judgement:
Appeals Nos. 777 and 778 of 1964.
Appeals by special leave from the judgment and order dated March 5, 1964 of the Gujarat High Court in First appeals Nos. 111 and 112 of 1960.
W. section Barlingay and A. G. Ratitaparkhi, for the appellant (in both the appeals).
I. N. Shroff, for the respondents 2 and 3.
Sarkar J. delivered a dissenting Opinion.
The Judgment of Subba Rao, Raghubar Dayal, Ayyangar and Mudholkar JJ.
was delivered by Subba Rao J. Sarkar J.
These appeals arise from two miscellaneous appli cations made to the trial Court which was the Court of the Civil Judge, Nadiad in the State of Gujarat.
One of these applications was for execution of orders for costs awarded and the other was under section 144 of the Code of Civil Procedure for restitution of money and property taken in execution of a decree reversed in appeal. 'Me appellant is the successor in interest of the plaintiff in the suit out of the proceedings of which these appeals arise and the respondents were the defendants there.
The appellant 's predecessor in interest had filed the suit for possession of land against the respondents and another person, now dead.
The suit was decreed with costs by the trial Court on November 30, 1945 but that decree was set aside on July 13, 1949 439 on appeal by the defendants to the High Court of Bombay.
While the appeal was pending the appellant 's predecessor in interest had in execution of the decree of the trial Court obtained possession of the land and realised the costs awarded.
Also pending the appeal the appellant 's predecessor in interest having died, the appellant was substituted in his place.
After the appellate decree had been drawn up, it was amended on August 24, 1950 by deleting the name of one of the appellants mentioned therein, being one of the defendants to the suit, on the ground of his death.
The appellant got leave from this Court under article 136 of the Constitution to appeal from the appellate decree but such leave was revoked on November 24, 1952 as the appellant had failed to carry out the condition on which it had been granted.
Thereafter on February 1 1, 1 9 5 3, the respondents filed in the trial Court the application for execution for recovering the costs awarded to them in the proceedings up to the date of the revocation of leave by this Court and out of this application one of the appeals has arisen.
On February 13, 1953, they filed the other application under section 144 of the Code for restitution of the land taken and the costs realised from them in execution of the decree of the trial Court and out of this the other appeal has arisen.
The only question argued in each appeal is whether it is barred by limitation.
As regards the application for execution, I agree with my learned brother Subba Rao that it is not barred by time and the appeal arising from it, that is, appeal No. 777 of 1964 should be dismissed.
On this matter I, have nothing to add to what my learned brother has stated in his judgment.
On the other application, namely, the application for restitution under section 144 of the Code, I have come to a conclusion different from that of my learned brother.
The question here also, as I have already said, is whether the application had been made beyond the time specified and was barred.
The appellant, who was the defendant to that application, contended that an application under section 144 was not in execution and would be governed by article 181 of the Limitation Act which covers applications not specially provided for in the Schedule to that Act and not by article 182 relating to execution.
The respondents who wanted the restitution, contended on the other hand that the case came under article 182 as the application for it was really one in execution.
Subject to certain questions which I will later discuss, it is not in dispute that if article 181 applied, then the application would be barred while it would not be so if the case was governed by article 182.
Supp./65 12 440 The question, therefore, in this appeal is whether an application under section 144 is an application in execution.
On that question there has been a great divergence of opinion in the High Courts.
It would not be profitable to refer specifically to the reasons given in these judgments in support of the views respectively adopted, for these reasons will, in substance, all be discussed later.
In my view, an application under section 144 is not one for execution and I proceed now to state my reasons for that view.
I suppose our first task in deciding what kind of application is contemplated in section 144 is to look at its terms.
On doing so, I find that no reference to execution is made in it.
It is not contained in any chapter dealing with execution.
It says that when a party becomes entitled to restitution as a result of a decree being varied or reversed, the Court of first instance shall, on his application, cause restitution to be made and for this purpose the Court may the word "may" here clearly means "shalt" make any orders that may be necessary.
