Summary of the Judgment
Case Name: Bhikchand S/O Dhondiram Mutha (Deceased) Through LRs. Vs. Shamabai Dhanraj Gugale (Deceased) Through LRs.
Date: 14th May 2024
Judges: Honorable Justice Hrishikesh Roy, Honorable Justice Prashant Kumar Mishra
Advocates: For Appellant: Mr. D.N. Goburdhan For Respondent: Mr. Vinay Navare, Mr. K. Parameshwar
Acts and Sections: Section 144 Code of Civil Procedure, 1908 (CPC)
Cited Judgements: Binayak Swain vs. Ramesh Chandra Panigrahi & Anr Chinnamal & Ors. Vs. Arumugham & Anr Padanathil Rugmini Ama Vs. P.K. Abdulla South Eastern Coalfields Ltd. Vs. State of M.P. & Ors Jai Berham v. Kedar Nath Marwari Zain-Ul-Abdin Khan vs. Muhammad Asghar Ali Khan
Introduction
The Supreme Court of India delivered a significant judgement in the case of Bhikchand S/O Dhondiram Mutha (Deceased) Through LRs. Vs. Shamabai Dhanraj Gugale (Deceased) Through LRs. on 14th May 2024. This case revolves around the legal principle of restitution under Section 144 of the Code of Civil Procedure, 1908 (CPC). The judgement addressed the complexities surrounding the execution of a decree, the sale of a judgment debtor's property, and the subsequent restitution when the decree was varied by an appellate court.
Case Background
The legal dispute began in 1969 when Dhanraj, the husband of the original plaintiff Shamabai Dhanraj Gugale, advanced a loan of Rs. 8,000 to the appellant, Bhikchand S/O Dhondiram Mutha. Upon the appellant's failure to repay the loan, Shamabai filed a Special Civil Suit No. 255 of 1972 for the recovery of Rs. 10,880, which included the principal amount and accrued interest.
On 15th February 1982, the 4th Joint Civil Judge, Senior Division, Pune, partly decreed the suit, awarding the principal amount, pre-suit accrued interest, and pendente lite interest at 12% per annum until the realization of the principal amount. However, the plaintiff-decree holder preferred an appeal against the partial rejection of the claim, while the judgment debtor filed cross objections.
During the pendency of the appeal, the decree holder initiated execution proceedings, resulting in the auction sale of the judgment debtor's property on 23rd September 1985. The plaintiff-decree holder purchased the property in the auction. Subsequently, the appellate court modified the decree, reducing the interest rates and costs, which significantly lowered the total decretal amount from Rs. 27,694 to Rs. 17,120.
Legal Issue
The primary legal issue in this case pertains to the entitlement of the judgment debtor to restitution under Section 144 CPC after the appellate court modified the original decree. The appellant sought restitution, arguing that the execution sale should be set aside due to the reduction in the decretal amount.
Analysis
Restitution Principle
Section 144 CPC embodies the principle of restitution, which is statutorily recognized but also inherent in the court's general jurisdiction to act fairly and justly. As the Hon'ble Supreme Court explained,
"The principle of restitution takes care of restoring to a party, on the modification, variation, or reversal of a decree or order, what has been lost due to the execution of that decree or order."
In this case, the appellate court's modification of the decree reduced the total amount payable by the judgment debtor. Despite this, the execution sale had already been conducted, and the property was sold to the decree holder. The appellant argued that the principle of restitution necessitates setting aside the sale to place the parties back in their original positions before the execution of the decree.
Decree Holder as Auction Purchaser
A key point of contention was whether the decree holder, who purchased the property in the auction, could resist restitution. The Supreme Court has previously distinguished between third-party bona fide purchasers and decree holders who purchase properties in execution of their decrees. In Binayak Swain vs. Ramesh Chandra Panigrahi & Anr, the Court emphasized that
"where the decree holder is himself the auction purchaser, the sale cannot stand if the decree is subsequently set aside."
This principle was reinforced in Chinnamal & Ors. Vs. Arumugham & Anr, where the Court held that a decree holder who purchases property in execution is not entitled to the same protection as a bona fide third-party purchaser. The latter remains unaffected by the subsequent reversal or modification of the decree, whereas the former must restore the property to the judgment debtor.
Sale of Property and Valuation
The Court scrutinized the execution sale, noting that the decree holder purchased the property for Rs. 34,000 despite the property's estimated value being significantly higher. The auction included multiple properties worth a total of Rs. 1,05,700 to satisfy a decree amount of Rs. 27,694, raising questions about the fairness and necessity of selling the entire property.
The Court highlighted that under Order XXI Rule 64 CPC, it is mandatory to sell only so much of the attached property as is necessary to satisfy the decree. Selling the entire property without examining if a portion could suffice constitutes a breach of this requirement.
Conclusion
The Supreme Court, in its judgement, allowed the appeal, setting aside the execution sale and restoring the parties to their original positions before the execution. The Court emphasized that the principle of restitution aims to rectify the injustice caused by the erroneous or varied decree. It reiterated that a decree holder who purchases the property in execution must restore it if the decree is subsequently modified.
Hon'ble Justice Prashant Kumar Mishra, in delivering the judgement, remarked,
"The principle of restitution is not just a statutory provision but a reflection of the court's duty to ensure justice, equity, and fair play. It is imperative that no party gains an undue advantage from a decree that has been modified or reversed."
This judgement reaffirms the Supreme Court's commitment to upholding the principles of justice and equity, ensuring that the legal process does not unduly harm any party involved. It also underscores the importance of meticulous adherence to procedural requirements in execution proceedings to prevent exploitation and ensure fair outcomes.
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