C.K. Xavier Vs. Bhagaraj Singh and anr. - Court Judgment

Excerpt:
commercial - recovery proceedings - section 47 and order 21 rule 2 of code of civil procedure, 1908 - appeal against order granting decree for recovery of rs. 18000 as money illegally retained by appellant and allowing interest at 12% - rs.18000 remained unappropriated with appellant and liable to be refunded to respondents - appellant defrauded respondent and received money from him with undertaking that it will go in discharge of decree - despite of undertaking he took out execution proceedings for entire amount - respondent damnified by said action of appellant - order 21 rule 2 does not bar maintainability of suit in regard to such payment - order 21 rule 2 only precludes executing court from entertaining plea of discharge not certified in manner prescribed by that rule - suit not barred by section 47 - appeal dismissed in limine. - - 64 of 1978 has been fully satisfied or to get back the amount of rs. 64 of 1978 is fully satisfied and in the alternative directing the appellant to repay rs. in bringing the suit the plaintiff does not aver that a decree has been satisfied by the payment or contract. his case is that the decree was not legally satisfied. he alleges only an intention that it should be satisfied -an intention to which the decree-holder might have given, but did not give, effect. from this point of view as well he should be entitled to get back the total sum which he had parted with under the influence of fraud. padmini kunhamma, 1959 ker lj 601, had taken it as well settled that :in cases of this type the only remedy of the judgment-debtor is to sue the decree-holder for the recovery of the money paid out of court,'10a. receiving of ready money, where only a right to realise a decree existed, is in the nature of a good consideration for the decree-holder to give such an implied undertaking to the judgment-debtor. the fact of payment out of court carries with it the necessary implications mentioned above, and a breach of such an implied covenant should ordinarily afford a good ground for a judgment-debtor to file a suit for damages. it may here be noted that if after the decree is satisfied out of court, a assigns the decree to x, and x then proceeds to realize the decree by execution against b, b has no cause of action against x, and he is not entitled to recover from x as damages the amount paid by him in execution to x, even though x i took the assignment with the knowledge that the decree had been satisfied. the case is one of clear breachof contract on the part of the decree-holderand the failure of consideration or even of a statutory duty to certify the payment, the suit that is instituted for refund of the money is one based on the failure to certify and to adjust the decree and is not one relating to execution, discharge or satisfaction of the decree for which alone the bar of section 47 applies. it cannot be that the law has left the judgment-debtor without a remedy in such cases merely because of section 47. unjust enrichment is not encouraged by the law, more so when it is the result of the breach of an express or implied undertaking by the decree-holder himself that the decree will stand satisfied in whole or in part. 34. the plaintiff has clearly defrauded the defendant and received money from him with the undertaking that it will go in discharge of the decree in o.viswanathaiyer, j.1. this appeal by the defendant came up for hearing before us under order 41, rule 11 of the c.p.c. we sentfor the records of the case from the lower court, and we are disposing of the appeal after hearing counsel for the appellant and after perusing the records in the case.2. defendant is the appellant. he obtained a decree against the respondents-plaintiffs in o.s. no. 64 of 1978, on the file of the subordinate judge, thodupuzha, for recovery of the amount due to him from the respondents, namely rs. 10,000/- and interest thereon due on hypothecation of their cardamom estate. the suit was decreed for an amount of rs. 24,100/-. while so, respondents were invited for the marriage of the appellant's son. the respondents then sought a settlement of this claim from the appellant and ultimately the matter was settled between the parties by the appellant receiving an amount of rs. 18,000/- on 30-7-1980, and executing ext. a1 receipt in acknowledgment thereof. despite receipt of the money the appellant applied for execution of the decree in o.s. no. 64 of 1978 for an amount of rs. 33,045/- on 17-11-1981. the respondents objected to the execution, but were not successful. the court declined to accept their objection on the ground that the payment and settlement were not duly certified under order xxi, rule 2, c.p.c. the respondents therefore, claimed that the appellant had acted in violation of his legal obligation to certify the payment to court. they claimed that they have the right either to get a declaration that the decree in o.s. no. 64 of 1978 has been fully satisfied or to get back the amount of rs. 18,000/- with interest at the rate of 12% per annum. respondents issued registered notice on 16-7-1983 requesting either certification of the payment and settlement in court or for repayment of the amount paid under ext. a1 with interest at 12% per annum. there was no reply. the issue