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Citation Codes
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citation codes
Acts
  • provisions of Sections 69 and 70 of the Indian Contract Act.
  • Section 310A of the Code of Civil Procedure of 1832,
  • Section 70 of the Indian Contract Act.
  • Section 159 of the Bengal Tenancy Act
  • Section 310 A of the Code of 18S2.
  • Section 310 A of the Code of 1882,
  • Public Demands Recovery Act
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Acts
  • provisions of Sections 69 and 70 of the Indian Contract Act.
  • Section 310A of the Code of Civil Procedure of 1832,
  • Section 70 of the Indian Contract Act.
  • Section 159 of the Bengal Tenancy Act
  • Section 310 A of the Code of 18S2.
  • Section 310 A of the Code of 1882,
  • Public Demands Recovery Act
Smart Summary

Factual and Procedural Background

The plaintiffs, mortgagees of certain properties, commenced an action to recover a sum paid by them under Section 310A of the Code of Civil Procedure (referenced in the opinion) to set aside a sale in execution of a decree for arrears of rent. The plaintiffs had obtained decrees to enforce their securities on 29 January 1901 and 8 February 1904. The superior landlord obtained a decree for arrears of rent against the registered tenant on 7 December 1901 and subsequently caused a sale in execution on 21 December 1904 after partial payments left the rent-debt unpaid. The plaintiffs deposited (on 20 January 1905) a sum sufficient under Section 310A of the Code of 1882 to reverse that sale, and the sale was set aside on 11 February 1905. On 20 January 1908 the plaintiffs sued to recover the money deposited, together with interest and costs. The Courts below decreed the suit for the plaintiffs, and the present appeal is by the defendants challenging that decree.

Legal Issues Presented

  1. Whether the payment made by the plaintiffs to set aside the sale was voluntary such that they are not entitled to restitution from the defendants.
  2. Whether the fact that the plaintiffs had obtained decrees on the basis of their mortgages altered their status so that they no longer had an encumbrance or interest protectable under the Tenancy/Code provisions (i.e., whether obtaining a decree extinguished the mortgagee's lien).
  3. Whether Section 70 (and Section 69) of the Indian Contract Act apply so as to entitle the plaintiffs to restitution or compensation for the lawful payment made not intending to be gratuitous.
  4. Whether the decree should have determined the separate liability of each of the several defendants (i.e., whether the plaintiffs were required to seek contribution or separate adjudication of each defendant's share).

Arguments of the Parties

Appellant's Arguments

  • The payment was voluntary and therefore the plaintiffs are not entitled to restitution from the defendants.
  • Because the plaintiffs had obtained decrees on their mortgage securities, their interest was not affected by the sale in execution of the rent-decree; in other words, once a mortgagee obtains a decree, he ceases to have any lien on the tenure and so has no encumbrance to protect.
  • The case falls beyond the operation of Sections 69 and 70 of the Indian Contract Act; Section 69, in particular, does not apply because the defendants (as judgment-debtors under the rent-decree) were not bound by law to make the Section 310A payment to set aside the sale.
  • Implicitly (or alternatively) that Section 70 should not apply because, by analogy to Yogambal Boyee v. Naina Pillai (Madras), the term "enjoys" in Section 70 should be interpreted as "accepts and enjoys" and hence would not cover benefits that a person could not refuse or was compelled to accept.

