Shanmugasundara Mudaliar and Others vs S. Ratnavelu Mudaliar

Reilly, J.—In O.S. No. 5 of 1922 on the file of the Subordinate Judge of Chingleput the appellants as trustees of a certain temple obtained a

decree for money against Defendant 1 and others. Defendant 1 among others appealed to this Court against that decree in Appeal No. 218 of

1925. Pending that appeal, Defendant 1 applied for stay of execution of the Subordinate Judge''s decree, the amount of which we are told by the

date of this appeal with interest had come to about Rs. 7,000. The appellants opposed that stay application, and eventually an order was made by

Jackson, J., on the stay petition that execution would be stayed if Defendant 1 paid into-Court Rs. 3,500 and gave security for the remainder of

the decree and that, if the Rs. 3,500 was paid into Court in accordance with the order, then the present appellants should be allowed to draw it

only on giving security for that amount. Defendant 1 paid that Rs. 3,500 into Court and gave security for the remainder of the decree, and

thereupon execution of the decree against him and the other defendants was stayed pending the appeal against that decree to this Court. But,

although Defendant 1 paid that Rs. 3,500 into Court, it appears that the present appellants never gave security for the amount, and so they never

withdrew it from Court. The appeal of Defendant 1 and others against the Subordinate Judge''s decree for money was successful so far as

Defendant 1 and some of the other defendants were concerned; and after his success Defendant 1 applied to the Subordinate Judge, in whose

Court the Rs. 3,500 had been deposited by him, for restitution. He claimed the Rs. 3,500 with interest upon it. The Subordinate Judge made an

order that the Rs. 3,500 should be paid back to him and that the present appellants should pay interest at 6 per cent, on that amount as part of the

restitution to be made to Defendant 1. The present appeal is against that order so far as it directs the present appellants to pay interest on the Rs.

3,500 to Defendant 1.

It is urged for the appellants, first, that they never compelled Defendant 1 to pay that amount into Court and, secondly, that they never got any

benefit out of it, as they never withdrew the amount from Court; and for both those reasons it is contended that, although Defendant 1 is entitled to

get back the Rs. 3,500, he is not entitled to any interest as part of the restitution now due to him. I cannot agree with the suggestion that the

payment of the Rs. 3,500 into the Subordinate Judge''s Court by Defendant 1 was a voluntary payment. It is true that the appellants by the time

Defendant 1 came to this Court for an order for stay of execution had not taken any proceedings to execute their decree. But there was a decree

for money standing against Defendant 1, which he knew might be executed at any moment against him, and he was quite within his rights in coming

to this Court and asking that, pending his appeal against that decree, execution might be stayed. When the present appellants got notice of that

application, they did not consent to the decree being stayed on security under R. 5 of Order 41, and they were quite within their rights in not

consenting. Nor did they disclaim any intention of executing their decree. On the contrary they asserted their right and intention to execute it.

Jackson, J., stayed execution of that decree on certain terms : he made an order that, if there was to be any stay at all, Rs. 3,500 must be paid into

the Subordinate Judge''s Court. That order was obviously intended for the benefit of the present appellants and must have been at their instance. It

certainly would never have been made if they had disclaimed a desire for any such order. In the circumstances I think, it is impossible to say that

Defendant 1 made the deposit of Rs. 3,500 in the Subordinate Judge''s Court as a voluntary payment. Defendant 1 had to pay that amount

because a decree, which the appellants were prepared to execute and declared that they intended to execute, had been wrongly made against him,

as events have turned out, and for the time from the date he made that payment until the disposal of the appeal against the decree he was deprived

of that money. Having been deprived of his money as the result of a decree, which the appellants insisted on executing, but which turns out to be

wrong, he is clearly entitled to restitution.

