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Puni Devi Sahu And Another v. Jagannath Mohapatra .
Factual and Procedural Background
The plaintiffs purchased 1.60 acres of land (survey No. 277/2, Mouza Purusottampur) by registered sale deed dated 25-4-1967 for Rs. 4,000. When plaintiffs attempted possession, defendants 2 and 3 resisted. The plaintiffs instituted T.S. No. 26/67 on 11-8-1967 seeking recovery of possession or, alternatively, refund of the Rs. 4,000 they had paid to defendant No. 1.
The Subordinate Judge found title with defendants 2 and 3 but held that plaintiffs had paid Rs. 4,000 to defendant No. 1 and therefore granted the alternative relief of refund of the consideration amount with interest at 12% per annum (judgment delivered 27-10-1973). Plaintiffs initiated execution proceedings (E.P. No. 1/74) on 9-2-1974. Defendant No. 1 appealed (T.A. 3/74); an initial stay of execution was later vacated; T.A. 3/74 was dismissed on 5-10-1974. Defendant No. 1 filed Second Appeal S.A. 54/75.
In the execution proceedings, proclamation for sale was carried out (14-7-1975), sale held (21-7-1975), and plaintiff No. 2 was the highest bidder at Rs. 4,200; sale confirmed 26-8-1975; possession delivered 29-12-1975. This Court disposed of S.A. 54/75 on 17-11-1977, confirming refund of consideration but reducing interest from 12% to 6%.
Defendant No. 1 subsequently filed an application under Section 144, C.P.C. in the trial Court seeking restitution of possession (registered as KJC No. 67/78). The trial Judge allowed restitution on 31-1-1983, finding suppression of a valuation notice and fraud by the plaintiffs; the lower appellate Court (T.A. 18/83) affirmed. The present Second Appeal challenges those orders, raising whether the reduction of interest in S.A. 54/75 amounted to a variation of the decree entitling defendant No. 1 to restitution under Section 144, C.P.C.
Legal Issues Presented
- Whether the decree passed in T.S. No. 26/67 was "varied or reversed" by this Court in S.A. 54/75 merely by reduction of the rate of interest from 12% to 6%, thereby engaging Section 144, C.P.C., and permitting restitution.
- Whether, even if a variation occurred, the conditions for restitution under Section 144, C.P.C. were satisfied (i.e., whether the party applying was entitled to a benefit under the reversing decree and whether the relief claimed was properly consequential on the variation).
- Whether the courts below were justified in granting restitution on findings of suppression of valuation notice and fraud by the plaintiffs, as pleaded or established in the record.
Arguments of the Parties
Appellant's Arguments
- The decree in T.S. 26/67 was not varied by S.A. 54/75 except insofar as the rate of interest was reduced from 12% to 6%; such a reduction does not amount to a variation triggering Section 144, C.P.C.
- There was no pleaded or established fraud; the courts below erred in concluding that plaintiffs practised fraud in getting the property sold for Rs. 4,200.
Respondent's Arguments
- Reducing the rate of interest from 12% to 6% is a variance of the decree in law and therefore Section 144, C.P.C. applies.