Apart from the fact that the application is not described as one in execution, the provision for the making of an order for the purpose of effecting restitution would lead to the ,conclusion that it is this order which is to be executed for obtaining restitution.
The section obviously could not contemplate two applications for execution, and therefore, the earlier application resulting in the order mentioned in the section could not be one for execution.
It seems to me impossible, looking at the terms of the section alone and without more, we have no right to look at anything else to say that the application contemplated in it is one in execution.
There are other reasons indicating that the application contemplated by the section is not one for execution.
Thus if the application was in execution, then under section 47 of the Code a suit to obtain the same relief would be barred.
It would then have been unnecessary to provide by sub section
(2) of section 144 that no suit shall be instituted for the purpose of obtaining restitution.
Again turning to the definition of decree in section 2, sub sec.
(2), I find that it includes the determination of a question within section 144.
This provision would be wholly unnecessary if the determination of that question was in execution proceedings for then the matter would be brought within the definition of decree by that part of it which included in it the determination of any question within section 47 which section relates to questions arising in execution.
Lastly, while section 144 provides that the application under it is to be made to "the Court of first instance", section 38 which occurs in 441 a part of the Code dealing with execution, states that a decree may be executed either by "the Court which passed it or by the Court to which it is sent for execution".
Section 39 provides for a transfer of a decree for execution to another Court and by virtue of Or.
21, r, 10, the holder of a decree desiring to execute it shall, if the decree has been sent to another Court, apply to that Court.
Under section 144 however the application had to be made to "the Court of first instance".
The section does not permit an application to be made to a transferee Court.
This again will indicate that it was riot intended that an application under section 144 will be an application for execution.
No doubt, the expression "Court of first Instance" has to be interpreted in a general sense and would include, where the Court of first instance has ceased to exist, a court which then has jurisdiction over the territory in which the abolished Court functioned.
Such a view was taken in Panchapakesa Aiyar vs Natesa Pathar(l).
This however is a different matter.
It was said on behalf of the respondents that section 144 of the Code of 1908 was intended to replace the analogous provisions contained in section 583 of the preceding Code of 1882 and was in effect a re enactment of the earlier provision and, therefore, in construing section 144 it has to be considered in what way the earlier provision, namely, section 583, was defective which defects the new provision intended to rectify.
It does not seem to me that even this approach assists the contention that section 144 contemplates an application in execution.
Section 583 expressly said that the restitution was to be obtained by way of an execution.
While it is true that on various questions arising under section 583 difficulty had been felt and divergent views expressed in the High Courts, there was however no doubt ever felt that the earlier section had provided for a procedure by way of execution to obtain restitution.
The earlier section cannot, therefore, lend any support to the view that the application under the new section has to be in execution.
Indeed the old section leads to the contrary view for while it expressly provided that restitution would be by way of execution, the present section deliberately omits reference to execution.
This departure in the terminology used, would tend to the view that it was intended that the procedure under the new section would not be by way of execution.
With the difficulties actually felt under section 583, we are not concerned in the discussion of the present case: they give no assistance in the solution of the question now before us.
(1) 442 It was then said that if the application for obtaining restitution under section 144 was not in execution, then minors and others would be deprived of the benefit of the provisions in sections 6 and 7 of the Limitation Act and the benefit of section 15 of that Act would also not be available in respect of such an application.
It the language of section 144 by itself clearly indicates that the procedure is not to be by way of execution, as I think it does, it would not be legitimate to interpret that section in a different way because of the deprivation of the benefits under the provisions of another Act.
Furthermore, there will be many applications coming under article 181 of the Limitation Act other than one under section 144 of the Code where the benefits of these sections of the Limitation Act would not be avail able.
The provisions in the Code of Civil Procedure which give rise to the other kinds of applications covered by article 181 of the Limitation Act cannot all be changed for conferring the benefits of sections 6, 7 and 15 of that Act.
Clearly the intention of sections 6, 7 and 15 of the Limitation Act was that their benefit would be available only in cases coming within their terms.
