Savita Vs. H.S. Achuta Rao - Court Judgment

SooperKanoon Citationsooperkanoon.com/384011
SubjectContract
CourtKarnataka High Court
Decided OnJul-12-1990
Case NumberR.S.A. No. 303 of 1979
JudgeB.N. Krishnan, J.
Reported inILR1990KAR3174; 1990(3)KarLJ580
ActsContract Act, 1872 - Sections 69
AppellantSavita
RespondentH.S. Achuta Rao
Appellant AdvocateG.S. Visweswara and T.N. Raghupathy, Advs.
Respondent AdvocateH.S. Achuta Rao, Adv. for R-1 and S.V. Shama Rao, Adv. for R-3
DispositionAppeal allowed
Excerpt:
contract act, 1872 (central act no. 9 of 1872) - section 69 - quasi contract: ingredients - 'bound by law' not confined to statutory liability in exclusion of contracts & torts. ;there are three ingredients in this section. firstly, some person must be bound by law to pay certain amount and consequently another person must be interested in the payment of this money and thirdly the person interested in payment of money should pay that money and if all these three ingredients are satisfied the person making the payment is entitled to be reimbursed by the person who was bound by law to make the payment...there is no scope to restrict the phrase 'bound by law to pay' occurring in this section only to statutory liability to the exclusion of liabilities arising out of contract or tort. ;on facts: ;though there was no contract as such between the plaintiff and defendant no. 2, there was obligation on the part of defendant no. 2 to discharge the debt of defendant no. 1 with the land development bank because a sum of rs. 9,000/- was left with him by the 1st defendant for that purpose and therefore, the 2nd defendant is a person bound by law to pay within the meaning of section 69 of the act. plaintiff being the purchaser of the lands, given by way of security to the bank for discharging the liability of the 1st defendant is a person interested in the payment of money by the 2nd defendant to the bank. the plaintiff has made the payment to the bank in respect of the obligation of the 2nd defendant. though there is no privity of contract as such between the plaintiff and defendant no. 2 it has to be held that there is a relation resembling that of the contract between the plaintiff and 2nd defendant and he can in law sustain the claim for recovery of the amount from the 2nd defendant. - motor vehicles act, 1988 [c.a. no. 59/1988]section 147 (1)(ii); [n. kumar, j] question whether a cleaner whose risk is not statutorily covered under proviso (ii) to sub-section (1) of section 147 of the act is entitled to compensation as a third party, if at the time of the accident he was outside the vehicle? held, some categories of employees at the time of accident though in the course of employment are outside the vehicle, then they would become third party under the act, notwithstanding the fact that such a person is also an employee of the insured. such an employee has the option of claiming compensation either under the provisions of the m.v. act as a third party or as an employee of the insured under the provisions of workmens compensation act. award of tribunal fastening the liability on the insurer was upheld. - 38/1976 on the file of the civil judge, hassan to fasten the liability against defendants 2 and 3 but he did not meet with any success there. ' the purport of this section has been clearly expounded by the privy council in the decision in govindram gordhandas seksaria and anr. firstly, some person must be bound by law to pay certain amount and consequently another person must be interested in the payment of this money and thirdly the person interested in payment of money should pay that money and if all these three ingredients are satisfied the person making the payment is entitled to be reimbursed by the person who was bound by law to make the payment. the findings of the two lower courts that plaintiff is not entitled to recover the amount from the 2nd defendant is in total disregard of section 69 of the act and therefore clearly unsustainable. therefore, it has to be held that the two lower courts were perfectly justified in negativing the claim of the plaintiff against defendant no.b.n. krishnan, j1. the appellants were the plaintiffs before munsiff, hassan in original suit no. 193 of 1973. they sought for recovery of a sum of rs. 2,575/- from defendants 1 to 3. being aggrieved by the judgment and decree of the two lower courts negativing the relief to him against defendants 2 and 3, they have preferred this appeal.2. the case put forward by them is, that the properties described in the plaint 'a' schedule formerly belonged to the 1st defendant who sold plots 1 and 2 to the 3rd defendant and plots 3 and 4 to him. he later purchased plots 1 and 2 from 3rd defendant. the 1st defendant was due certain monies to manjarabad taluk co-operative land development bank, on the security of these properties sold by him and certain other properties. the 1st defendant sold his other properties for a sum of rs. 20,000/- to the 2nd defendant and out of the sale consideration, he left a sum of rs. 9,000/- with the 2nd defendant himself to discharge the loan due by him to the aforesaid bank. the 2nd defendant did not discharge the amount due by the 1st defendant to the bank and therefore the bank in turn brought the properties purchased by the plaintiff to sale. in order to save his properties, plaintiff had to pay a sum of rs. 2,250/- to the said sank and therefore he sought to recover that amount with interest of rs. 300/- and notice charges of rs. 25/- from all the three defendants. the 1st defendant remained exparte. 2nd defendant did not dispute the various sales nor did he dispute the sale by 1st defendant in his favour and the further averment that a sum of rs. 9,000/-was left with him for discharging dues of 1st defendant. though he was not prepared to admit the payment of money by plaintiffs to the bank, he did not specifically deny the same. anyway, he took the contention that there was no contractual relationship between him and the plaintiff and hence the latter had no locus standi to seek any kind of relief from him. the 3rd defendant has also denied his liability to pay the amount claimed.3. after contest the suit was decreed only against defendant no. 1 and the suit as against defendants 2 and 3 came to be dismissed by munsiff, hassan. the plaintiffs preferred r.a.no. 38/1976 on the file of the civil judge, hassan to fasten the liability against defendants 2 and 3 but he did not meet with any success there. being aggrieved by the refusal of the courts below to grant any relief against defendants 2 and 3, the plaintiff has approached this court.4. the substantial point of law