of the said notice is evidenced by the postal receipt ext. a2 and the postal acknowledgment ext. a3. receipt of the notice is also admitted by the appellant as d.w. 1. the suit was laid for a declaration that the decree in o.s. no. 64 of 1978 is fully satisfied and in the alternative directing the appellant to repay rs. 18,000/- to the respondents with interest at 12% per annum till realisation of the amount.3. the defendant contested the claim withhis plea that there was no settlement of the claim, that the receipt ext. a1 produced along with the plaint was a cooked up document and that the suit was but another attempt on the part of the plaintiffs to stall the execution of the decree in o.s. no. 64 of 1978. the defendant also raised a plea that the suit was barred under the provisions of o. xxi, r. 2 of the c.p.c. there was however, no contention in the written statement regarding the plaintiffs entitlement to interest if the amount of rs. 18,000/- was bound to be repaid, or about the rate of interest.4. the lower court accepted respondents-plaintiffs' case regarding the genuineness of the receipt ext. a1 and the payment of rs. 18,000/- to the appellant on 30-7-1980. the court, however, found that there was no evidence that this payment had been made in full satisfaction of the decree in o.s. no. 64 of 1978 and accordingly declined to grant the plaintiffs' prayer for declaration of full satisfaction of the said decree. the court therefore, granted a decree for recovery of rs. 18,000/- as money illegally retained by the appellant, and in that view also allowed the respondents interest at 12% per annum from the date of ext. al, namely, 30-7-1980 till recovery.5. this decree is challenged in the appeal before us by the defendant. the first point that arises for consideration is whether ext. a1 is a genuine receipt. that the decree in o.s. no. 64 of 1978 was obtained for recovery of a sum of rs. 10,000/- with interest thereon is not in dispute. the further fact that the respondents-plaintiffs had attended the marriage of the appellant's son and stayed with him is also not disputed. the appellant also admits that he had received the notice dated 16-7-1983 from the respondents and that he did not send any reply thereto, though he would contend that he had his own reason for not sending a reply, namely that the respondents' contention regarding settlement of the decree had not been accepted in the execution proceedings. ext. a1 is the receipt written out by p.w. 5, who deposes that he wrote it out as per the dictation of the appellant. the receipt is attested by three witnesses who have been examined as p. ws. 2, 3 and 4. the first plaintiff has examined himself as p.w. 1. we have gone through theentire evidence. all the witnesses speak with one voice about the execution of ext. a1.6. on the occasion of the visit of the plaintiffs-respondents to attend the marriage of the appellant's son, they had occasion to talk to the appellant about settlement of the decree in o.s. no. 64 of 1978. at that time the appellant had promised to consider the request if the respondents came with money. the money was arranged by the respondents partly by selling the jewels belonging to the 2nd respondent by which they raised rs. 12,000/-. they had intended to give a total of rs. 20,000/- to the appellant for which purpose they had requested p.w. 2 ramakrishna achari to give them rs. 10,000/-however, ramakrishna achari was able to make up only rs. 6,000/-. respondents therefore, approached the appellant with the amount of rs. 18,000/- on 30-7-1980. they had with them ramakrishna achari, his son p.w. 5 and two others, namely, p.ws. 3 and 4 who were also known to the parties. appellant was not willing in the first instance to settle at anything less than rs. 20,000/-. however, on the intercession and pleas by the mediators p.ws: 2, 3 and 4, he agreed to accept rs. 18,000/- in full settlement of his dues under the decree. the amount was received and as per his dictation ext. a1 was written up by p.w. 5, signed by the appellant, attested by p.ws. 2, 3 and 4 and then signed by p.w. 1. the fact that rs. 18,000/- was paid to the appellant on 30-7-1980 and that ext. a1 was written up by p.w. 5 and signed by the appellant in the manner stated above is spoken to by the independent witnesses p.ws. 2 to 5. we have carefully gone through their evidence. we find their evidence cogent and convincing and we do not see any reason to disbelieve any of them. the only suggestion made to p.w. 2 was regarding his means, which he explained as referable to the substantial income from pepper from his agricultural properties. absolutely nothing has been brought out to discredit the testimony of p.ws. 2 and 5 who have consistently spoken to all the facts regarding ext. a1 and the payment of rs. 18,000/-. on 30-7-1980. p.ws. 3 and 4 have also deposed in the same lines about ext. a1 and the payment. there is absolutely no discrepancy in the testimony of the respondents' witnesses.as against p.ws. 3 and 4 the suggestion made by the appellant was that there were some proceedings initiated by him against p.ws. 3 and 4. against p.w. 3, his case was that one sethuraman was indebted to him for which he had agreed to sell his cardamom plantation to the appellant. however, the said plantation was purchased by p.w. 3 in