Appeal No 804 of 1963
Appeal by special leave from the judgment and decree dated January 3 1961 of the Orissa High Court in Appeal under Orissa High Court Order No 3 of 1959
25 K R Chaudhuri for the appellant
C B Aggarwala B Parthasarathy J B Dadachanji OC Mathur and Ravinder Narain for respondent No 1
The Judgment of the Court was delivered by Ramaswami J
This appeal is brought by special leave on behalf of the judgment debtor against the judgment of the Orissa High Court dated January 3 1961 in Letters Patent Appeal No 3 of 1959
The deceased plaintiff filed Original Suit No 500 of 1941 against the appellant defendant in the Court of the Additional Munsif Aska claiming Rs 970 on the basis of a promissory note
The suit was dismissed on August 17 1942
The plaintiff preferred an appeal No 178 of 1942 before the District Judge who allowed the appeal and set aside the decree of the Munsif and decreed the suit ex parte on March 9 1943
Against this decree of the appellate Court the appellant filed Second Appeal No 100 of 1943 in the Orissa High Court which set aside the decree of the District Judge on November 11 1946 and remanded the suit to the lower appellate court for disposal
The lower appellate court in its turn remanded the suit to the trial court by its judgment dated April 11 1947
In the meantime the original plaintiff died and the present respondents were brought on record as his legal representatives
The suit was again dismissed by the trial court on November 29 1947 but on appeal the Additional Subordinate Judge set aside the judgment and decree of the Munsif on November 30 1948
The appellant carried the matter in Second Appeal No 12 of 1949 to the Orissa High Court which dismissed the appeal on August 27 1954
After the ex parte decree was passed inappeal No 178 of 1942 by the District Judge on March 91943 the plaintiff executed the decree attached the propertiesin dispute and himself purchased the properties in Court auction
The plaintiff also took delivery of the properties on May 17 1946 and since that date the respondents have been in possession of the properties and enjoying the usufruct
After the decree of the High Court dated November 11
1946 in Second Appeal No 100 of 1943 the appellant made an application for restitution in the Court of the Additional Munsif in Miscellaneous Judicial Case No 34 of 1947
The plaintiff obtained a stay of the hearing of the Miscellaneous Judicial Case from the Court of the Additional District Judge but on March 30 1948 the order of stay was discharged
In Civil Revision No 75 sup Cl66 3 2 6 of 1948 the High Court also granted interim stay in the proceedings in the Miscellaneous Judicial Case at the instance of the plaintiff but the order of stay was vacated by the High Court on April 28 1949
Thereafter the present appellant got the Miscellaneous Judicial Case stayed till disposal of his Second Appeal after remand
On July 12 1956 the Miscellaneous Judicial case was allowed by the Munsif and an order of restitution was made in favour of the appellant
The respondents filed an appeal before the Subordinate Judge of Berhampur who allowed the appeal and set aside the order of restitution
The appellant took the matter before the High Court in Miscellaneous Appeal No 24 of 1958 which was allowed by P V Balakrishna Rao J on October 3 1958 and it was ordered that the restitution of the properties should be made to the appellant subject to the condition that he must deposit the amount decreed in favour of the plaintiff decree holder
The order of the learned Single Judge was however set aside in Letters Patent appeal by a Division Bench which held that the appellant was not entitled to restitution of properties sold in the execution case
The question presented for determination in this case is whether the appellant was entitled to restitution of his properties purchased by judgment debtor in execution of the decree passed by the District Judge on the ground that the decree was set aside by the High Court and the suit was remanded for rehearing and fresh disposal under the provisions of section 144 of the Civil Procedure Code which states as follows 144 1 Where and in so far as a decree or order is varied or reversed the Court of first instance 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
 On behalf of the responds Mr aggarwala made the submission that after the suit was re heard a decree was passed in favour of the respondents and that decree was eventually affirmed by the High Court and the appellant was therefore not entitled to 27 restitution under the provisions of this section
We are unable to accept this argument as correct
The properties of the appellant were sold in execution at the instance of the respondents who were executing the ex parte decree passed by the District Judge on March 9 1943
In this execution case the properties of the appellant were sold and the respondents got delivery of possession on May 17 1946
It is true that the suit was eventually decreed after remand on August 27 1954 by judgment of the High Court but we are unable to accept the argument of the respondents that the execution sale held under the previous ex parte decree which was set aside by the High Court is validated by the passing of the subsequent decree and therefore the appellant is not entitled to any restitution
It is evident that the application for restitution was filed by the appellant in 1947 in Miscellaneous Judicial Case No 34 of 1947 before the passing of a fresh decree by the High Court in the Second Appeal