Respondents' Arguments

The opinion does not contain a detailed account of the respondents' legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Paresh Nath Singha v. Nobo Gopal Chattopadhaya, 29 C. 1 That if the plaintiffs had not obtained a decree on the basis of their mortgage, they would have been entitled to have the sale set aside under Section 310A. The court treats this decision as establishing that absent a mortgagee's decree the plaintiffs would have had the right to set aside the sale; it is used to frame the question whether obtaining a decree alters that position.
Bibijan Bibi v. Sachi Bewa, 21 C. 863 The security is not extinguished until the sale in execution of the mortgage-decree has taken place and the proceeds have been distributed in satisfaction of the mortgagee's claim. Used to support the proposition that a mortgagee's lien (encumbrance) continues to subsist after obtaining a decree until execution sale and distribution, thereby countering the appellants' contention.
Surjiram Marwari v. Barhamdeo, 2 C.L.J. 202 Applied the principle that a mortgagee's security is not extinguished until sale and distribution on execution. Referenced as supporting authority for the continuation of the mortgagee's encumbrance despite the obtaining of a decree.
Bhawani Koer v. Muthura Prasad, 7 C.L.J. 1 Applied the same principle regarding continuation of the mortgagee's security until execution sale and distribution. Referenced alongside other authorities to support the same legal principle.
Drake v. Mitchell, 3 East 251 : 7 R.R. 449 (Lord Ellenborough) The principle that a judgment recovered remains a security for the original cause of action until it is made productive by satisfaction to the party. Quoted to illustrate that a decree does not convert or extinguish the underlying security until it is realized in satisfaction; used in reasoning against the appellant's contention.
Moharanee Dasya v. Harindra Lal Roy, 1 C.W.N. 458 In the cited case the purchaser at the sale in execution of the mortgage-decree acquired the property subject to pre-existing rent charges; when, as full owner, he paid the rent charge he could not recover it from the judgment-debtor. The court distinguishes this authority as factually different from the present case and thus not controlling here.
Manindra Chunaer Nundy v. Jawaher Kumari Bibi, 9 C.W.N. 670 Same factual situation as Moharanee Dasya: purchaser acquired property subject to rent charges and could not recover payment from judgment-debtor. Also distinguished by the court as not applicable to the facts of the present case.
Akhoy Kumar v. Bejoy Chand, 29 C. 813 (dictum at p. 818) A dictum that was cited but the court states it cannot be taken to involve a final decision on the point under discussion. Not treated as controlling; the opinion notes the dictum but declines to treat it as a final adjudication of the issue.
Bepin Behary Sarnokar v. Kali Dass Chatterjee, 6 C.W.N. 336 Case where person who made payment to set aside sale had not had his interest affected by the sale sought to be reversed. Noted as a case of different character (and supporting appellant's contention in that limited factual class) but distinguished on facts from the present matter.
Baikunta Nath Dev v. Udoy Chand Maiti, 2 C.L.J. 311 Sale under the Public Demands Recovery Act passes only the right, title and interest of the judgment-debtor; the payer's interest was unaffected in that case. Also cited as a distinct factual precedent and not directly applicable to the present case.
Smith v. Dinonath, 12 C. 213 Listed among authorities that run counter to the appellant's contention. Relied upon as precedent that militates against the appellant's argument (supporting the plaintiffs' position).
Jugdeo Narain Singh v. Raja Singh, 15 C. 656 Listed among authorities opposing the appellant's contention. Identified as precedent that undermines the appellant's position and supports the opposite view.
Abdul Wahid Khan v. Shaluka Bibi, 21 C. 496 : 21 I.A. 26 Listed among authorities opposing the appellant's contention. Used as one of several authorities which "militate against" the appellant's argument.
Bindu Bashini Dassi v. Harendra Lal Roy, 25 C. 305 : C.W.N. 150 Listed among authorities opposing the appellant's contention. Used by the court to show there are reported decisions contrary to the appellant's view.
Upendra Chandra Mitter v. Tara Prosanna Mukerjee, 30 C. 794 Listed among authorities opposing the appellant's contention. Also cited as authority that militates against the appellant's argument.
Yogambal Boyee v. Naina Pillai, 33 M. 15 : 3 Ind. Cas. 110 : 6 M.L.T. 162 : 19 M.L.J. 489 (Madras) Held that Section 70 has no application where payment is made under circumstances making it impossible for the person benefited to refuse the benefit; construed "enjoys" as "accepts and enjoys." The court considered this narrower construction but rejected it, declining to adopt that restrictive interpretation of Section 70.
Mahendra Ghoshal v. Bhuban Mardana, 12 C.L.J. 566 : 6 Ind. Cas. 810 : 38 C. 1 : 14 C.W.N. 945 Payment made under section 3101 (as cited) of the Code of 1882 was treated as a valid payment for the purposes of Section 70 of the Indian Contract Act. Relied upon by the court as authority supporting the proposition that Section 70 covers such payments; used to support the court's acceptance of Section 70 in the present case.
Hurt Das v. Panchkowri, 9 Ind. Cas. 615 Cited in relation to Section 70; noted not to really militate against the court's view. The court observed that this decision does not materially conflict with the view the court adopts.
Matichand v. Bajrang Sahai S.A. No. 1878 of 1909 Explained the nature of suits for contribution. Used to explain that the present suit was not one for contribution and that the plaintiffs were entitled to a joint decree against all defendants.

Court's Reasoning and Analysis

The court proceeded by addressing each major contention in turn, applying statutory text and cited authorities.

1. On the contention that the payment was voluntary: the court rejected the argument that payment was voluntary and thus non-recoverable. It noted first that even if the plaintiffs had obtained decrees on their mortgages, that did not necessarily mean they had no interest to protect. The court relied on the legal framework in the Bengal Tenancy Act (Sections 159 and 161 as cited) to show that a mortgage created by a tenant is a lien on the tenure and thus an "encumbrance" for the purposes of the tenancy statutes.