violation of his agreement with sethuraman. he filed a suit against sethuraman as o.s. no. 102 of 1978 in the sub court, thodupuzha. p.w. 3 paid the money due and settled the claim. it is said that subsequently there were some proceedings in the munsiff s court, devicolam initiated by the appellant against p.w. 3 for alleged trespass, it is said that there was also a complaint against p.w. 3 in the magistrate's court at nedumkandom. the exact period of time when these alleged disputes arose or the proceedings were initiated is not, however, available on record. absolutely no documents have been produced to substantiate these suggestions made by the appellant. in any case, these proceedings are, even according to the appellant, only in 1981 or 1982. these suggestions are not accepted by p.w. 3. as against p.w. 4 the appellant would urge that he had instituted a criminal complaint against him. what exactly is the nature of the complaint and as to what happened to the same are all not in evidence. we are not prepared to discard the evidence of p.ws. 3 and 4 on the basis of such vague suggestions made by the appellant without any concrete corroborating evidence in support thereof. in any case, nothing has been brought out against p.ws. 2 and 5 who are both independent witnesses. the lower court which had the benefit of seeing these witnesses has found them to be worthy of credence and accepted their testimony to find in favour of the genuineness of ext. a1. to reassure ourselves, we also compared the signature in ext. a2 with the admitted signature of the appellant in ext. a3, his vakalat and in the written statement and we find close similarity between them. we feel that the signature in ext. a1 is that of the appellant. we accordingly hold that ext. a1 is a receipt executed by the appellant and that he received rs. 18,000/- from the respondents on that date.7. according to the plaintiffs, this amount had been received in full satisfaction of thedecree in o.s. no. 64 of 1978. however, in the absence of evidence in that regard the lower court did not accept this contention. the amount of rs. 18,000/- therefore remains unappropriated with the appellant and is liable to be refunded to the respondents.8. counsel for the appellant raised a plea that the suit is barred by order xxi, rule 2 and section 47, c.p.c. we wonder how order xxi, rule 2 could bar the suit at all. the said rule only precludes the executing court from entertaining a plea of discharge or payment which has not been certified in the manner prescribed by the rule. the bar is only on the executing court. the rule does not bar the maintainability of a suit in regard to such payment, fulton, j. of the bombay high court observed thus in his judgment in hanmant santaya prabhu v. subbabhat (1899) i. l. rule 23 bom 394 :'it is equally clear that section 258, as now worded, is no bar to the court's taking cognizance of such suit, for it is only the court executing the decree which is precluded from recognizing the payment.'(section 258 of the code of 1882 referred to above corresponds to order xxi, rule 2).9. the other contention, therefore, to be looked into is whether the suit is barred by section 47 of the c.p.c. counsel for the appellant would urge that the suit is one for a declaration that the decree in o. s. no. 64 of 1978 stands discharged and that this is a matter relating to execution, discharge or satisfaction of the said decree, and therefore could only be agitated in the execution proceedings therein and not by a separate suit. in urging this plea, counsel for the appellant forgets the alternate prayer in the plaint for refund of the amount of rs. 18,000/- with interest, which alone has been decreed by the lower court.10. this question had arisen over a century back and a full bench of the high court of madras led by turner, c.j. had occasion to hold that money paid in satisfaction of a decree, which was not applied for that purpose, could be recovered by a separate suit. in viraraghava v. subbakka (1882) ilr 5 mad 397, sir charles a. turner, with whom justice muttusami ayyar concurred, said thus :'the 258th section, which prohibits such court from recognizing the delivery as a plea in bar of execution, does not prohibit the maintenance of such a suit, nor in our judgment do the terms of section 244, there is no longer any question whether the money was paid in satisfaction of the decree. it is admitted that it has not been duly applied to that purpose. the question relates not to the execution of the decree, but to a contract which formed no subject of inquiry in the suit and could not form a subject of inquiry in execution of decree.'a larger bench of the high court of madras, had occasion to deal with the matter again in the subsequent decision in mallamma v. vankappa, (1885) ilr 8 mad. 277. turner, c. j. again spoke for the court and observed thus at page 282 : --'it appears to us that the grounds on which we held that such a suit would not be precluded by the provisions of section 244 still obtain. in bringing the suit the plaintiff does not aver that a decree has been satisfied by the payment or contract. his case is that the decree was not legally satisfied. he raises no question as to the execution, discharge or satisfaction of the decree. he alleges only an intention that it should