were purchased by strangers to the decree

and the sale proceeds were rateably distributed among persons holding decrees against the same judgment-debtor. Subsequently in proceedings

instituted by certain claimants the properties were held to belong to a trust and they were recovered from the auction purchasers. In these

circumstances an application by the auction purchasers for the refund of the purchase money distributed among the decree-holders entitled to

rateable distribution was dismissed and the appeal from the order of the lower Court was also dismissed. We do not think that this case helps the

appellant. In the first place it should be noted that neither Ayling, O. C. J., nor Venkatasubba Rao, J., who delivered separate but concurring

judgments, seems to have doubted that a Court could, in a proper case, order restitution even though the case did not fall strictly u/s 144 of the

Code of Civil Procedure. The decision was that in the circumstances of the case before the Bench the provisions of Section 151 of the CPC could

not be invoked in favour of the auction purchaser; and the reason for the decision as stated by Ayling, O.C.J., was that the extraordinary powers

conferred by Section 151, should not be invoked where the equities were evenly balanced to cover an order '''' which only sets right one injustice

by the infliction of another, or, as it is said, robs Peter in order to pay Paul"". In the second place the facts were different from the facts in the

present case. The question was as to the equities between third parties, and the injustice done to the auction purchasers could only be set right by

doing an equal injustice to the decree-holders. Palaniappa Chettiar v. Ramanathan Chettiar (1934) 67 M.L.J. 49 : ILR 57 Mad. 849 again is a

case in which the inherent powers of the Court were invoked and restitution ordered although the case did not fall within the scope of Section 144

of the CPC but again the facts in this case are distinguishable from the facts in the present case.

In short the three cases which we have so far considered since the facts are different, do not afford any assistance in the determination of the

question whether the case now under consideration is a proper case for the application of the provisions of Section 151 of the Code of Civil

Procedure. As already stated, we have no doubt that the powers of a Court to order restitution are not confined entirely to cases which fall u/s

144; but, whether the inherent powers of the Court to order restitution should be invoked in a particular case, must depend on the facts of that

case. The fourth case, however, (Firm) Ratnaji Chandanmall Vs. Kolli Ramakrishnayya, , seems to us to be directly in point. In that case A had

brought a suit against B for possession of property. Pending the trial of the suit B deposited one year''s mesne profits, but A was not allowed to

draw these profits on the ground that he had not asked for future profits. A appealed, but while his appeal was pending '' C who held a decree

against B attached the mesne profits in Court and they were paid out to him. A succeeded in his appeal and on an application by him the Court

ordered restitution of the money paid to. G. Venkataramana Rao, J., confirmed the order of the lower Court and dismissed C''s appeal. On the

facts before us we are unable to see that the position of ''C'' differs from the position of the appellant in the present case. The inherent jurisdiction

vested in the Court must no doubt be exercised in each individual case in accordance with principle and not arbitrarily. The principle on which

Venkataramana Rao, J., based his decision was that there was inherent jurisdiction in the Court to call back money paid, owing to an erroneous

view, to a person not entitled to it. The decision in (Firm) Ratnaji Chandanmall Vs. Kolli Ramakrishnayya, is that of a single Judge, but with respect

we find ourselves in agreement with it and with the principle on which it is based. In the present case the order transferring the sum of Rs. 9,000 to

R.E.P. No. 126 of 1935 in O.S. No. 71 of 1930 was correct and the order directing payment of that sum to the appellant was also correct on the

assumption that the decree passed by the Court in O.S. No. 42 of 1931 was right. it transpired, however, that the decree was wrong, and, that

being so, the order directing the transsfer of the money and the payment of it to the appellant were also wrong. We are, therefore, of opinion that if

there are no other circumstances affecting the equities as between respondents 1 to 3 and the appellant it was the duty of the Court to set right the

wrong done to its suitors (respondents 1 to 3) by reason of its own errors. We are not prepared, however, at this stage to dismiss the appeal,

since the learned Subordinate Judge did not apply his mind to the question whether a relief of an equitable or discretionary nature should or should

not be granted and there may be facts affecting the grant of such a relief of which we are not aware. Sir William Ayling, J., in Rajarao v.

Ananithanarayanan Chetti (1921) 42 M.L.J. 308 in refusing to grant relief by way of restitution took into account the fact that the decree held by

the decree-holders had become time-barred, and in this case learned Counsel have been unable to tell us whether the appellant''s decree against

the fourth respondent is time-barred or not. This is only one ''instance of a circumstance which might affect the grant of relief by way of restitution.

There may be others.

We therefore, set aside the order of the lower Court in so far as it affects the appellant and remand the case for determination on merits in

accordance with law and in the light of the observations contained in this judgment. Costs here and below will abide the result.