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Beni Madho Singh v. Pran Singh And Ors.
Factual and Procedural Background
The appellant (decree-holder) obtained a mortgage decree on 29 June 1907, confirmed on appeal on 2 December 1908. Execution followed; the mortgaged properties were sold and purchased by the decree-holder in the name of another on 25 November 1910, and possession was delivered. An application for reversal of the sale was made on 21 March 1910; the primary Court dismissed it on 18 August 1910, but this Court set aside the sale on 28 August 1911. On remand, the judgment-debtors applied for restoration to possession; the decree-holder objected under Section 144, and simultaneously applied for appointment of a Receiver. The Subordinate Judge restored possession to the judgment-debtors and refused the Receiver; the decree-holder appealed both orders to this Court.
Legal Issues Presented
- Whether restitution (restoration to possession and refund of profits) should be ordered following the setting aside of a sale held in execution, and whether Section 144 or inherent judicial power permits such restitution.
- Whether a Receiver should be appointed over the mortgaged properties pending further execution of the mortgage-decree.
Arguments of the Parties
Decree-holder (Appellant) — Arguments
- Section 144 of the Code of 1908 does not apply because what was reversed was the sale held in execution and not the original decree.
- Section 141 is of no assistance because, per Thahur Prasad v. Fakirullah, Section 647 of the Code of 1882 (replaced by Section 141) was not applicable to execution proceedings.
- For appointment of a Receiver: mortgage securities date to 1900, decree 1907, no payments of principal or interest, dispute as to property value, and alleged insufficiency of security justify a Receiver.
Judgment-debtors (Respondents) — Arguments
- They sought restoration to possession after the sale was set aside.
- They argued that appointment of a stranger as Receiver may cause needless costs, and that placing properties in the hands of a Receiver might hamper their ability to transfer portions of the mortgaged properties to satisfy the debt.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Thahur Prasad v. Fakirullah 22 I.A. 44 : 17 A. 106 | Held that Section 647 of the Code of 1882 (replaced by Section 141 of the Code of 1908) was not applicable to proceedings in execution of decrees. | Cited by appellant to argue Section 141 is inapplicable to execution proceedings. |
| Mookoond Lal Pal Chowdhry v. Mahomed Sami Meah 14 C. 484 | Illustration of Court's power to grant restitution outside strict statutory provisions. | Referred to as authority, accepted as good law in Raja Singh v. Kooldip Singh. |
| Raja Singh v. Kooldip Singh 21 C. 989 | Accepted Mookoond Lal Pal Chowdhry as good law regarding restitution. | Used to support proposition that Court's power to grant restitution is not confined to Section 144. |
| Dinesh Prasad v. Sankar Chaudhury 2 C.L.J. 537 | Example of restitution ordered though case did not fall strictly within Section 583 of the Code of 1882. | Listed among illustrations supporting restitution outside strict statutory scope. |
| Radhey Singh v. Mangni Ram 6 C.W.N. 710 | Illustration of restitution ordered though not strictly within Section 583 of the Code of 1882. | Listed as illustration of broader restitution power. |
| Collector of Meerut v. Kalka Pershad 28 A. 665 : A.W.N. (1906) 171 : 3 A.L.J. 556 | Illustration of restitution ordered though not strictly within Section 583 of the Code of 1882. | Listed among cases showing restitution beyond statutory confines. |
| Shiam Sunder Lal v. Kaisar Zamani Begam 29 A. 143 : 4 A.L.J. 19 : A.W.N. (1906) 315 | Illustration of restitution ordered though not strictly within Section 583 of the Code of 1882. | Listed as an illustrative case. |
