Binayak Swain Vs. Ramesh Chandra
Panigrahi & ANR  INSC 289 (10 December 1965)
10/12/1965 RAMASWAMI, V.
GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N.
CITATION: 1966 AIR 948 1966 SCR (3) 24
RF 1992 SC 248 (76)
Code of Civil Procedure, s. 144-Property of
defendant sold in execution of decree-Subsequently decree set aside and case
remanded-Application for restitution by defendant-Fresh decree passed against
defendant-Application for restitution whether to be allowed.
A money-suit against the appellant was
dismissed by the trial court but the first appellate court passed an ex-parte
decree against him. The appellant's property was sold in execution and
purchased by the decree holder. The appellant went to the High Court which set
aside the exparte decree and remanded the suit. The appellant then filed an
application for restitution under s. 144 of the Code of Civil Procedure. It was
stayed pending proceedings in the main suit. 'Me suit was finally decided
against the applicant, by the High Court. Thereafter the trial court allowed
the appellant's application for restitution. After intermediate proceedings the
High Court decided in Letters Patent Appeal that the appellant was not entitled
to restitution. He appealed to this Court by special leave.
HELD: The application for restitution was
filed by the appellant before the passing of a fresh decree by the High Court
in second appeal. At the time of the application therefore the appellant was
entitled to restitution because on that date the decree in execution of which
the properties were sold had been set aside. The appellant was therefore
entitled to restitution notwithstanding anything which happened subsequently.
[27 C-E] The principle of the doctrine of restitution is that on the reverse of
a decree the law imposes an obligation on the party to the suit who received
the benefit of the erroneous decree to make restitution to the other party for
what he has lost. The Court in making restitution is bound to restore the
parties so far as they can be restored to the same position they were in at the
time when the Court by its erroneous action had displaced them from. [27 E-F]
Zainal-Abdin Khan v. Muhammad Asghar All Khan, I.L.R. 10 All 166, relied on.
Set Umedmal & Anr. v. Srinath Ray &
Anr. I.L.R. 27 Cal.
810, Raghu Nandan Singh v. Jagdish Singh, 14
C.W.N. 182, Abdul Rahaman v. Sarafat Ali, 20 C.W.N. 667 and Shivbai Kom Babya
Swam v. Yesoo, I.L.R. 43 Bom. 235, referred to.
Lal Bhagwant Singh v. Rai Sahib Lala Sri
Kishen Das,  S.C.R. 559, distinguished.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 804 of 1963.
Appeal by special leave from the judgment and
decree, dated January 3, 1961 of the Orissa High Court in Appeal under Orissa
High Court Order No. 3 of 1959.
25 K. R. Chaudhuri, for the appellant.
C. B. Aggarwala, B. Parthasarathy, J. B.
Dadachanji, O.C. Mathur, and Ravinder Narain, for respondent No. 1.
The Judgment of the Court was delivered by
Ramaswami, J. This appeal is brought by special leave on behalf of the
judgment-debtor against the judgment of the Orissa High Court, dated January 3,
1961 in Letters Patent Appeal No. 3 of 1959.
The deceased plaintiff filed Original Suit
No. 500 of 1941 against the appellant-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 District Judge who allowed the appeal and set aside the decree
of the Munsif and decreed the suit ex parte on March 9, 1943. Against this
decree of the appellate Court, the appellant filed Second Appeal No. 100 of
1943 in the Orissa High Court which set aside the decree of the District Judge
on November 11, 1946 and remanded the suit to the lower appellate court for
disposal. The lower appellate court in its turn remanded the suit to the trial
court by its judgment, dated April 11, 1947. In the meantime the original
plaintiff died and the present respondents were brought on record as his legal
representatives. The suit was again dismissed by the trial court on November
29, 1947 but on appeal the Additional Subordinate Judge set aside the judgment
and decree of the Munsif on November 30, 1948. The appellant carried the matter
in Second Appeal No. 12 of 1949 to the Orissa High Court which dismissed the
appeal on August 27, 1954.
After the ex parte decree was passed inappeal
No. 178 of 1942 by the District Judge on March 9,1943, the plaintiff executed
the decree, attached the properties in dispute and himself purchased the
properties in Court auction.The plaintiff also took delivery of the properties
on May 17, 1946 and since that date the respondents have been in possession of
the properties and enjoying 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 for restitution in the Court of the Additional Munsif in
Miscellaneous Judicial Case No.