formulated for consideration in this appeal, at the time of admission is as hereunder:'whether defendant no. 2 who held a sum of rs. 9,000/- earmarked for the exclusive purpose of discharging prior encumbrances is not liable to contribute to the extent paid by the plaintiff in discharge of a part of the said encumbrances and whether plaintiff though not a party to the contract could seek its enforcement as one of the beneficiaries of the contractual rights between the first and second defendants?'5. nothing was urged by any of the advocates to say that any other substantial point of law also arises for consideration in this appeal.6. the several points of fact asserted by the plaintiff were not seriously disputed by the 2nd defendant. further, the courts below have recorded a finding in favour of plaintiff on those aspects. the only ground on which the relief has been negatived against defendant no. 2 is, that there was no privity of contract between the plaintiff and the 2nd defendant and therefore, he could not maintain in a suit against defendant no. 2 in this regard. it has to be seen as to how far this finding of the two lower courts could be supported in law. though there was no privity of contract as such between plaintiff and defendant no. 2 it has to be seen whether plaintiff in law could still look to defendant no. 2 for reimbursement.7. in addition to dealing with the rights and liabilities of parties arising out of contract, chapter v of the indian contract act (for short 'the act') also contains provisions which create certain relationship resembling those created by contract. one of those provisions is in section 69 of the act which reads as hereunder:'69. a person who is interested in the payment of moneys which another is bound by law to pay, and who therefore pays it, is entitled to be reimbursed by the other.'the purport of this section has been clearly expounded by the privy council in the decision in govindram gordhandas seksaria and anr. v. state of gondal by his highness the maharaja of gondal and ors air 1950 pc 99 @ 104. as hereunder:'the section is part of a chapter of the contract act devoted to 'quasi contract'. the phrase itself is no doubt taken from a familiar branch of the english common law, although there is no reason to suppose that the indian contract act was intended to do no more than to reproduce the compendious phrases the precise doctrines of the english law of contract. but the general purport of the action is reasonably clear: to afford to a person who pays money in furtherance of some existing interest an indemnity in respect of the payment against any other person who, rather than he, could have been made liable at law to make the payment.'8. there are three ingredients in this section. firstly, some person must be bound by law to pay certain amount and consequently another person must be interested in the payment of this money and thirdly the person interested in payment of money should pay that money and if all these three ingredients are satisfied the person making the payment is entitled to be reimbursed by the person who was bound by law to make the payment.9. the words 'bound by law to pay' occurring in the section was interpreted by certain high court, as only embracing statutory liability to pay and not contractual or other liability. the privy council in the-aforesaid decision has pointed out that there was no scope to restrict the phrase 'bound by law to pay' occurring in this section only to statutory liability to the exclusion of liabilities arising out of contract or tort. this decision has been followed by the division bench of the madras high court in thirumalasubbu chettiar v. smt. rajammal : air1961mad170 . i am in respectful agreement with the purport of section 69 of the act as expounded by the privy council in the aforesaid decision and also the interpretation of the words 'bound by law to pay' given in the aforesaid two decisions.10. though there was no contract as such between the, plaintiff and defendant no. 2, there was obligation on the part of defendant no. 2 to discharge the debt of defendant no. 1 with the land development bank because a sum of rs. 9,000/- was left with him by the 1st defendant for that purpose and therefore, the 2nd defendant is a person bound by law to pay within) the meaning of section 69 of the act. that he has not discharged his obligation in respect of liability of defendant no. 1 to the bank is also an undisputed fact plaintiff being the purchaser of the lands, given by way of security to the bank for discharging the liability of the 1st defendant is a person interested in the payment of money by the 2nd defendant to the bank cannot also be disputed. undisputedly, the plaintiff has made the payment to the bank in respect of the obligation of the 2nd defendant. though there is no privity of contract as such between the plaintiff and defendant no. 2 on the strength of the findings recorded by the lower courts and also section 69 of the contract act, it has to be held that there is a relation resembling that of the contract between plaintiff and 2nd defendant and he can in law sustain the claim for recovery of the amount from the 2nd defendant. the findings of the two lower courts that plaintiff is not entitled to recover the amount from the 2nd defendant is in total disregard of section 69 of the act and therefore clearly unsustainable. hence, the substantial question of law formulated has to be answered against the 2nd defendant and in favour of the appellant and it is accordingly so answered.11. one word need be said in respect of the claim made against the 3rd defendant. there is no point of law, muchless a substantial point of law involved in respect of the claim of the plaintiff against defendant no. 3. the plots purchased by the 3rd defendant are admittedly later purchased by the plaintiff himself and there could be no personal liability' of defendant no. 3 to answer the claim of the plaintiff. therefore, it has to be held that the two lower courts were perfectly justified in negativing the claim of the plaintiff against defendant no. 3.12. in the result, in reversal of the judgment and decrees of the two lower courts there shall also be a decree as prayed for against the 2nd defendant. the appeal is allowed accordingly only to the extent indicated above.13. the appellant-plaintiff is entitled to recover costs incurred by him in this appeal and also in the first appellate court from the 2nd defendant. the liability to pay the costs of the 1st court shall be joint and several on defendants 1 and 2. defendant no. 3 who is respondent-3 herein shall bear his own costs.
Judgment:

B.N. Krishnan, J

1. The appellants were the plaintiffs before Munsiff, Hassan in Original Suit No. 193 of 1973. They sought for recovery of a sum of Rs. 2,575/- from defendants 1 to 3. Being aggrieved by the Judgment and decree of the two lower Courts negativing the relief to him against defendants 2 and 3, they have preferred this appeal.

2. The case put forward by them is, that the properties described in the plaint 'A' schedule formerly belonged to the 1st defendant who sold plots 1 and 2 to the 3rd defendant and plots 3 and 4 to him. He later purchased plots 1 and 2 from 3rd defendant. The 1st defendant was due certain monies to Manjarabad Taluk Co-operative Land Development Bank, on the security of these properties sold by him and certain other properties. The 1st defendant sold his other properties for a sum of Rs. 20,000/- to the 2nd defendant and out of the sale consideration, he left a sum of Rs. 9,000/- with the 2nd defendant himself to discharge the loan due by him to the aforesaid Bank. The 2nd defendant did not discharge the amount due by the 1st defendant to the Bank and therefore the Bank in turn brought the properties purchased by the plaintiff to sale. In order to save his properties, plaintiff had to pay a sum of Rs. 2,250/- to the said Sank and therefore he sought to recover that amount with interest of Rs. 300/- and notice charges of Rs. 25/- from all the three defendants. The 1st defendant remained exparte. 2nd defendant did not dispute the various sales nor did he dispute the sale by 1st defendant in his favour and the further averment that a sum of Rs. 9,000/-was left with him for discharging dues of 1st defendant. Though he was not prepared to admit the payment of money by plaintiffs to the Bank, he did not specifically deny the same. Anyway, he took the contention that there was no contractual relationship between him and the plaintiff and hence the latter had no locus standi to seek any kind of relief from him. The 3rd defendant has also denied his liability to pay the amount claimed.

3. After contest the suit was decreed only against defendant No. 1 and the suit as against defendants 2 and 3 came to be dismissed by Munsiff, Hassan. The plaintiffs preferred R.A.No. 38/1976 on the file of the Civil Judge, Hassan to fasten the liability against defendants 2 and 3 but he did not meet with any success there. Being aggrieved by the refusal of the Courts below to grant any relief against defendants 2 and 3, the plaintiff has approached this Court.

4. The substantial point of law formulated for consideration in this appeal, at the time of admission is as hereunder:

'Whether defendant No. 2 who held a sum of Rs. 9,000/- earmarked for the exclusive purpose of discharging prior encumbrances is not liable to contribute to the extent paid by the plaintiff in discharge of a part of the said encumbrances and whether plaintiff though not a party to the contract could seek its enforcement as one of the beneficiaries of the contractual rights between the first and second defendants?'

5. Nothing was urged by any of the Advocates to say that any other substantial point of law also arises for consideration in this appeal.

6. The several points of fact asserted by the plaintiff were not seriously disputed by the 2nd defendant. Further, the Courts below have recorded a finding in favour of plaintiff on those aspects. The only ground on which the relief has been negatived against defendant No. 2 is, that there was no privity of contract between the plaintiff and the 2nd defendant and therefore, he could not maintain in a suit against defendant No. 2 in this regard. It has to be seen as to how far this finding of the two lower Courts could be supported in law. Though there was no privity of contract as such between plaintiff and defendant No. 2 it has to be seen whether plaintiff in law could still look to defendant No. 2 for reimbursement.