I am, therefore, unable to agree that a consideration of these sections of the Limitation Act is relevant for the present enquiry.
For all these reasons I am of opinion that the application contemplated in section 144 of the Code is not one in execution and, therefore, it is not governed by article 182 of the Limitation Act dealing with execution but by article 181.
for it is not disputed that if article 182 did not apply, article 181 would.
Now under article 181 the time starts to run from the date the right to apply accrues and the period provided is three years.
In the present case if the right to apply accrued from the date of the appellate decree which gave rise to the right of restitution, then the application for restitution would be barred for the appellate decree was passed on July 13, 1949 and the application had been filed on February 13, 1953.
But, as I have already said, after the appellate decree had been drawn up it was amended on August 24, 1950 by deleting the name of one of the appellants who had died.
It was said for the respondents that the right to apply even if article 181 applied, must be said to have accrued when the amendment was made, for before then the present respondents could not apply, and if time was computed from that date the application was not barred.
This contention however is without foundation for under section 9 of the Limitation Act once the time starts running, it does not stop to do so and there is no dispute that the time began to run from the date of the appellate decree when the right to apply first accrued.
443 It was lastly contended for the respondents that time should start running from the date when this Court revoked the leave to appeal granted under article 136.
There is no authority to support this contention.
In the result I would allow appeal No. 778 of 1964 that has arisen from Miscellaneous application No. 16 of 1953 and dismiss the other appeal.
Subba Rao, J. These appeals by special leave raise, inter alia, the question whether article 181 of the Limitation Act or article 182 thereof applies to an application under section 144 of the Code of Civil Procedure, 1908.
The facts may be briefly stated.
Mohanbhai filed Special Jurisdiction Suit No. 28 of 1943 in the Court of the Civil Judge, Senior Division, Nadiad, for possession of the properties described in the Schedule annexed to the plaint from respondents Nos. 1 to 5 and others.
Respondents 1 to 5 claimed to be in possession of the said properties as trustees under a will executed by Mohanbhai 's brother Chhabaji; the other respondents are alleged to be the sevaks appointed by the respondents to administer some of the trust properties.
On November 30, 1945, the learned Civil Judge decreed the suit.
3 of the trustees and the sevaks preferred an appeal, being Appeal No. 317 of 1946, to the High Court of Bombay.
On November 8, 1946, pending the appeal, Mohanbhai obtained possession of the suit properties in execution of the decree of the trial Court; he also recovered a sum of Rs. 1,290 3 0 from the trustees being costs awarded to him by the Trial Court.
Pending the appeal, Mohanbhai died and his son, the present appellant, was brought on record in his place.
On July 13, 1949, the High Court set aside the decree of the Trial Court and dismissed the suit with costs.
After the appellate decree was drawn up, an application was filed by the decree holders for deleting the name of appellant No. 7 in the High Court on the ground of his death.
On August 24, 1950, the application was granted and the name of appellant No. 7 therein was deleted.
As the application filed by the appellant in the High Court for a certificate to prefer an appeal to this Court was dismissed on January 9, 1951, he filed an application in this Court for special leave to appeal.
On April 16, 1952, special leave to appeal was granted to the appellant.
But as he did not comply with the conditions imposed on him while granting the special leave, this Court on November 24, 1952, rescinded the special leave.
Thereafter, the respondents herein filed 2 applications in the Trial 444 Court, one was Special Darkhast No. 7 of 1953 filed on february 11, 1953, for recovering costs of the suit, the appeal, and the miscellaneous applications, awarded to them against the appellant, and the other was Miscellaneous Application No. 16 of 1953 filed on February 13, 1953, under section 144 of the Code of Civil Procedure 'for the restitution of the estate of Chhabaji which had come into the possession of the appellant and also for the recovery of a sum of Rs. 1,290 3 0 paid by the trustees to Mohanbai in execution of the decree of the Trial Court.
The appellant contended that both the applications were barred by limitation.
The learned Civil Judge held that cl.