be satisfied -- an intention to which the decree-holder might have given, but did not give, effect.'in their decision in hanmant santaya prabhu v. subbabhat (1899) ilr 23 bom 394, the high court of bombay followed the decision in viraraghava v. subbakka, (1882) ilr 5 mad 397 (fb) and held that there is no law which stands in the way of the judgment debtor recovering by suit the damages sustained by him by virtue of an adjustment uncertified and the decree adjusted being executed. fulton, j. observed thus : --'a contract whereby a decree-holder engages not to execute a decree seems valid; and i can see no reason why, if it has been broken, the injured party should not be entitled to sue for compensation in respect of any loss which he has suffered in consequence.'the decision of the allahabad high court in gendo v. nihal kunwar (1908) ilr 30 all 464, is one on parallal facts and the court held that neither section 244 nor section 258 of the code of 1882, which correspond to section 47 andorder xxi, rule 2 of the present code, preclude the institution of a suit by the judgment debtor, who had made a part payment of amounts due under the decree, but such payment remained uncertified, enabling the decree-holder to take out execution and get the amount paid twice over. the same view has been taken, inter alia, in the following decisions: --mahabub ali v. mahammad hussain, air 1927 all 710, a. k. r. m. m. c. t. chetty firm v. maung tha din, air 1929 rang 269, ram das v. sukhdeo ram, air 1939 pat 156 and rambhau v. nagarmal, air 1948 nag 94.the observations of the judicial commissioner of peshawar in azin khan v. sahib jan, air 1943 peshawar 13 are apposite. the judicial commissioner observes thus : --'....... private payment of the decretalamount by the judgment-debtor to the decree-holder brings into existence a contract casting a duty on the decree-holder to certify that payment in court and relieve the judgment-debtor of his responsibility to that extent, and implies his liability to pay back the whole amount to the judgment-debtor if he fails to do so. the breach of such contract should, in my estimation, entitle the judgment-debtor to ask that the decree-holder should be made to carry out his implied promise that he shall return the money paid to him if he fails to certify the payment. .......... there is no reason why the plaintiffshould not be presumed to have suffered loss to the extent of the amount paid by him privately and should not be paid that amount in full with costs. the worry and expense of litigation should not be overlooked which such judgment-debtor wanted to avoid when paying the decree-holder in private. i may point out that the element of fraud comes in for consideration too. the plaintiffs case in such suits is not only based on breach of contract but also on the allegation that fraud had been practised upon him. from this point of view as well he should be entitled to get back the total sum which he had parted with under the influence of fraud.'the bench decision of this court in poulose alias kunjipyloth v. padmini kunhamma, 1959 ker lj 601, had taken it as well settled that :'in cases of this type the only remedy of the judgment-debtor is to sue the decree-holder for the recovery of the money paid out of court,'10a. the matter has also been dealt with at great length by the rajasthan high court in jiwa lal v. budha, ilr (1952) 2 raj 731. their lordships observed thus at pages 738 and 739 :'when a payment is made by the judgment-debtor to the decree-holder, there is an implied understanding between the parties that the decree-holder shall credit that amount towards his decree and in case of his not giving a credit of that amount towards the decree, he shall refund the amount to the judgment-debtor. this understanding cannot be regarded otherwise than by way of a contract. receiving of ready money, where only a right to realise a decree existed, is in the nature of a good consideration for the decree-holder to give such an implied undertaking to the judgment-debtor. the fact of payment out of court carries with it the necessary implications mentioned above, and a breach of such an implied covenant should ordinarily afford a good ground for a judgment-debtor to file a suit for damages. the madras and peshawar decisions, which have been referred to above, have adopted the view that there is at least an implied covenant between the parties for refund of the amount paid out of the court by a judgment-debtor to the decree-holder in the event of the latter not giving a credit thereof towards the decree. we are in agreement with this view, and, in our opinion, the amount paid out of court may form part of the damages, as has been held by the peshawar judgment referred to above. a decree-holder by not giving a credit of the amount received by him out of court and by filing an execution petition for the, recovery of such amount contravenes the implied understanding of the parties, and there is no reason why he should not be made to refund the amount in the event of his not giving a credit towards the decree. the judgment-debtor need not wait till the decree-holder recovers the amount twice over in order to entitle him to file a suit for the refund of the amount already paid by him. on breach of a contract a party is entitled to such damages as