2. On whether obtaining a decree extinguished the mortgagee's lien: the court reasoned that a decree does not automatically extinguish the underlying mortgage-security as an encumbrance on the property. It relied on authority (Bibijan Bibi v. Sachi Bewa and others) and the principle expressed by Lord Ellenborough in Drake v. Mitchell that a judgment or decree remains a security for the original cause until it is made productive by satisfaction. On this basis the court held that the appellants' contention that the mortgagee's lien ceased upon obtaining a decree was unsound.

3. Distinguishing adverse precedents: the court examined cases relied upon by the appellants (for example Moharanee Dasya and Manindra Chunaer Nundy) and explained they are distinguishable because in those cases the purchaser at the mortgage-decree sale had acquired the property subject to rent charges and, as full owner, discharged an obligation that belonged to him; thus those decisions do not decide the present factual matrix. The court also discussed other authorities and identified some that supported the plaintiffs' position.

4. On the applicability of Sections 69 and 70 of the Indian Contract Act: the court accepted that Section 69 did not apply for the stated reason (it concerns reimbursement where one pays money which another is bound by law to pay). However, the court concluded that Section 70 is sufficiently comprehensive to cover the present case. The court explained that the payment by the plaintiffs was lawful (they were entitled to deposit the money under Section 310A of the Code of 1882), made in the presence of the defendants (who, as judgment-debtors, were parties to the execution proceedings), and accepted by the Court. The court rejected a narrow construction of "enjoys" in Section 70 (as in Yogambal Boyee) and preferred the position that Section 70 covers lawful payments made for another where the other enjoys the benefit, even if acceptance was not voluntary in a narrow sense. The court cited Mahendra Ghoshal v. Bhuban Mardana as supportive authority for treating such a payment as within Section 70.

5. On the contention regarding determination of separate liability of each defendant: the court explained that this was not a suit for contribution (citing Matichand v. Bajrang Sahai) and that the plaintiffs were entitled to a joint decree against all defendants. The court noted that inter se adjustment among defendants could be made when the plaintiffs realize their dues by execution, if necessary.

6. After considering these points, the court concluded that the lower courts' decrees were rightly made in favour of the plaintiffs and that the appellants' objections lacked substance.

Holding and Implications

Holding: The decree of the Court below is affirmed and the appeal is DISMISSED. The order awards costs to the plaintiffs-respondents.

Implications:

  • Direct effect on the parties: The plaintiffs are entitled to recover the money they deposited under Section 310A (together with interest and costs as decreed below). The defendants (judgment-debtors) remain jointly liable to the plaintiffs under the decree; the plaintiffs need not determine the separate shares of each defendant in this suit.
  • Inter se adjustments: If necessary, defendants may sort out their respective liabilities between themselves when execution is effected; the plaintiffs have no interest in such inter se apportionment.
  • On legal principles: The court applies and reaffirms the proposition that a mortgagee's decree does not necessarily extinguish the underlying mortgage lien or encumbrance until execution sale and distribution; it also holds that Section 70 of the Indian Contract Act can apply to lawful statutory payments made for another where the latter enjoys the benefit.
  • No broader precedent claimed: The opinion confines its reasoning to the statutory provisions and the authorities cited; it does not purport to lay down a novel general rule beyond the application to the facts before the court.

    Jog Narain Singh And Ors. v. Badri Das And Ors.

    1. This is an appeal on be-half of the defendants in an action commenced by the plaintiffs for recovery of a sum of money alleged to have been paid by them under Section 310A of the Code of Civil Procedure of 1832, to set aside a sale in execution of a decree for arrears of rent. It appears that the plaintiffs were mortgagees of the properties in respect of which the landlord obtained a decree for arrears of rent. The plaintiffs sued to enforce their securities and obtained decree on the 29th January 1901 and the 8th February 1904. Meanwhile the mortgagors, now appellants before us, defaulted to pay rent to the superior landlord who obtained a decree against the registered tenant on the 7th December 1901. On the 16th July 1903 and the 11th April 1904, two sums were paid by some of the judgment-debtors towards partial satisfaction of the rent-decree but as the debt was not satisfied in its entirety the landlord decree-holder proceeded to sell the tenure on the 21st December 1904. The plaintiffs thereupon deposited on the 20th January 1905 a sum sufficient under Section 310 A of the Code of 1882, for the reversal of the sale. The sale was accordingly set aside on the 11th February 1905. On the 20th January 1908, they commenced the present action for recovery of the money they had deposited together with interest and costs.