Mr. Srinivasa Aiyar, who appears for the appellants here, does not deny that restitution in such cases, if it is to be complete, must often include

not only the actual money which has been deposited but interest thereon, and that is provided by Section 144 of the Code of Civil Procedure. But

he contends that, when we are trying to ascertain what is the exact restitution which should be made in such a case, whether it should be the money

deposited alone or the money with the addition of interest upon it, the test to be applied is, not the injury which has been done to the judgment-

debtor who has had to pay the amount under a mistaken decree but the benefit which has been obtained by the other party, or at least that no

interest should be ordered where, although the judgment-debtor has suffered an injury in consequence of such compulsory payment the decree-

holder has not derived any benefit from it. It appears to me that that is not the way to apply the principle of restitution, which is recognised in the

Code. The provision in the Code is to be found in Section 144, which lays down that ""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"". Now, reading that provision in its ordinary plain meaning, the restitution mentioned appears to me to be on its face the restoration to the

injured party of what he has lost, not primarily the deprivation of the other party of what he has wrongfully gained. It is the party entitled to

restitution who can apply to the Court and claim the help of the Court in the matter: it is for his benefit that the provision is introduced. The

restitution must be such as will put the parties in the position which they would have occupied but for the wrong decree. The party who is to be

assisted by Court must be put into the position which he would have occupied but for the wrong decree. Is it an answer to that provision to say

that it cannot be given effect to because the other party happened to gain no benefit by the wrong decree or order which had been made? I can

see nothing in the section to lead us to suppose that it can be defeated in the way. And, if we go further into the section, we find the words ""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"". Take damages. Can it be suggested that the measure of damages in

such cases is, not what the wronged party has suffered, but what the other party has gained? Take compensation. Is the wronged party to be

deprived of compensation merely because the other party has made no actual profit out of the mistaken decree or order, which is afterwards

reversed? I think, if we read the section in its natural way, it will be found to be directed to the benefit of the wronged party and its object to be, so

far as possible, to put him back into the position in which he would have been but for the wrong decree or order which is afterwards reversed.

Surely that is how the matter should be treated. The Court unfortunately by a mistaken decree has done a wrong to the judgment-debtor. When

the Court has done a wrong, it is the Court''s duty, so far as possible, to put it right. The Court is not directly interested in depriving the other party

of a benefit which he may have got from a mistaken order or decree. It is the wrong that has been done which the Court should wish to put right.

The actual benefit which may have been gained by the other party may often be almost impossible to estimate; but that is not the matter in which

the Court is interested. If we look at Rodger v. The Comptoir d''Escompte de Paris (1871) L.R. 3 P.C. 465, in which this matter was discussed

by Lord Cairns, I think it will be seen that it is the wrong which has been done by the mistaken order or decree with which the Court is primarily

concerned and which the Court must always wish to rectify, not the incidental advantage which the other party may have been fortunate enough to

get. That principle has been applied in a case somewhat like this, Dalu Ram Gobardhan Das Vs. Ramanand Jurimull, . There the plaintiff was made

to pay interest as part of the restitution of the money deposited by the defendant towards the decree, not only from the date when the plaintiff drew

that money from Court, but from a much earlier date, when the defendant had deposited it in Court, although it was represented that between

those two dates the plaintiff had got no benefit whatever from the money.

But it happens that in this case the present appellants are not at all in a strong position for urging that they got no benefit from Defendant l''s

deposit of Rs. 3,500. It is urged for them that they got no benefit from that because for some reason they found it inconvenient to give security and

draw that money. Can we properly say that they got no benefit from the money simply because they did not choose, or were even unable, to give

security? We know that they did not give it; but the moment they chose to give security or were able to give that security they could take the

money out of Court. And, as part of the decree amount due to them was in Court ready for them to put their hands upon it the amount they

succeeded in the appeal, if they did succeed in it, that was clearly a benefit to them, as was recognised in Hirabhai Dahyabhai v. Maneklal

Ranchhod (1925) 87 I.C. 713. In my opinion, if we had to decide this case on the basis whether the appellants had got any benefit by the deposit

of the Rs. 3,500, I think we should have to find that they had derived at least some benefit from that deposit. But in my opinion that is not the

proper test. The proper test is whether Defendant 1 has been injured or deprived of his legal right in respect of that Rs. 3,500 which he had to

deposit in consequence of the wrong decree obtained against him by the appellants. In my opinion he was injured by 1 having to make that

deposit, and he cannot be properly compensated for that injury by the mere return of the Rs. 3,500. If he is to be compensated, if he is to get

restitution within the meaning of Section 144 of the Code, he is entitled to get interest also.