34 of 1947. The plaintiff obtained a stay of
the hearing of the Miscellaneous Judicial Case from the Court of the Additional
District Judge but on March 30, 1948 the order of stay was discharged. In Civil
Revision No. 75 sup, Cl/66---3 2 6 of 1948 the High Court also granted interim
stay in the proceedings in the Miscellaneous Judicial Case at the instance of
the plaintiff but the order of stay was vacated by the High Court on April 28,
1949. Thereafter the present appellant got the Miscellaneous Judicial Case
stayed till disposal of his Second Appeal after remand. On July 12, 1956 the
Miscellaneous Judicial case was allowed by the Munsif and an order of
restitution was made in favour of the appellant. The respondents filed an
appeal before the Subordinate Judge of Berhampur who allowed the appeal and set
aside the order of restitution. The appellant took the matter before the High
Court in Miscellaneous Appeal No. 24 of 1958 which was allowed by P. V.
Balakrishna Rao, J. on October 3, 1958 and it was ordered that the restitution
of the properties should be made to the appellant subject to the condition that
he must deposit the amount decreed in favour of the plaintiff-decree holder.
The order of the learned Single Judge was, however, set aside in Letters Patent
appeal by a Division Bench which held that the appellant was not entitled to
restitution of properties sold in the execution case.
The question presented for determination in
this case is whether the appellant was entitled to restitution of his
properties purchased by judgment-debtor in execution of the decree passed by
the District Judge on the ground that the decree was set aside by the High
Court and the suit was remanded for rehearing and fresh disposal under the
provisions of s. 144 of the Civil Procedure Code which states as follows 144
(1) Where and in so far as a decree or order 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." On behalf of the responds Mr. aggarwala made the
submission that after the suit was re-heard a decree was passed in favour of the
respondents and that decree was eventually affirmed by the High Court., and the
appellant was, therefore, not entitled to 27 restitution under the provisions
of this section. We are unable to accept this argument as correct. The
properties of the appellant were sold in execution at the instance of the
respondents who were executing the ex parte decree passed by the District Judge
on March 9, 1943. In this execution case, the properties of the appellant were
sold and the respondents got delivery of possession on May 17, 1946. It is true
that the suit was eventually decreed after remand on August 27, 1954 by
judgment of the High Court, but we are unable to accept the argument of the
respondents that the execution sale held under the previous ex parte decree
which was set aside by the High Court, is validated by the passing of the
subsequent decree and therefore the appellant is not entitled to, any
restitution. It is evident that the application for restitution was filed by
the appellant in 1947 in Miscellaneous Judicial Case, No. 34 of 1947 before the
passing of a fresh decree by the High Court in the Second Appeal. At the time
of the application for restitution, therefore, the appellant was entitled to
restitution,. because on that date the decree in execution of which the
properties. were sold had been set aside. We are of the opinion that the
appellant is entitled to restitution notwithstanding anything which happened
subsequently as the right to claim restitution is based upon the existence or
otherwise of a decree in favour of the plaintiff' at the time when the
application for restitution was made. The principle 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 benefit of the erroneous decree to
make restitution to the other party for what he has lost. This obligation
arises automatically on the reversal or modification of the decree and'
necessarily carries with it the right to restitution of all that has been done
under the erroneous decree; and the Court in making restitution is bound to
restore the parties, so far as they can berestored, to the same position they
were in at the time when the Court by its erroneous action had displaced them
from. It should be noticed, in the present case, that the properties were
purchased' by the decree-holder himself in execution of the ex-parte decree and
not by a stranger auction-purchaser. After the ex-parte decree 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 the decree-holder who
purchased the properties in executions of the invalid decree is bound to
restore to the judgment-debtor what he had gained under the decree which was
subsequently set aside. The view that we have expressed is borne out by the
decision of the Judicial Committee in Zain-Ul-Abdin Khan v. 28 Muhammad Asghar
Ali Khan(1) in which a suit was brought by the judgment-debtor to set aside the
sale of his property in execution of the decree against him in force at the
time of the sales, but afterwards so modified, as the result of an appeal to
Her Majesty in Council, that, as it finally stood, it would have been satisfied
without the sales in question having taken place. The judgment debtor sued both
those who were purchasers at some of the sales, being also holders of the
decree to satisfy which the sales took place, and those who were bona fide
purchasers at other sales, under the same decree, who were no parties to it.
The Judicial Committee held that, as against the latter purchasers, whose
position was different from that of the decree-holding purchasers, 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 a great distinction
between the decree-holders who came in and purchased under their own decree,
which was afterwards reversed on appeal, and the bona fide purchasers who came
in and bought at the sale in execution of the decree to which 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." The same principle has been laid down by
the Calcutta High Court in Set Umedmal and another v. Srinath Ray and another
(2 ) where certain immovable properties were sold in execution of an exparte
decree and were purchased by the decree-holder himself. After the confirmation
of the sale, the decree was set aside under S. 108 of the Civil Procedure Code,
1882 at the instance of some of the defendants in the original suit. On an
application unders. 244 of the Civil Procedure Code, 1882 having been made by
adecree, to set aside the sale held in execution of the ex-parte decree the
defence was that the 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 held by the Calcutta High Court that the ex-parte decree
having been set aside the sale 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, (1)
I.L,R. 10 All, 166.