(2) of article 182 of the Limitation Act applied to the facts of the case and the period of limitation would run from November 24, 1952, when this Court revoked the order granting special leave, and, therefore, both the applications having been filed within 3 years from that date, they were in time.
Alternatively.
he held that as the decree was amended on August 24, 1950, when the name of the deceased trustee was deleted, the period of limitation would run from that date under cl.
(4) of article 182 of the Limitation Act and, therefore, the two applications would be in time.
In that view, the Trial Court ordered execution to proceed in the said two applications.
The appellant preferred an appeal to the High Court against the said order of the Trial Court.
Before the High Court learned counsel for the appellant contended that in regard to the application for restitution article 181 of the Limitation Act would apply and, therefore the said appli cation not having been filed within 3 years of the date of the decree, was barred thereunder.
Alternatively he contended that even if article 182 of the Limitation Act applied, both the applications would be barred by limitation under the said Article.
The High Court held that both the applications were governed by article 182 of the Limitation Act and that the period of limitation would commence to run from the date the said decree was amended on August 24, 1950, when the name of the deceased trustee was deleted and that, as the said applications were filed within 3 years from the said date, they were within time.
In that view, it con firmed the ordeer of the Trial Court.
Hence the appeals.
Dr. Barlingay, learned counsel for the appellant, raised 'before us the following two points : (1) An application for restitution under section 144 of the Code of Civil Procedure is not an application for the execution of a decree and, therefore, the said application is not governed by article 182 of the Limitation Act, which provides for a period of limitation in the case of execution of decrees, but by article 181 thereof, which is a residuary article of limitation.
445 (2)As under article 181 of the Limitation Act the period of limitation of 3 years starts from the date the right to apply accrues, the said application for restitution was barred by limitation as the respondents right to apply for restitution accrued to them when the appeal filed by them in the High Court was allowed on July 13, 1949.
He further argued that the alleged amendment dated August 24, 1950, would not help the respondents, as the 7th respondent (7th appellant in the High Court) died after the said appeal was disposed of, that is after the respondents ' right to apply accrued; and that the second application viz., Special Darkhast No. 7 of 1953, for recovery of costs was also barred by limitation under article 182 of the limitation Act as it was filed beyond 3 vears from the date of the appellate decree and that the amendment dated August 24, 1950, on which the respondents relied to save the bar, was only an amendment of a clerical mistake and, therefore, was not an amendment within the meaning of article 182(4) of the Limitation Act.
Mr. 1.
N. Shroff.
learned counsel for the respondents, on the other hand, contended that both the applications are governed by article 182 of the Limitation Act and that they are saved both under cl.
(2) and cl.
(4) of article 182 of the, Limitation Act.
Alternatively he argued that even if article 181 of the Limitation Act applied to the application for restitution, it would be within time, as the respondents right to apply accrued to them either on the date when the Supreme Court revoked the special leave granted to the appellant, viz., November 24, 1952, or at any rate on the date when the decree was amended, i.e., August 24, 1950.
We shall first take up the question of Iimitation in regard to an application for restitution.
At the outset it would be convenient to read the relevant provisions of the Code of Civil Procedure and of the Limitation Act.
Section 144 of the Code of Civil Procedure (1 ) Where and in so far as a decree 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, 446 which are properly consequential on such variation or reversal.
(2) No suit shall be instituted for the purpose of obtaining any restitution or other relief which could be obtained by application under sub section (1).
The First Schedule to the Limitation Act Period Time from which Description of application of period begins Limitation to run article 181.
Applications for When the right to which no period of apply accrues.
limitation is provided Three elsewhere in this schedule years or by section 48 of the Code of Civil Procedure, 1908.
article 182.For the execution Three years; 1.
The date of the of a decree or order of or where a decree or order, or any Civil Court not certified provided for by article by copy of 2.
Where there has 183 or by section 48 of the decree or been an appeal, the Code Civil Procedure, orders has the date of the 1908.
been regis final decree tered, six or order of the, years.
Appellate Court or the withdrawal of the appeal, or 3.
Where there has been a review of Judgment,date of the decision passed on the review, or 4.