In my opinion the order of the learned Subordinate Judge is right and this appeal should be dismissed.

Anantakrishna Aiyar, J.

I agree.

In O.S. No. 5 of 1922 on the file of the Subordinate Judge''s Court, Chingleput, the appellants before us obtained a decree for money against

the 1st defendant and others. They were apparently anxious to execute the decree, and the 1st defendant on preferring an appeal to this Court

against the decree in O.S. No. 5 of 1922 applied for stay of execution of the Lower Court''s decree. The application was contested by the

decree-holders, the present appellants. The decree4iolders were anxious to be allowed to execute the whole of the decree. The 1st defendant was

anxious that execution of the whole of the decree should be stayed, evidently on his furnishing security for the decree amount, which was about Rs.

7,000. The application for stay of execution of the decree appealed from came on for hearing before a learned Judge of this Court, and the learned

Judge having regard to the circumstances of the case directed that so far as a moiety of the amount of the decree was concerned the 1st defendant

should have stay of execution on his furnishing security for the amount of that moiety, but as regards the other moiety the learned Judge directed

that the 1st defendant should pay that portion of the decree amount into Court, the decree-holders being allowed to draw the same out of Court on

their furnishing security to the satisfaction of the Lower Court. These facts are clear from the affidavits and the order passed in connection with the

application for stay of execution pending the appeal. Now what happened subsequently was this. The decree-holders did not trouble themselves

about the execution of the decree any further, so the amount of Rs. 3,500 deposited by the 1st defendant into the Lower Court remained in the

Lower Court without being drawn out by the decree-holders on furnishing security. The appeal was eventually successful so far as the 1st

defendant was concerned. The present appeal arises out of a petition, E. P. No. 76 of 1928, filed by the 1st defendant in the Lower Court u/s 144

of the CPC praying that the decree-holders may be directed to pay interest in respect of the amount of the moiety of the decree which the 1st

defendant had deposited in the Lower Court, from the date of his deposit to the date of the judgment of the High Court on appeal in his favour.

The decree-holders objected to the Court decreeing any interest in the circumstances, their argument being that they had in fact derived no benefit

out of the decree amount deposited in the Lower Court, and that consequently they should not be directed to pay any interest in respect of that

amount. The learned Subordinate Judge overruled that contention and directed that the decree-holders should pay interest on the amount

deposited in Court for the period mentioned by him. The plaintiffs - decree-holders - are the appellants before us.

Before us it was contended by the learned advocate for the appellants that on a proper construction of Section 144, Civil Procedure Code, all

that the Court could direct the unsuccessful decree-holders to do was to restore the benefit that they might have derived by virtue of the decree

that was subsequently reversed by the appellate Court. In support of that argument the learned advocate drew our attention to some reported

decisions. In my view, that is not the proper standpoint from which this case is to be looked at in order to arrive at a correct decision on the point

before us. The principle of restitution is based upon the legal maxim that the act of the Court should injure none. Actus curiae neminem gravabit.

That this is the principle is made clear by the judgment of Lord Cairns in Rodger v. The Comptoir d''Escompte de Paris (1871) L.R. 3 P.C. 465

where the principles that ought to govern Courts in directing restitution in such cases are discussed. I do not propose to read all the passages,

though very many of them would be relevant to the point before me. The following are among the relevant passages occurring in that judgment:

It is contended on the part of the respondents here, that the principal sum being restored to the present petitioners, they have no right to recover

from them any interest. It is obvious that, if that is so, injury, and very grave injury, will be done to the petitioners. They will by reason of an act of

the Court have paid a sum which it is now ascertained was ordered to be paid by mistake and wrongfully. They will recover that sum after the

lapse of a considerable time, but they will recover it without the ordinary fruits which are derived from the enjoyment of money. On the other hand,

those fruits will 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. So far, therefore, as principle is concerned, their Lordships have no doubt or hesitation in saying that

injustice will be done to the petitioners, and that the perfect judicial determination which it must be the object of all Courts to arrive at will not have

been arrived at unless the persons who have had their money improperly taken from them have the money restored to them, with interest, during

the time that the money has been withheld.