he suffers on account of the breach.'mulla on the civil p.c. 14th edn. summarises the position thus at page 1347 : --'the third question stands upon a different footing. the suit therein referred to is one for the recovery of damages for breach of the contract represented by the adjustment. the contract represented by the adjustment was to accept rs. 1,000/- in full satisfaction of the decree, and not to execute the decree for its full amount. if notwithstanding the payment to a of rs. 1,000/- in pursuance of the adjustment, a causes the decree to be executed, and b is compelled to pay the amount of the decree (that is rs. 2,000/-) in execution, b may sue a to recover back the amount as damages for breach of the contract not to execute the decree. such a suit is not barred under section 47, for the principal question in the suit is not one relating to execution, but to the contract, its breach, and the amount of damages suffered by b in consequence of the breach. the answer to the third question is therefore in the affirmative. the court trying the suit will take cognizance of the adjustment, and will direct a by its decree to repay rs. 2,000/- as and by way of damages to b, though the adjustment has not been certified. it may here be noted that if after the decree is satisfied out of court, a assigns the decree to x, and x then proceeds to realize the decree by execution against b, b has no cause of action against x, and he is not entitled to recover from x as damages the amount paid by him in execution to x, even though x i took the assignment with the knowledge that the decree had been satisfied.'when payment is made by the judgment-debtor to the decree-holder, in full or partsatisfaction of the decree, there is anobligation cast on the decree-holder to certifythe payment and if he proceeds to executethe decree without giving credit to the moneypaid or the adjustment effected, he is guiltyof breach of contract. it cannot be said thatthe judgment-debtor has made a gift of hismoney to the decree-holder and it will be toowide and unjust a proposition to hold that thejudgment-debtor is without any remedy inlaw to get refund of the amount paid by himwhich results in an unjust enrichment of thedecree-holder. the case is one of clear breachof contract on the part of the decree-holderand the failure of consideration or even of a statutory duty to certify the payment, the suit that is instituted for refund of the money is one based on the failure to certify and to adjust the decree and is not one relating to execution, discharge or satisfaction of the decree for which alone the bar of section 47 applies. the judgment-debtor is entitled to have his normal remedies at law to get refund of the money which had not been utilised for the purpose for which it had been intended. it cannot be that the law has left the judgment-debtor without a remedy in such cases merely because of section 47. unjust enrichment is not encouraged by the law, more so when it is the result of the breach of an express or implied undertaking by the decree-holder himself that the decree will stand satisfied in whole or in part. we, therefore, hold that the suit is maintainable and is not barred by section 47.11. counsel further argued that the plaintiff has not laid any foundation for the award of interest at 12% per annum from the date of suit. there is no substance in this contention. the plaintiff has categorically avarred in the plaint that he is entitled to award of interest at 12% per annum from the date of suit till recovery. there is absolutely no traversal of this plea in the written statement and as such we have to proceed on the basis that the claim for interest at 12% is not merely undisputed but also admitted. counsel's next plea was that interest after the decree has also been awarded at 12% and that it cannot exceed 6% as under s. 34. the plaintiff has clearly defrauded the defendant and received money from him with the undertaking that it will go in discharge of the decree in o. s no. 64 of 1978. despite the undertaking he took out execution proceedings for the entire amount. the plaintiff is damnified by the said action of the appellant. the suit, as laid down in various decisions, is for damages for breach of contract, though the quantum of damages in this case is assessed as the amount paid with interest. we do not, therefore, find any reason to limit the award of interest to anything less than 12% till recovery. further we are also inclined to hold that the transaction under which the amount passed was a commercial transaction. the appellant had lent money to the respondents on hypothecation of hiscardamom estate, which is in the nature of a commercial transaction. it is only in connection with that that the present amount of rs. 18,000/- covered by ext. a1 was also paid. the appellant has claimed interest at 12% from the respondents in respect of the amount due under the loan transaction. there is therefore no reason why, for the amount paid by the respondents in repayment, which did not fructify, a lesser rate of interest should be awarded. we do not find any justice or enquity in the claim made by the appellant that the post decree period should carry interest only at 6%. we, therefore, reject all the contentions raised by the appellant.the appeal is dismissed in limine.