- On reversal or modification of a decree, a party is entitled to restitution to restore the position as it would have been but for the erroneous decree; the courts below correctly ordered restitution.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| AIR 1932 Cal 303 | Holds that where an appellate court varies, modifies or reduces an item in the decree (e.g., costs), an application under Section 144, C.P.C. for restitution may be entertainable; but the judgment-debtor must show that the sale would not have taken place but for the higher decree. | The Court relied on this authority to show that a technical variance may make Section 144 available but that the applicant must prove the sale was the direct effect of the erroneous terms of the original decree before restitution is ordered. |
| AIR 1948 Mad 12 — Kuppa Sankara Sastri v. Kakumanu Varaprasad | Establishes that where a decree is reduced on appeal but the sale of property would have been inevitable even under the reduced decree, restitution need not be granted; mere reduction does not automatically entitle the judgment-debtor to set aside the sale. | The Court relied on this Madras decision to illustrate that restitution is inappropriate where the sale would have occurred regardless of the reduction in the decree; applied this principle to deny restitution in the present case. |
| AIR 1941 Pat 130 — Gansu Ram v. Mt. Parvati Kuer | Expresses a similar view (as in Calcutta and Madras authorities) that restitution should not be ordered where the sale or detriment would have been inevitable despite a later reduction/modification of the decree. | The Court cited this Patna authority as supporting precedent for refusing restitution where the altered decree would not have prevented the sale or loss suffered by the decree-holder. |
| AIR 1953 SC 136 — Lal Bhagwant Singh v. Sri Kishen Das | Sets out the equitable doctrine of restitution: on reversal the law obliges the recipient of the erroneous judgment's benefit to make restitution unless doing so would be clearly contrary to real justice; if the sale was inevitable under the amended decree, restitution is not permitted. | The Court relied on the Supreme Court's formulation to conclude that restitution should not have been ordered here because the reduction in interest did not produce the kind of prejudice that the doctrine of restitution is meant to redress. |
Court's Reasoning and Analysis
The Court began by identifying the central statutory provision, Section 144, C.P.C., and explaining its object: to prevent acts of Courts from working injury on suitors by providing restitution when a decree executed during the pendency of appeal is later reversed or varied. The Court described restitution as an equitable doctrine that depends on the facts and circumstances of each case.
The opinion distilled three conditions necessary for Section 144 to apply:
- The restitution sought must relate to a decree or order that has been varied or reversed;
- The party applying for restitution must be entitled to a benefit under the reversing decree or order;
- The relief claimed must be properly consequential on the reversal or variation of the decree or order.
The Court examined the meaning of "varied or reversed," noting dictionary definitions of "vary" and earlier judicial decisions showing that a technical variance (for example, reduction of costs or interest) would prima facie fall within the phrase as used in Section 144. It acknowledged that, technically, the High Court's reduction of interest from 12% to 6% was a variance.
However, the Court emphasized that a mere technical variance does not automatically entitle a party to restitution. The essence of the doctrine is that restitution aims to remove prejudice that resulted from the erroneous terms of the original decree — i.e., the prejudice must be the direct consequence of the error in the original decree. The Court therefore examined whether the reduction in interest constituted such a prejudicial variance that made restitution appropriate.
Relying on the cited authorities (including AIR 1932 Cal 303, AIR 1948 Mad 12, AIR 1941 Pat 130 and the Supreme Court in Lal Bhagwant Singh v. Sri Kishen Das, AIR 1953 SC 136), the Court explained the settled rule that where the sale or loss was inevitable even under the amended decree, restitution is not warranted. The applicant must show that but for the erroneous aspects of the original decree the execution (and resulting sale) would not have taken place.
Applying these principles to the facts, the Court concluded that the two courts below erred in granting restitution solely because there had been a variance in the decree by way of reduction of interest. The Court found that the requisite prejudice and causal connection (that the sale occurred as a direct effect of the erroneous higher interest rate) had not been established in a manner that justified restitution under Section 144, C.P.C.
Holding and Implications
Holding: APPEAL ALLOWED.
The Court set aside the judgments and decrees of the two courts below (the trial Court's restitution order dated 31-1-1983 and the lower appellate Court's confirmation) and allowed the Second Appeal. The opinion expressly states: "The judgments and decrees of the two Courts below cannot be sustained. In the result, the judgments and decrees of the two Courts below are set aside and the Second Appeal is allowed. There would be no order as to costs."
Direct consequences for the parties: the restitution orders made by the trial Court and affirmed by the lower appellate Court are vacated; the Second Appeal succeeds; there is no order as to costs. The opinion does not purport to establish any novel legal principle beyond applying existing authorities on Section 144, C.P.C., and accordingly it does not announce a new precedent beyond its application of settled doctrine to the facts of this case.