See pp. 475 and 476. Now as I read those passages, it seems to me that it is the injury which has been caused to a party who has been

ultimately successful as a final result of the litigation that the Courts seek to remedy by virtue of proceedings taken in restitution. Such a party is to

be placed - so far as it may be done--in the same position which he would have occupied had not the injury been done to him. If that is the

principle, then, I think, the answer to the question before me is quite clear. The 1st defendant was, as a result of the proceedings, taken by the

appellants in pursuance of a decree, which was ultimately reversed, directed to put into Court a certain sum of money. If that decision had not been

passed, the 1st defendant would not have been deprived of the use of the money, and the injury done to him therefore could be remedied only by

paying him back not only the principal amount of that money but also some compensation for the deprivation of the use of the money from date of

deposit to date of judgment of the High Court reversing the Lower Court''s decree. The wordings of Section 144 also make this point clear. The

section is not drafted merely with a view of depriving the decree-holder in the prior litigation of any benefit which he has actually in fact derived

from the decree, but the section is drafted with a view to benefit, by way of restitution or otherwise, the party who had been injured by an act of

Court, found to be ultimately erroneous. The section says:

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.

I therefore decline to accept the contention raised before us by the learned advocate for the appellants, that we should view the case from the

standpoint of the benefit that the appellants actually derived from the decree they obtained in the first Court. The learned advocate emphasised on

the words ""so far as may be"" occurring in the section. As I understand the section, those words have no relevancy so far as the point now before

us is concerned. It may happen that in very many cases restitution, as ordinarily understood, is impossible. Property may have been sold and

purchased by bona fide strangers, and in some cases it might be impossible to restore in specie the property of which the defendant might have

been deprived. In such and similar cases, justice requires that the injured party should be restored, if not to the very thing of which he was

deprived, at least to as much of its equivalent as can be given to him in the place of the thing the restoration of which has become impossible. The

subsequent wordings of the section, namely, ""the Court may take any order. for payment of interest, damages, etc.,"" make it clear that it is the

injury that the 1st defendant suffered that has to be compensated for in a case like the present. The learned advocate for the appellants referred us

to some cases which he stated were inconsistent with the view that I am inclined to adopt in this case. On a careful perusal of the cases to which

our attention was drawn, it is clear that those cases do not establish the proposition he contends for. I must remark that in properly understanding

the expressions used by learned Judges in particular cases we must not forget to inquire what exactly was the relief that a party was actually

claiming before the Court in such proceedings. If, as a matter of fact, a person in the position of the 1st defendant claimed only interest from the

time when the decree-holder actually drew the money out of Court, and was content with claiming the same only, and did not claim compensation

from the time when he parted with the money, then the remarks occurring in judgments dealing with such contentions should be understood only

with reference to the prayer actually contained in the petition before the Court. As far as I am able to see, the passages in the judgments referred to

us do not lay down that a person in the position of the 1st defendant would not be entitled to anything more than the benefit which the decree-

holder actually got by virtue of the prior decree. On the other hand, our attention was drawn to two cases Dalu Ram Gobardhan Das Vs.