At the time of the application for restitution therefore the appellant was entitled to restitution
because on that date the decree in execution of which the properties
were sold had been set aside
We are of the opinion that the appellant is entitled to restitution notwithstanding anything which happened subsequently as the right to claim restitution is based upon the existence or otherwise of a decree in favour of the plaintiff  at the time when the application for restitution was made
The principle of the doctrine of restitution is that on the reversal of a decree the law imposes an obligation on the party to the suit who received the benefit of the erroneous decree to make restitution to the other party for what he has lost
This obligation arises automatically on the reversal or modification of the decree and  necessarily carries with it the right to restitution of all that has been done under the erroneous decree and the Court in making restitution is bound to restore the parties so far as they can berestored to the same position they were in at the time when the Court by its erroneous action had displaced them from
It should be noticed in the present case that the properties were purchased  by the decree holder himself in execution of the ex parte decree and not by a stranger auction purchaser
After the ex parte decree was set aside in appeal and after a fresh decree was passed on remand the sale held in execution of the ex parte decree becomes invalid and the decree holder who purchased the properties in executions of the invalid decree is bound to restore to the judgment debtor what he had gained under the decree which was subsequently set aside
The view that we have expressed is borne out by the decision of the Judicial Committee in Zain Ul Abdin Khan vs 28 Muhammad Asghar Ali Khan1 in which a suit was brought by the judgment debtor to set aside the sale of his property in execution of the decree against him in force at the time of the sales but afterwards so modified as the result of an appeal to Her Majesty in Council that as it finally stood it would have been satisfied without the sales in question having taken place
The judgmentdebtor sued both those who were purchasers at some of the sales being also holders of the decree to satisfy which the sales took place and those who were bona fide purchasers at other sales under the same decree who were no parties to it
The Judicial Committee held that as against the latter purchasers whose position was different from that of the decree holding purchasers the suit must be dismissed
At page 172 of the Report Sir B Peacock observed as follows It appears to their Lordships that there is a great distinction between the decree holders who came in and purchased under their own decree which was afterwards reversed on appeal and the bona fide purchasers who came in and bought at the sale in execution of the decree to which they were no parties and at a time when that decree was a valid decree and when the order for the sale was a valid order The same principle has been laid down by the Calcutta High Court in Set Umedmal and another vs Srinath Ray and another 2  where certain immovable properties were sold in execution of an exparte decree and were purchased by the decree holder himself
After the confirmation of the sale the decree was set aside under section 108 of the Civil Procedure Code 1882 at the instance of some of the defendants in the original suit
On an application unders
244 of the Civil Procedure Code 1882 having been made by adecree to set aside the sale held in execution of the ex parte decree the defence was that the application could not come under section 244 of the Civil Procedure Code 1882 and that the sale could not be set aside as it had been confirmed
It was held by the Calcutta High Court that the ex parte decree having been set aside the sale could not stand inasmuch as the decree holder himself was the purchaser
At page 813 Maclean CJ stated  As regards the second point viz whether notwithstanding the confirmation the sale ought to be set aside 1 ILR 10 All 166
2 ILR 29 the fact that the decree holder is himself the auction purchaser is an element of considerable importance
The distinction between the case of the decree holder and of a third party being the auction purchaser is pointed out by their Lordships of the Judicial Committee in the case of Nawab Zainal abdin Khan vs Mahommed Asghar Ali ILR 10 All 166 and also in the case of Mina Kumari Bibee vs Jagat Sattani Bibee ILR  which is a clear authority for the proposition that where the decree holder is himself the auction purchaser the sale cannot stand if the decree be subsequently set aside
I am not aware that this decision which was given in 1883 has since been impugned
 The same view has been expressed in Raghu Nandan Singh vs Jagdish Singh1 where it was held that if an ex parte decree has been set aside it cannot by any subsequent proceeding be revived and if a decree is passed against judgment debtors on re hearing it is a new decree and does not revive the former decree
The same opinion has been expressed in Abdul Rahaman vs Sarafat Ali2 in which it was pointed out that as soon as an ex parte decree was set aside the sale where the decree holder was the purchaser falls through and was not validated by a fresh decree subsequently made
The same principle was reiterated by the Bombay High Court in Shivbai Kom Babya Swami vs Yesoo3