(2) I.L.R. 27 Cal. 810.
29 the fact that the decree-holder is himself
the auction purchaser is an element of considerable importance. The distinction
between the case of the decree-holder and of a third party being the auction
purchaser is pointed out by their Lordships of the Judicial Committee in the
case of Nawab Zainal-abdin Khan v. Mahommed Asghar Ali (I.L.R. 10 All., 166),
and also in the case of Mina Kumari Bibee v. Jagat Sattani Bibee (I.L.R. 10
Cal., 220), which is a clear authority for the proposition that where the
decree-holder is himself the auction-purchaser, the sale cannot stand, if the
decree be subsequently set aside. I am not aware that this decision, which was
given in 1883, has since been impugned." The same view has been expressed
in Raghu Nandan Singh v.
Jagdish Singh(1) where it was held that if an
ex-parte decree has been set aside, it cannot by any subsequent proceeding be
revived and if a decree is passed against judgment-debtors on re-hearing, it is
a new decree and does not revive the former decree. The same opinion has been
expressed in Abdul Rahaman v. Sarafat Ali(2) in which it was pointed out that
as soon as an ex-parte decree was set aside, the sale, where the decree-holder
was the purchaser, falls through and was not validated by a fresh decree
subsequently made. The same principle was reiterated by the Bombay High Court
in Shivbai Kom Babya Swami v. Yesoo.(3).
In that case, an ex-parte decree was passed
against the defendant, in execution of which the defendant's house was sold and
purchased by the plaintiff decree-holder. The exparte decree was subsequently
set aside; but at the retrial, a decree was again passed in plaintiffs favour.
In the meanwhile, the defendant applied to have the sale of the house set
aside. It was held, in these circumstances, by the Bombay High Court that the
previous sale of the house in execution under the previous decree which had
been set aside should itself be set aside as being no longer based on any solid
foundation; but subject in all the circumstances to the condition that the
defendant should pay up the amount due under the second decree within a
On behalf of the respondents reference was
made to the decision of this Court in Lal Bhagwant Singh v. Rai Sahib Lala Sri
Kishen Das. (4 ) But the ratio of that case has no application to the present
case. It should be noticed that the decree in that case was affirmed at all
stages of the litigation except that the amount of (1) 14 Calcutta Weekly
(3) I.L.R. 43 Bom. 235.
(2) 20 Calcutta Weekly Notes, 667.
(4)  S.C.R. 559.
30 the decree was slightly altered from Rs.
3,38,300 and odd to Rs. 3,76,790 and odd which amount was ultimately decreed by
the Privy Council in the appeal which the judgment-debtor preferred from the
decision of the Oudh Chief Court which restored the decree of the trial Judge
who decreed a sum of Rs. 3,88,300. It was held by this Court that the Privy
Council had merely restored the amended decree without altering the provisions
as to payment by installments or extending the time for payment by installments
and its decree did not in any way alter the position of the parties as it stood
under the amended decree, and, the sale was not in consequence of any error in
a decree which was reversed on appeal by the Privy Council and so the judgment
debtor was not entitled to restitution. In the present case the material facts
are manifestly very different.
For the reasons expressed, we are satisfied
that the appellant is entitled to restitution of the properties sold in
execution of the export decree subject to equities to be adjusted in favour of
the respondent-decree holders. We order that the appellant should be restored
back to possession of the properties sold in the execution case subject to the
condition that he deposits the amount of Rs.
970 in the Court of the Munsif, Aska within
two months from this date. If no deposit is made within this time this appeal
will stand dismissed with costs. But if the appellant makes the deposit within
the time allowed the sale of the properties in the execution case will be set
aside and the respondents will make over the possession of the properties sold
to the appellant. The appellant will not be entitled to any past mesne profits
but if the respondents do not deliver the possession of the properties the
appellant will be entitled to the future mesne profits from the respondents
from the date of deposit till the actual date of delivery of possession.
Learned Counsel for the appellant has informed us that the deposit has already
been made by the appellant in pursuance of the order of the learned Single
Judge of the High Court, dated October 3, 1958. If the deposit has already been
made the appellant will be entitled to take possession of the properties
through the executing court and to future mesne profits from the date of this
judgment till the actual date of delivery of possession.
We accordingly allow the appeal to the extent
indicated above. In the circumstances of the case we do not propose to make any
order as to costs.
Appeal allowed in part.