Ramanand Jurimull, and Hirabhai v. Maneklal (1925) 87 I.C. 713 both of which support the position contended for by the 1st defendant. In

Hirabhai v. Maneklal (1925) 87 I.C. 713 the money was in Court for some time. The decree-holder had no benefit in the sense that he was able to

make interest out of that money, as during the period in question the money was lying idle in Court; yet the learned Judges decided that the decree-

holder was bound to pay interest for the period during which the money was lying in Court. To use the words of the judgment, "" The decree-holder

has had the advantage of the money lying in Court until the appeal was heard and that would be a sufficient advantage to enable 1st defendant to

succeed."" In the other case Dalu Ram Gobardhan Das Vs. Ramanand Jurimull, the decree-holder was disected to withdraw the money from Court

after furnishing security, and, in that respect, that case is very similar to the one before us. The learned Judges decided that even in such a case the

decree-holder was bound to pay interest to the defendant on the amount for the period during which the money was lying idle without the decree-

holder having furnished security; If the test is the injury done to the defendant, then the circumstance that the decree-holder considered it to his

benefit in any particular case not to actually draw the money out of Court but to have it ready in Court, would not make any difference, and I am

not at all satisfied that it will not be to the benefit of the decree-holder to have an order in his favour that the money is to lie in Court and that he can

draw it at any time on furnishing security. In this particular case that it was a benefit to the decree-holders to have money ready in Court is clear to

me from another circumstance. Evidently the 1st defendant wanted to have stay of execution in respect of the whole decree. The learned Judge

was inclined to grant stay on the 1st defendant furnishing security in respect of a moiety of the decree amount. The order passed by the learned

Judge with reference to the other moiety is, in my view, entirely due to the request made by the decree-holders that money may be directed to be

paid into Court and that they should be allowed to draw the same on furnishing security. If such a thing was not to their benefit, I am unable to

understand why they wanted such orders to be made with reference to that moiety of that decree amount. Therefore the question of benefit to the

decree-holders is, in my view, entirely immaterial and irrelevant for the purposes of the present case; and even otherwise, in the present case I am

clear that there was an order which was (as already stated) to the benefit of the decree-holders; and consequently, having got a benefit, it does not

lie in their mouths to say that they are not liable or responsible for having deprived the 1st defendant of the use of the money during the period. In

addition to the case in Rodger v. The Comptoir d''Escompte de Paris (1871) L.R. 3 P.C. 465 I wish to refer to the observations of Sir Barnes

Peacock in Hurro Chunder Roy Chozvdhry v. Sooradhonee Debia (1868) 985 Beng. L.R. Sup. 992 (F.B.)

It is the legal effect of a decree of reversal that the party against whom the decree was given is to have restitution of all that he has been deprived of

under it. A Court of Appeal does not necessarily enter into the question, whether a decree, which it is about to reverse, has been executed or not.

The decree of reversal necessarily carries with it the right to restitution of all that has been taken under the erroneous decree, in the same manner as

an ordinary decree carries with it a right to have it executed; and I should have considered that a decree of reversal necessarily authorised the

Lower Court to cause restitution to be made of all that the party, against whom the erroneous decree had been enforced, had been deprived by

reason of its having been enforced.

See also the further observations at p. 993. I wish also to refer to the observations of Sir Asutosh Mookerjee, J., in Ashulosh v. Upendra

(1916) 24 C.L.J. 467 where the learned Judge after referring to the decision in Rodger v. The Comptoir d''Escompte de Paris (1871) L.R. 3 P.C.

465, emphasises on the correct principle underlying the whole discussion, namely, that it is the legal injury that is done to the person in the position

of the defendant that is sought to be remedied in such cases. See also a later Privy Council decision in Jai Berham and others V. Kedar Nath

Marwari and others, 49 Indian Appeals 351 .

I think it is enough for our purpose to be guided strictly by the provisions of Section 144 of the Code of Civil Procedure; and having regard to

its wordings, I think that the 1st defendant is entitled to the benefit he claims in the present case, namely, interest - as for the use of the money - of

which he has been deprived, for the period during which that money was not available to him, he having been directed to part with that money by a

decree that has been ultimately reversed as erroneous.

I agree that the appeal must be dismissed but without costs as nobody appears for the respondent. In order to make matters clear, I should

add that the 1st defendant claimed restitution with interest at 12 per cent, and the learned Subordinate Judge was in my opinion right in having

allowed him only interest at 6 per cent.