7. In addition to dealing with the rights and liabilities of parties arising out of contract, Chapter V of the Indian Contract Act (for short 'the Act') also contains provisions which create certain relationship resembling those created by contract. One of those provisions is in Section 69 of the Act which reads as hereunder:

'69. A person who is interested in the payment of moneys which another is bound by law to pay, and who therefore pays it, is entitled to be reimbursed by the other.'

The purport of this Section has been clearly expounded by the Privy Council in the decision in GOVINDRAM GORDHANDAS SEKSARIA AND ANR. v. STATE OF GONDAL BY HIS HIGHNESS THE MAHARAJA OF GONDAL AND ORS AIR 1950 PC 99 @ 104. as hereunder:

'The Section is part of a chapter of the Contract Act devoted to 'Quasi Contract'. The phrase itself is no doubt taken from a familiar branch of the English Common Law, although there is no reason to suppose that the Indian Contract Act was intended to do no more than to reproduce the compendious phrases the precise doctrines of the English Law of contract. But the general purport of the action is reasonably clear: to afford to a person who pays money in furtherance of some existing interest an indemnity in respect of the payment against any other person who, rather than he, could have been made liable at law to make the payment.'

8. There are three ingredients in this Section. Firstly, some person must be bound by law to pay certain amount and consequently another person must be interested in the payment of this money and thirdly the person interested in payment of money should pay that money and if all these three ingredients are satisfied the person making the payment is entitled to be reimbursed by the person who was bound by law to make the payment.

9. The words 'bound by law to pay' occurring in the Section was interpreted by certain High Court, as only embracing statutory liability to pay and not contractual or other liability. The Privy Council in the-aforesaid decision has pointed out that there was no scope to restrict the phrase 'bound by law to pay' occurring in this Section only to statutory liability to the exclusion of liabilities arising out of contract or tort. This decision has been followed by the Division Bench of the Madras High Court in THIRUMALASUBBU CHETTIAR v. SMT. RAJAMMAL : AIR1961Mad170 . I am in respectful agreement with the purport of Section 69 of the Act as expounded by the Privy Council in the aforesaid decision and also the interpretation of the words 'bound by law to pay' given in the aforesaid two decisions.

10. Though there was no contract as such between the, plaintiff and defendant No. 2, there was obligation on the part of defendant No. 2 to discharge the debt of defendant No. 1 with the Land Development Bank because a sum of Rs. 9,000/- was left with him by the 1st defendant for that purpose and therefore, the 2nd defendant is a person bound by law to pay within) the meaning of Section 69 of the Act. That he has not discharged his obligation in respect of liability of defendant No. 1 to the Bank is also an undisputed fact Plaintiff being the purchaser of the lands, given by way of security to the Bank for discharging the liability of the 1st defendant is a person interested in the payment of money by the 2nd defendant to the Bank cannot also be disputed. Undisputedly, the plaintiff has made the payment to the Bank in respect of the obligation of the 2nd defendant. Though there is no privity of contract as such between the plaintiff and defendant No. 2 on the strength of the findings recorded by the lower Courts and also Section 69 of the Contract Act, it has to be held that there is a relation resembling that of the contract between plaintiff and 2nd defendant and he can in law sustain the claim for recovery of the amount from the 2nd defendant. The findings of the two lower Courts that plaintiff is not entitled to recover the amount from the 2nd defendant is in total disregard of Section 69 of the Act and therefore clearly unsustainable. Hence, the substantial question of law formulated has to be answered against the 2nd defendant and in favour of the appellant and it is accordingly so answered.

11. One word need be said in respect of the claim made against the 3rd defendant. There is no point of law, muchless a substantial point of law involved in respect of the claim of the plaintiff against defendant No. 3. The plots purchased by the 3rd defendant are admittedly later purchased by the plaintiff himself and there could be no personal liability' of defendant No. 3 to answer the claim of the plaintiff. Therefore, it has to be held that the two lower Courts were perfectly justified in negativing the claim of the plaintiff against defendant No. 3.

12. In the result, in reversal of the Judgment and decrees of the two lower Courts there shall also be a decree as prayed for against the 2nd defendant. The appeal is allowed accordingly only to the extent indicated above.

13. The appellant-plaintiff is entitled to recover costs incurred by him in this appeal and also in the first Appellate Court from the 2nd defendant. The liability to pay the costs of the 1st Court shall be joint and several on defendants 1 and 2. Defendant No. 3 who is respondent-3 herein shall bear his own costs.