    2. The Courts below have concurrently decreed the suit. In the present appeal, that decree has been assailed on the ground that the payment was voluntary and the plaintiffs are not entitled to ask for restitution from the defendants. In our opinion, there is no substance in this contention. The learned Vakil for the appellants has argued that, inasmuch as the plaintiffs had obtained decrees on the footing of their securities, they were not liable to have their interest affected by the sale in execution of the rent-decree, and that in substance they had no interest to protect. It has not been disputed and, in view of the decision of a Full Bench of this Court in the case of Paresh Nath Singha v. Nobo Gopal Chattopadhaya 29 C. 1 it cannot be disputed, that if the plaintiffs had not obtained a decree on the basis of their mortgage, they would have been entitled to have the sale set aside under Section 310A. The question, therefore, arises whether the fact that they had obtained decrees, in any way altered their position.

    3. Section 159 of the Bengal Tenancy Act provides that where a tenure or holding is sold in execution of a decree for arrears due in respect thereof the purchaser shall take subject to the interests defined in Chapter XIV, as " protected interest" but with power to annul the interests defined in that Chapter as "encumbrances." Section 161 then lays down that the term "encumbrance" used with reference to tenancy means any lien, sub-tenancy, easement or other right or interest created by the tenant on his tenure or holding or in limitation of his own interest therein, and not being a protected interest as defined in station 160. It cannot be disputed that a mortgage created by a tenant is a lien on his tenure or holding and is, consequently, an encumbrance within the meaning of Section 161. It has been suggested, however, that as soon as mortgagee obtains a decree, he ceases to have any lien on the tenure or holding, in other words, that his interest is no longer an encumbrance on the tenure within the meaning of Section 161, This contention is obviously unfounded. It was pointed out by this Court in the case of Bibijan Bibi v. Sachi Bewa 21 C. 863 that the security is not extinguished till the sale has taken place in execution of the mortgage-decree and the proceeds have been distributed in satisfaction of the sum due to the mortgagee. This principle was applied in the case of Surjiram Marwari v. Barhamdeo 2 C.L.J. 202 and Bhawani Koer v. Muthura Prasad 7 C.L.J. 1 and is in fact supported by the decision of Lord Ellenborough in Drake v. Mitchell 3 East 251 : 7 R.R. 449 that a judgment recovered in any form of action is still but a security for the original cause of action until it be made productive in satisfaction to the party. If we were to give effect to the contention of the appellant, the result would be that as soon as a mortgagee obtains a decree on his security, his position becomes worse than what it was when he was a mortgagee, pure and simple. It has not been disputed, as we have already observed, that as mortgagee he would have encumbrance liable to be annulled by the purchaser at the sale for arrears of rent. It cannot also be disputed that if he purchased the property in execution of his own decree, his interest would be equally liable to be annulled by the purchaser at the sale in execution of the decree for arrears of rent, although such decree was obtained against the registered tenant. But, it is suggested, that his intermediate position is different; that is, after the decree has been obtained, he would have no lien at all on the property. We are not able, for the reasons stated, to give effect to this contention as well-founded on principle.

    4. But it has been contended that the view which may thus be defended on principle is opposed to the decision of this Court in Moharanee Dasya v. Harindra Lal Roy 1 C.W.N. 458 and Manindra Chunaer Nundy v. Jawaher Kumari Bibi 9 C.W.N. 670. These cases, however, are clearly distinguishable. There the purchaser at the sale in execution of the mortgage-decree acquired the property subject to pre-existing rent charges. When, therefore, after his purchase as full owner he paid the rent charge, he could not claim to recover that sum from the judgment-debtor whose interest he had purchased. This conclusion is based on the principle that the purchaser at the sale in execution of the decree of the mortgagee acquired the property subject to the rent charge, and consequently when he discharged that rent charge, he simply fulfilled his own obligation. The dictum in Akhoy Kumar v. Bejoy Chand 29 C. 813 at p. 818 cannot be taken to involve a final decision upon the point. Our attention has also been invited to the decisions in Bepin Behary Sarnokar v. Kali Dass Chatterjee 6 C.W.N. 336 and Baikunta Nath Dev v. Udoy Chand Maiti 2 C.L.J. 311. These were cases in which the person who made the payment to have the sale set aside was a person whose interest had not been affected by the sale which he sought to get reversed. In the first of these cases, the decree for rent had been obtained with respect to non-agricultural land and the purchaser of a sale in execution of such a decree does not acquire the property free from encumbrances. In the second case, the sale sought to be set aside was a sale under the Public Demands Recovery Act which passes to the purchaser merely the right, title and interest of the judgment-debtor. On the other hand, there are cases in the reports which undoubtedly militate against the contention of the appellant, and amongst these may be mentioned Smith v. Dinonath 12 C. 213; Jugdeo Narain Singh v. Raja Singh 15 C. 656; Abdul Wahid Khan v. Shaluka Bibi 21 C. 496 : 21 I.A. 26; Bindu Bashini Dassi v. Harendra Lal Roy 25 C. 305 : C.W.N. 150 and Upendra Chandra Mitter v. Tara Prosanna Mukerjee 30 C. 794.