| Rodger v. Comptior d'Escompte de Paris L.R. 3 P.C. 465 : 40 L.J. P.C. 1 : 24 L.T. 111 : 19 W.R. 449 : 7 Moore P.C. (N.S.) 314 | Principle that Court will restore parties to the position they would have occupied but for an erroneous order which has been reversed; Court will not permit an injustice to be done by reason of an erroneous order. | Explained the principle underpinning restitution; relied upon to justify restoration despite statutory limits. |
| Prag Narain v. Kamakhia. Singh 10 C.L.J. 257 : 11 Bom. L.R. 1200 : 6 M.L.T. 303 : 3 Ind. Cas. 298 : 31 A. 551 : 14 C.W.N. 55 : 19 M.L.J. 599 : 13 O.C. 180 | Supported the same restorative principle as Rodger's case. | Cited to show consistent application of restoration principle by this Court. |
| Panchanan Singha v. Dwarka Nath Roy 3 C.L.J. 29 | Illustrative of decisions aligned with the principle embodied in Section 151 of the Code of 1908. | Referred to in connection with legislative sanction (Section 151) for inherent powers. |
| Hukum Chand v. Kamalanand 3 C.L.J. 67 : 33 C. 927 | Illustrative of decisions aligned with the principle embodied in Section 151 of the Code of 1908. | Cited as authority showing acceptance of inherent powers sanctioned by Section 151. |
| Udit Chobey v. Rashika Prasad 6 C.L.J. 662 : 3 M.L.T. 41 | Illustrative of decisions aligned with the principle embodied in Section 151 of the Code of 1908. | Referred to in support of Section 151's sanction of inherent powers. |
| Weatherall v. Eastern Mortgage Agency 13 C.L.J. 495 : 9 Ind. Cas. 985 | Authority supporting appointment of a Receiver in circumstances of inadequate security and unpaid sums. | Relied upon to support allowing appointment of a Receiver. |
| Khubsurat Koer v. Saroda Charan 14 C.L.J. 526 : 16 C.W.N. 126 : 12 Ind. Cas. 165 | Authority supporting appointment of a Receiver. | Relied upon to justify appointment of a Receiver in the present facts. |
Court's Reasoning and Analysis
First appeal (restitution): The Court considered the appellant's contention that Section 144 did not apply because the sale (not the decree) was reversed and that Section 141 was inapplicable per Thahur Prasad. The Court held it unnecessary to rely on Sections 141 or 144 because the power to grant restitution is not confined to Section 144; the Court has an inherent power to order restitution. The Court cited Mookoond Lal Pal Chowdhry (accepted in Raja Singh) and several illustrative cases (Dinesh Prasad; Radhey Singh; Collector of Meerut; Shiam Sunder Lal) showing restitution outside strict statutory scope. The Court relied on the restorative principle explained in Rodger v. Comptior d'Escompte de Paris and applied it in line with Prag Narain. Section 151 of the Code of 1908 was cited as legislative sanction for the inherent power. Consequently, the Court concluded that the judgment-debtors must be restored to possession and entitled to refund of profits (mesne profits), to be ascertained by the Court below and set off against the decretal amount.
Second appeal (Receiver): The Court examined facts put forward by the decree-holder: earliest mortgage 1900, decree 1907, no payments of principal or interest, dispute over property value, and alleged insufficiency of security. On these facts the Court considered appointment of a Receiver appropriate, relying on Weatherall v. Eastern Mortgage Agency and Khubsurat Koer v. Saroda Charan. The Court set aside the Subordinate Judge's refusal, allowed the appeal, and remanded for appointment of a suitable Receiver. The Court directed preference be given to any competent judgment-debtor to act as Receiver, allowed judgment-debtors to transfer properties with the leave of the Court despite the Receiver, and directed that sums collected by the Receiver be brought into Court and applied under the Judge's direction (part for maintenance of judgment-debtors, remainder credited to satisfy the mortgage-decree).
Holding and Implications
Holding: First appeal dismissed. The Court upheld the restoration order: the judgment-debtors are to be restored to possession of the properties sold in execution and are entitled to a refund of profits (mesne profits) collected while the decree-holder was in possession, to be ascertained and set off against the decretal amount.