Where the decree has been ameended, the date of ameendment, or Under the said provisions if an application is one for execution of a decree, Art 182 of the Limitation Act applies; but if it is not an application for execution of a decree, but an application for which no period of limitation is prescribed elsewhere, article 181 of the Limitation Act applies.
The short but difficult question is whether an application for restitution under section 144 of the Code of Civil Procedure is an application for execution of a decree.
Section 144 of the Code of Civil Procedure does not say in express terms that an application for restitution is not an application for execution of a decree; nor does it say that it is one for execution.
So its nature can be ascertained only by construing the said statutory provision.
To execute a decree is to carry into effect the terms of the decree; and "to restitute" is to restore to a 447 party the benefit which the other party has received under a decree subsequently held to be wrong.
There is no dichotomy between execution and restitution, for there can be an executable decree for restitution.
There is a sharp cleavage of opinion among the various High Courts on the question whether an application for restitution is one for execution of a decree or not.
This shows that different views can be taken on a fair construction of section 144 of the Code of Civil Procedure.
In such a case the rule of construction of a statute applicable is stated by Lord Coke, which is adopted by Maxwell, and it is found in Maxwell on Interpretation of Statutes, 11th Edn.
at p. 18 : "To arrive at the real meaning, it is always necessary to get an exact conception of the aim, scope and object of the whole Act; to consider, according to Lord Coke : 1.
What was the law before the Act was passed; 2.
Whatwas the mischief or defect for which the law had not provided; 3.
What remedy Parliament has appointed; and 4.
The reason of the remedy.
" Let us therefore, approach the problem having regard to the said rule of construction.
In Halsbury 's Laws of England, 2nd Edn., Vol.
14, p.38, para.
69, the English law on the subject is stated thus: "Where a wrongful or irregular execution has been set aside, or where a judgment or order has been reversed after execution thereon has taken place, restitution will be made to the successful party.
The order setting aside the execution or reversing the judgment or order should provide for this; and if it does, execution may issue upon it in the ordinary course.
If the order does not so provide, another order may be made, or a writ called a writ of restitution be issued, commanding the judgment creditor to restore the property or pay over the proceeds of sale.
" The said passage indicates that under the English law the appellate order reversing the original one may itself contain a direction for restitution or a court may issue a separate order or a writ of restitution.
In the Code of Civil Procedure, 1859, there was no express provision for restitution.
But the scope of the doctrine of restitution was considered by the Judicial Committee in Shama Purshad Roy Chowdery vs Hurro Purshad Roy Chowdery(l) wherein it stated the principle thus (1) [1865] 10 M I.A.203,211. 448 ". . this rule of law rests, as their Lordship apprehend, upon this ground, that the original decree or judgment must be taken to be subsisting and valid until it has been reversed or superseded by some ulterior pro ceeding.
If it has been so reversed or superseded, the money recovered under it ought certainly to be refunded, and, as their Lordships conceive, is recoverable either by summary process, or by a new suit or action.
The true question, therefore, in such cases is, wether the decree or judgment under which the money ",as originally recovered has been reversed or superseded; and applying this test to the present case, their Lordships are oil opinion, that the decrees obtained by Tara Pushad against Doogra Purshad were superseded by the Order of Her Majesty in Council pronounced in the year 1849.
It was plainly intended by that Order that all the rights and liabilities of the parties should be dealt with under it, and it would be in contravention of the Order to permit the decrees obtained by Tara Purshad pending the appeal on which it was made to interfere with this purpose.
" Though this passage relates to supersession of a decree not in an appeal against that decree but by the Privy Council in a collateral proceeding the Judicial Committee made it clear that the rights and liabilities of parties should be dealt with only under the decree superseding the earlier decree; and it further restated the Englisg principle that restitution could be made either by a summary process or by a new suit or action.
The Code of Civil Procedure, 1882, for the first time, introduced section 583 providing for restitution.