G.B Patnaik, J.:— The short question that arises for consideration in the present Second Appeal is whether the decree of the trial Judge passed in T.S No. 26 of 1967 can be said to have been modified or varied in Second Appeal No. 54/75 by which judgment this Court did not interfere with the decree directing refund of consideration money but reduced the rate of interest from 12 per cent to 6 per cent. The aforesaid question crops up for consideration in view of the order of restitution passed under Section 144, C.P.C Section 144, C.P.C is extracted hereinbelow in extenso:
“144. Application for restitution.
(1) Where and in so far as a decree or an order is varied or reversed in any appeal, revision or other proceeding or is set aside or modified in any suit instituted for the purpose, the Court which passed the decree or order 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 order of such part thereof as has been varied, reversed, set aside or modified 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, reversal, setting aside or modification of the decree or order.
Explanation— For the purpose of sub-section (1), the expression “Court which passed the decree or order” shall be deemed to include—
(a) where the decree or order has been varied or reversed in exercise of appellate or revisional jurisdiction, the Court of first instance;
(b) where the decree or order has been set aside by a separate suit, the Court of first instance which passed such decree or order;
(c) where the Court of first instance has ceased to exist or has ceased to have jurisdiction to execute it, the Court which, if the suit wherein the decree or order was passed were instituted at the time of making the application for restitution under this section would have jurisdiction to try such suit.
(2) No suit shall be instituted for the purpose of obtaining any restitution or other relief which could be obtained by application under sub-section (1).”
In view of the expression “varied or reversed” used in Section 144(1) which would entitle a Court to entertain an application for restitution and pass appropriate orders thereon, the aforesaid question has arisen for consideration.
2. 1.60 acres of land appertaining to survey No. 277/2 in Mouza Purusottampur was purchased under a registered sale deed dated 25-4-1967 by the plaintiffs in T.S 26/67 for a consideration of Rs. 4000/-. When they attempted to take possession of the land, defendants 2 and 3 resisted and, therefore, the plaintiffs filed T.S 26/67 on 11-8-1967 for recovery of possession of the property or in the alternative for recovery of consideration amount which the plaintiffs had paid to defendant No. 1. The Subordinate Judge found the title of the property with defendants 2 and 3 but on the finding that the plaintiffs had paid the consideration amount of Rs. 4000/- to defendant No. 1 decreed the suit granting alternative relief of refund of consideration money together with interest at the rate of 12 per cent per annum from the date of the decree. The judgment in the suit was delivered on 27-10-1973. The plaintiffs then levied execution on 9-2-1974 for realisation of the decretal amount being Execution Proceeding No. 1/74. The judgment of the learned Subordinate Judge in T.S 26/67 was assailed in appeal by defendant No. 1 in T.A 3/74. The appellate Court stayed the execution proceeding in E.P No. 1/74 by order dated 10-4-1964 subject to the condition that defendant No. 1 would furnish personal security to the extent of Rs. 4000/- to the satisfaction of the Subordinate Judge and will pay cost accrued in favour of the plaintiffs. The said order of stay, however, stood vacated as the security bond furnished by defendant No. 1 was not registered. The T.A 3/74 was ultimately dismissed on merits by the lower appellate court on 5-10-1974. Defendant No. 1 preferred a second appeal against the aforesaid appellate judgment which was registered as S.A 54/75. In the execution proceeding in E.P No. 1/74 defendant No. 1 did not contest even though there was valid service of notice. In the said execution proceeding proclamation for sale was executed on 14-7-1975 and the sale was held on 21-7-1975. Plaintiff No. 2 being the highest bidder purchased the disputed property for a sum of Rs. 4200/- and the sale was confirmed on 26-8-1975. The said plaintiff No. 2 took delivery of possession of the suit premises on 29-12-1975. The Second Appeal No. 54/75 filed by defendant No. 1 was disposed of by this Court on 17-11-1977 and this Court though confirmed the judgments of the forums below with regard to the refund of consideration amount but directed that the said consideration amount would be paid along with the interest at the rate of 6 per cent instead of 12 per cent as directed by the trial Court. Defendant No. 1 then filed an application invoking the jurisdiction of the trial Court under Section 144, C.P.C for restitution of possession of the house in question and that application was registered as KJC No. 67/78. The learned trial Judge allowed the said application by order dated 31-1-1983 inter alia on the findings that the plaintiffs in T.S 26/67 had suppressed the valuation notice and had practised fraud upon the Court in getting the house sold for a sum of Rs. 4200/- which was grossly prejudicial to the interest of defendant No. 1 and that judgment of this Court in S.A 54/75 amounts to variance of the decree of the trial Judge thereby entitling the Court to grant the relief of restitution. The aforesaid judgment of the trial Court dated 31-1-1983 was appealed against by the plaintiff which was registered as T.A 18/83. The lower appellate Court dismissed the appeal having confirmed the findings of the trial Court and hence the present Second Appeal.