In that case an ex parte decree was passed against the defendant in execution of which the defendant s house was sold and purchased by the plaintiff decree holder
The ex parte decree was subsequently set aside but at the retrial a decree was again passed in plaintiffs favour
In the meanwhile the defendant applied to have the sale of the house set aside
It was held in these circumstances by the Bombay High Court that the previous sale of the house in execution under the previous decree which had been set aside should itself be set aside as being no longer based on any solid foundation but subject in all the circumstances to the condition that the defendant should pay up the amount due under the second decree within a specified time
On behalf of the respondents reference was made to the decision of this Court in Lal Bhagwant Singh vs Rai Sahib Lala Sri Kishen Das
4  But the ratio of that case has no application to the present case
It should be noticed that the decree in that case was affirmed at all stages of the litigation except that the amount of 1 14 Calcutta Weekly Notes 182
3 ILR 2 20 Calcutta Weekly Notes 667
4 30 the decree was slightly altered from Rs 338300 and odd to Rs 376790 and odd which amount was ultimately decreed by the Privy Council in the appeal which the judgment debtor preferred from the decision of the Oudh Chief Court which restored the decree of the trial Judge who decreed a sum of Rs 388300
It was held by this Court that the Privy Council had merely restored the amended decree without altering the provisions as to payment by instalments or extending the time for payment by instalments and its decree did not in any way alter the position of the parties as it stood under the amended decree and the sale was not in consequence of any error in a decree which was reversed on appeal by the Privy Council and so the judgment debtor was not entitled to restitution
In the present case the materialfacts are manifestly very different
For the reasons expressed we are satisfied that the appellant is entitled to restitution of the properties sold in execution of the export decree subject to equities to be adjusted in favour of the respondent decree holders
We order that the appellant should be restored back to possession of the properties sold in the execution case subject to the condition that he deposits the amount of Rs 970 in the Court of the Munsif Aska within two months from this date
If no deposit is made within this time this appeal will stand dismissed with costs
But if the appellant makes the deposit within the time allowed the sale of the properties in the execution case will be set aside and the respondents will make over the possession of the properties sold to the appellant
The appellant will not be entitled to any past mesne profits but if the respondents do not deliver the possession of the properties the appellant will be entitled to the future mesne profits from the respondents from the date of deposit till the actual date of delivery of possession
Learned Counsel for the appellant has informed us that the deposit has already been made by the appellant in pursuance of the order of the learned Single Judge of the High Court dated October 3 1958
If the deposit has already been made the appellant will be entitled to take possession of the properties through the executing court and to future mesne profits from the date of this judgment till the actual date of delivery of possession
We accordingly allow the appeal to the extent indicated above
In the circumstances of the case we do not propose to make any order as to costs
Appeal allowed in part


Summary:
A money suit against the appellant was dismissed by the trial court but the first appellate court passed an ex parte decree against him
The appellant s property was sold in execution and purchased by the decreeholder
The appellant went to the High Court which set aside the exparte decree and remanded the suit
The appellant then filed an appli cation for restitution under section 144 of the Code of Civil Procedure
It was stayed pending proceedings in the main suit Me suit was finally decided against the applicant by the High Court
Thereafter the trial court allowed the appellant s application for restitution
After intermediate proceedings the High Court decided in Letters Patent Appeal that the appellant was not entitled to restitution
He appealed to this Court by special leave
HELD The application for restitution was filed by the appellant before the passing of a fresh decree by the High Court in second appeal
At the time of the application therefore the appellant was entitled to restitution because on that date the decree in execution of which the properties were sold had been set aside
The appellant was therefore entitled to restitution notwithstanding anything which happened subsequently
27 C E The principle of the doctrine of restitution is that on the reverse of a decree the law imposes an obligation on the party to the suit who received the benefit of the erroneous decree to make restitution to the other party for what he has lost
The Court in making restitution is bound to restore the parties so far as they can be restored to the same position they were in at the time when the Court by its erroneous action had displaced them from
27 E F Zainal Abdin Khan vs Muhammad Asghar All Khan ILR 10 All 166 relied on
Set Umedmal  Anr
vs Srinath Ray  Anr
ILR 27 Cal
810 Raghu Nandan Singh vs Jagdish Singh  Abdul Rahaman vs Sarafat Ali and Shivbai Kom Babya Swam vs Yesoo ILR  referred to
Lal Bhagwant Singh vs Rai Sahib Lala Sri Kishen Das  distinguished