Second appeal allowed. The Subordinate Judge's refusal to appoint a Receiver is set aside; the case is remanded for appointment of a suitable Receiver with directions (preference to a competent judgment-debtor, leave to judgment-debtors to transfer property with Court leave, Receiver to bring sums into Court and apply them for maintenance and decree satisfaction).
Implications: The decision restores possession to the judgment-debtors and requires ascertainment and refund/adjustment of mesne profits; it also authorizes appointment of a Receiver under specified conditions. The opinion does not purport to lay down a novel legal precedent beyond applying established restorative and receiver principles cited.
1. These appeals are directed against two orders made in execution proceed-mgs. The appellant, as plaintiff in a mortgage suit, obtained a decree on the 29th June 1907 which was confirmed by this Court on appeal on the 2nd December 1908. Execution was taken out in due course, the mortgaged properties were sold and were purchased by the decree-holder in the name of another person on the 25th November 1910. The auction-purchaser then obtained delivery of possession through the Court. Application was, however, made on the 21st March 1910 for reversal of the sale. That application was dismissed by the primary Court on the 18th August 1910, but upon appeal to this Court, the sale was set aside on the 28th August 1911. On the return of the records to the Court below, the judgment-debtors applied that they might be restored to possession of their properties. The decree-holder objected to the grant of this application on the ground that it could not be entertained under Section 144 of the Code of 1908. At the same time, the decree-holder applied for the appointment of a Receiver to take charge of the properties pending further proceedings inexecution. The Subordinate Judge has granted the application of the judgment-debtors and directed the decree-holder, auction-purchaser, to restore the properties to their custody. The Subordinate Judge has also dismissed the application of the decree-holder for the appointment of a Receiver. The appeals now before us are directed against these two orders.
2. In support of the first of these appeals, it has been argued on behalf of the decree-holder-appellant that inasmuch as Section 144 has no application to the circumstances of this case, the application for restitution should be dismissed. Section 144 provides that, where and in so far as a decree is varied or reversed, the Court 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. It has been contended on behalf of the appellant that what has been reversed in the present case is not the original decree but the sale which was held in execution of that decree, and that, consequently, Section 144 has no application. It has further been argued that Section 141, which lays down that the procedure provided in the Code in regard to suits shall be followed, as far as it can be made applicable, in all proceedings in any Court of Civil jurisdiction, is of no assistance in view of the decision of their Lordships of the Judicial Committee in Thahur Prasad v. Fakirullah. 22 I.A. 44 : 17 A. 106 where it was ruled that Section 647 of the Code of 1882, which was re-placed by Section 141 of the Code of 1908 was not applicable to proceedings in execution of decrees. Assuming these positions (o be sound, it is, in our opinion, not necessary to support the order of the Court below by a reference either to Section 141 or Section 144 of the Code. It is well settled that the power of a Court to grant restitution is not confined to the cases covered by the provisions of section 144. The power extends also to cases which do not come strictly within the section, because the Court has an inherent right, irrespective of the section, to order restitution. In support of this proposition reference may be made to the decision of Sir Comer Petheram, C.J., in Mookoond Lal Pal Chowdhry v. Mahomed Sami Meah 14 C. 484 which was accepted as good law in Raja Singh v. Kooldip Singh 21 C. 989. The cases of Dinesh Prasad v. Sankar Chaudhury 2 C.L.J. 537; Radhey Singh v. Mangni Ram 6 C.W.N. 710; Collector of Meerut v. Kalka Pershad 28 A. 665 : A.W.N. (1906) 171 : 3 A.L.J. 556 and Shiam Sunder Lal v. Kaisar Zamani Begam 29 A. 143 : 4 A.L.J. 19 : A.W.N. (1906) 315 furnish illustrations