3. The learned counsel for the appellants contends that the decree passed by the trial Court in T.S 26/67 has not varied by this Court in S.A 54/75 and only the rate of interest granted by the trial Court has been reduced from 12 per cent to 6 per cent. Therefore, the decree in question not having been varied or reversed, the provisions of Section 144, C.P.C will have no application. It is further contended that in the absence of fraud being pleaded and there being no material to establish the same, the courts below committed gross error in coming to a conclusion that the plaintiffs had practised fraud in getting the house sold for a sum of Rs. 4200/-.
4. Mr. Murty appearing for the respondent, on the other hand, contends that the direction of the trial Court to refund the consideration amount paid by the plaintiffs to defendant No. 1 together with interest at the rate of 12 per cent being the decree and the High Court having reduced the rate of interest from 12 per cent to 6 per cent, in the eye of law it amounts to variance of the decree and, therefore, Section 144, C.P.C squarely applies. Mr. Murty further contends that on the reversal or modification of the decree a party has the right for restitution and the Court is bound to make restitution and restore the parties to the same position as they were at the time when the Court by its erroneous action had displaced therefrom and in that view of the matter, the two courts below rightly granted restitution.
5. In view of the rival submissions at the Bar the first question that arises for consideration is what is the true meaning of the expression “decree must have been varied or reversed”. Before examining the aforesaid, question, it would be appropriate to notice that the sole object and purpose of engrafting Section 144 into the Code is that the acts of Courts should not be allowed to work injury on the suitors. The doctrine of restitution contemplates suitors that if the property has been received by the holder under his decree but the decree is subsequently, wholly or partially, reversed or varied, then the judgment debtor can seek the relief of restitution. In other words, Section 144, C.P.C has been enacted for the purpose of granting restitution in a case where a decree might have been executed during the pendency of an appeal against it and the decree so executed was later on set aside on appeal partially or totally. The law raises an obligation on the party who received the benefit of the erroneous judgment to make restitution to the other party for what he had lost. In other words, the Court should pass an order consistent with justice to both the parties. Restitution, therefore, will necessarily have to depend on the facts and circumstances of each case and cannot be reduced to the form of an inflexible rule that Courts should have regard only to the detriment suffered by one party and not to the position of the other. The aforesaid doctrine is based on equitable principle and consequently cannot be applied in a case where it conflicts with another rule of equity. A person applying for restitution under Section 144, C.P.C therefore, must base his claim upon the very same rights as existed on the date on which he was dispossessed under the decree which is subsequently reversed or varied. In order that Section 144, C.P.C would be applicable three conditions are necessary to be satisfied, namely.
(i) the restitution sought must be in respect of the decree or order which had been varied or reversed;
(ii) The party applying for restitution must be entitled to a benefit under a reversing decree or order; and
(iii) The relief claimed must be properly consequential on the reversal or variation of the decree or order.
Bearing in mind the aforesaid objects for which the provisions for restitution has been engrafted into the Code of Civil Procedure, let me now examine the first question posed earlier.