    5. The learned Vakil for the appellant has finally contended that the present case is clearly beyond the operation of the provisions of Sections 69 and 70 of the Indian Contract Act. In so far as Section 69 is concerned, it may be conceded that it has no application, because it provides that a person who is interested in the payment of money which another is bound by law to pay, and who, therefore, pays it, is entitled to be reimbursed by the other. It may be assumed that the present defendants as judgment debtors under the rent-decree were not bound by law to make a payment under Section 310A. to have the sale of the property set aside. But, when we examine Section 70, its terms appear to be comprehensive enough to cover the case. That Section provides as follows: "Where a person lawfully does any thing for another person or delivers any thing to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect thereof, or to restore the thing so done or delivered." It cannot he disputed that the payment in the present case was made lawfully. The money which was deposited by the plaintiffs was such as they were entitled to deposit under Section 310 A of the Code of 18S2. The deposit was made in the presence of the present defendants who, as judgment-debtors, were parties to the execution proceedings in the course of which the sale had taken place. The payment was further accepted by the Court. Under these circumstances it cannot be suggested that the payment was not made lawfully. But it has been suggested that the defendants are not the persons who have enjoyed the benefit thereof. In support of this proposition reliance has been placed upon the decision of the Madras High Court in Yogambal Boyee v. Naina Pillai 33 M. 15 : 3 Ind. Cas. 110 : 6 M.L.T. 162 : 19 M.L.J. 489. In that case, it appears to have been laid down that Section 70 has no application where the payment is made under such circumstances as to make it impossible for the person who is benefited thereby to refuse to accept the benefit conferred upon him. The learned Judges pointed out that the Section appears to have been modelled on the principle recognised in the oases of Lampleigh v. Brathwait 1 Smith L.C. 11th Ed. 160 and that, interpreted in the light of that decision, the term" enjoys" ought to be construed to mean "accepts and enjoys." We are not prepared to adopt this narrow construction of the section. The effect of it would be to exclude the operation of the Section in all cases where statutory payments are made for the protection of a property by a person who, but for such payment, might be seriously prejudiced. We may further point out that the interpretation which has been suggested is opposed to the decision of this Court in the case of Mahendra Ghoshal v. Bhuban Mardana 12 C.L.J. 566 : 6 Ind. Cas. 810 : 38 C. 1 : 14 C.W.N. 945 where a payment made under section 3101 of the code of 1882, was treated as a valid payment for the purposes of Section 70 of the Indian Contract Act. Reference has also been made to the case of Hurt Das v. Panchkowri 9 Ind. Cas. 615 which, however, does not really militate against the view we propose to take. The decision in Yogambal Boyee v. Naina Pillai 33 M. 15 : 3 Ind. Cas. 110 : 6 M.L.T. 162 : 19 M.L.J. 489 was cited before Mr. Justice Coxe, but, as we read his judgment, he did not express his approval of the interpretation put upon Section 70. On the other hand, he rests his judgment upon the perfectly intelligible ground that as the person who made the payment had, as a matter of fact, no interest to protect, he could not claim to be reimbursed. We are, therefore, of opinion that the present case is completely covered by Section 70.

    6. It has finally been suggested that the decree ought to have determined the separate liability of each of the several defendants. In our opinion, there is on substance in this contention. This is not a suit for contribution the nature of which was fully explained in Matichand v. Bajrang Sahai S.A. No. 1878 of 1909. The plaintiffs were not bound to bear any portion of the burden upon the failure of the defendants to pay rent which under the law they were bound (to pay to the superior landlord. The plaintiffs are entitled to a joint decree against all the defendants. When they realise their dues by execution, if necessary, it will be open to the defendants to settle their liability inter se; the plaintiffs are obviously interested in no way in the determination of that question.

    7. The result is, that the decree of the Court below is affirmed, and this appeal dismissed with casts to the plaintiffs-respondents.

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    Jog Narain Singh And Ors. v. Badri Das And Ors.
    (Aug 7, 1911)