of cases in which orders have been made for restitution, though the cases do not fall strictly within the scope of Section 583 of the Code of 1882. The principle upon which restitution is directed in such cases was explained by the Judicial Committee in Rodger v. Comptior d'Escompte de Paris L.R. 3 P.C. 465 : 40 L.J. P.C. 1 : 24 L.T. 111 : 19 W.R. 449 : 7 Moore P.C. (N.S.) 314. That principle is that the Court will not permit an injustice to be done by reason of an erroneous order made by it; when that erroneous order has been reversed, the Court will restore the parties to the position which they would otherwise have occupied. The same principle underlies the decision of this Court in Prag Narain v. Kamakhia. Singh 10 C.L.J. 257 : 11 Bom. L.R. 1200 : 6 M.L.T. 303 : 3 Ind. Cas. 298 : 31 A. 551 : 14 C.W.N. 55 : 19 M.L.J. 599 : 13 O.C. 180. It has not been disputed by the learned Vakil for the appellant that the Court has inherent power to make an order of this description; in fact, the position cannot be disputed in view of Section 151 of the Code of 1908 which gives Legislative sanction to the principle embodied in the decisions of this Court in Panchanan Singha v. Dwarka Nath Roy 3 C.L.J. 29; Hukum Chand v. Kamalanand 3 C.L.J. 67 : 33 C. 927 and Udit Chobey v. Rashika Prasad 6 C.L.J. 662 : 3 M.L.T. 41. It follows, consequently, that the judgment-debtors are not only entitled to be restored to possession of the properties sold in execution but also to a refund of the profits which have been or might have been collected by- the decree-holder auction-purchaser during the period he was in possession. The Court below, before execution is taken out again, will ascertain the amount of such mesne profits which will be set off against the decretal amount. The result, therefore, is that, in so far as the first appeal is concerned, it must be dismissed.
3. In so far as the second appeal is concerned, it is directed against the order of the Subordinate Judge refusing to appoint a Receiver of the mortgaged properties pending further execution of the mortgage-decree. It has been pointed out to us by the learned Vakil for the appellant that the earliest of the mortgage securities was granted so far back as 1900. The decree was made in 1907 and no payment has ever been made in respect of either the principal sum or of the interest which has accrued due. There is also a substantial dispute between the parties as to the value of the properties covered by the mortgage, and the decree-holder maintains that they do not afford sufficient security for the mortgage-debt with the ever-increasing interest. Under these circumstances, we are of opinion that the decree-holder is entitled to ask for the appointment of a Receiver. The view we take is supported by the decisions of this Court in the cases of Weatherall v. Eastern Mortgage Agency 13 C.L.J. 495 : 9 Ind. Cas. 985 and Khubsurat Koer v. Saroda Charan 14 C.L.J. 526 : 16 C.W.N. 126 : 12 Ind. Cas. 165. The result, therefore, is that the second appeal must be allowed, the order of the Subordinate Judge set aside, and the case remanded to him in order that he vmj appoint a suitable person as Receiver.
4. The learned Vakil for the judgment-debtors-respondents has argued that if a stranger is appointed Receiver, costs may be needlessly incurred. We, therefore, direct that if there is any one amongst the judgment debtors competent to be appointed Receiver, the first chance should be given to him. An apprehension has also been expressed that if the properties are placed in the hands of a Receiver, the judgment-debtors would be hampered in their endeavour to transfer a portion of the mortgaged properties for satisfaction of the mortgage-debt. To guard against this contingency, we declare that the judgment-debtors will be at liberty, in spite of the appointment of a Receiver, to transfer the properties with the leave of the Court and to pay in the proceeds with a view to satisfy the judgment-debt. We further direct that when a Receiver has been appointed, the sum collected by him should be brought into Court and applied by him under the direction of the learned Judge, a portion to be paid to the judgment-debtors for their maintenance and the remainder credited to the satisfaction of the mortgage-decree. We make no order as to the costs of either appeal.
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