6. The dictionary meaning of the word “vary” in Chambers is to make different; to diversify, modify; to alter or embellish preserving its identity, to change to something else; to be or become different; to deviate; to disagree. The word “varied” is adjective of the word “vary”. In Shorter Oxford English Dictionary the word “varied” has been given the meaning differing from one another; marked by variation or varied; presenting different forms or qualities. In AIR 1932 Cal 303 while dealing with Section 144, C.P.C, the learned Judges came to hold that in a suit for recovery of certain lands where the trial Court passes a decree with costs in favour of the plaintiff and the decree is executed and the property of the judgment-debtor is sold and purchased by the decree-holder in execution before the appeal preferred by the defendant is decided and the appellate court varies, modifies of reduces the amount of costs as decreed by the trial Court, then also an application under Section 144, C.P.C for restitution would be entertainable but the defendant-judgment-debtor would be required to establish to the satisfaction of the Court that the property would not have been sold if the decree of the trial court had been for an amount less than the one actually passed by it and that, therefore, the sale was an effect of that error.
7. The original decree passed in T.S 26/67 being refund of consideration amount of Rs. 4000/- together with interest at the rate of 12 per cent per annum and the High Court in Second Appeal having reduced the rate of interest from 12 per cent to 6 per cent, technically it would amount to a variance of the decree and, therefore, in term Section 144, C.P.C may be applicable. But merely on the ground that there has been a variance of the decree, relief of restitution cannot be granted. A person who has suffered any loss by reason of the decree or order can only claim restitution on the reversal or variation of the decree or order. As has been stated earlier the party applying for restitution must be entitled to a benefit under decree varied and the relief claimed must be consequential on the variance of the decree. The object of the principle of restitution being to place a party who has been prejudicially affected by a decree which has been varied in the same position as he would have occupied if the decree stood originally in the same terms as it stood after variation. The prejudice to be removed by restitution must be the result of the erroneous terms of the original decree. In AIR 1948 Mad 12 (Kuppa Sankara Sastri v. Kakumanu Varaprasad) where a decree was scaled down under debt relief legislation and the original decree for Rs. 8000/- was modified in appeal into a decree of Rs. 7500/- but in the meanwhile properties were sold for Rs. 7000/- to Rs. 3000/- in execution of the original decree to the decree holder himself, the High Court of Madras held that whether the decree was for Rs. 8000/- or Rs. 7500/- the property Y should necessarily have been sold and that therefore B was not prejudiced by the sale and that the sale ought not to be set aside by applying the principle of restitution. The same view has been expressed by the Calcutta High Court in AIR 1932 Cal 303 (supra) and also in Patna High Court in AIR 1941 Pat 130 (Gansu Ram v. Mt. Parvati Kuer). Their Lordships of the Supreme Court in the case of Lal Bhagwant Singh v. Sri Kishen Das, AIR 1953 SC 136 held (at p. 139):
“An order of restitution in the manner asked for in the circumstances of this case would be contrary to the principles of the doctrine of restitution which is that on the reversal of a judgment the law raises an obligation on the party to the record who received the benefit of the erraneous judgment to make restitution to the other party for what he had lost and that it is the duty of the Court to enforce that obligation unless it is shown that restitution would be clearly contrary to the real justice of the case.”
Where the decree-holder has derived no advantage to which he was not entitled and the judgment-debtor has lost nothing and in either event he had to discharge and satisfy the decretal debt due from him, the question of applying the principle of restitution does not arise. Their Lordships held (at p. 139):
“The sale being inevitable under the amended decree, the judgment-debtor was clearly not entitled to restitution.”
Applying the aforesaid principle to the case in hand, I have no doubt in my mind that the relief of restitution could not have been granted. The two Courts below committed gross error in allowing restitution merely on a finding that there has been a variance of the decree as the rate of interest was reduced from 12 per cent to 6 per cent. The said judgments and decrees of the two Courts below cannot be sustained. In the result, the judgments and decrees of the two Courts below are set aside and the Second Appeal is allowed. There would be no order as to costs.
Appeal allowed.
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