That section read : "When a party entitled to any benefit, by way of restitution or otherwise, under a decree passed in an appeal under this chapter desires to obtain execution of the same, he shall apply to the Court which passed the decree against which the appeal was preferred; and such Court shall proceed to execute the decree passed in appeal, according to the rules hereinbefore prescribed for the execution of decrees in suits." Under this section any party entitled to any benefit under a decree passed in an appeal could file an application in the Court which passed the decree against which the appeal was preferred for the purpose of executing the appellate decree.
The crucial words of 449 the section were "benefit by way of restitution or otherwise under a decree".
Did those words mean that an appellate decree should expressly contain a direction for restoration of any property taken by the respondent in execution of the decree of the first Court, or did they include any benefit to which the decree holder would be entitled as a consequence of that decree of reversal It was held that under that section a party would be entitled to restitution, though restitution was not expressly provided for by the decree see Balvantrav vs Sadrudin(1); and Rohini Singh vs Hodding(2) A bare perusal of the section indicates that an application for restitution under the said section was an application for execution of an appellate decree.
The Privy Council in Prag Narain Kamakhia Singh(3) held that a separate suit would not lie and the relief provided by the said section could be obtained only under section 583 and section 244 of the Code of Civil Procedure in execution proceedings.
An application made to obtain restitution under a decree in accordance with section 583 of the Code of Civil Procedure, 1982, being a proceeding in execution of that decree, it was held by all the High Courts, except one, that proceedings by way of restitution were proceedings for execution within the meaning of article 179 of the Limitation Act, 1877 : see Venkayya vs Raghavacharlu(4), Nand Ram vs Sita Ram(5), and Jeddi Subraya Venkatesh Shanboah vs Ramrao Ramchandra Murdeshvar(6).
There was so conflict on the question whether mesne profit, for the period of dispossession of the party could be recovered only under the said section or by a regular suit.
The legal position under section 583 of the Code of Civil Procedure, 1882, may be stated thus : The benefit accrued to a party under an appellate decree could be realized by him by executing the said decree through the Court which passed the decree against which the appeal was preferred.
The appellate Court which set aside or modified the decree of the first Court could give a direction providing for restitution.
Even if it did not expressly do so, it should certainly be implied as the appellate Court could not have intended otherwise.
The setting aside of the decree itself raised the necessary implication that the parties should be restored to their original position.
Be that as it may, Courts understood the provision in that light and held that such a decree was executable as if it contained such a direction.
Such an application was governed by article 179 of the Limitation Act, 1887, (1) Bom.
(2) Cal.
(3) All. 551 (P.C).
(4) , (5) All. 545.
(6) Bom.
450 corresponding to article 182 of the present Act.
No suit lay for the relief of restitution in respect of such a benefit, the same being held by the Privy Council to be barred by section 244 of the Code of Civil Procedure, corresponding to the present section 47 of the Code.
But the terms of the section were only confined to a party entitled to a benefit by way of restitution or otherwise under a decree passed in an appeal and not under any other proceeding.
With this background the Legislature in passing the Code of Civil Procedure, 1908, introduced section 144 therein.
The said section is more comprehensive than section 583 of the Code of 1882.
Section 144 of the present Code does not create any right of restitution.
As stated by the Judicial Committee in Jai Berham vs Kedar Nath Marwari(l), "It is the duty of the Court under section 144 of the Civil Procedure Code to 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.
Nor indeed does this duty or jurisdiction arise merely under the said section.
It is inherent in the general jurisdiction of the Court to act rightly and fairly according to the circumstances towards all parties involved.
" The section, to avoid the earlier conflict, prescribes the procedure, defines the powers of the Court and expressly bars the maintainability of a suit in respect of a relief obtainable under this section.
The section does not either expressly or by necessary implication change the nature of the proceedings.
Its object is limited.
It seeks to avoid the conflict and to make the scope of the restitution clear and unambiguous.
It does not say that an application for restitution, which till the new Procedure Code was enacted, was an application for execution, should be treated as an original petition.
Whether an application is one for execution of a decree or is an original application depends upon the nature of the application and the relief asked for.
When a party, who lost his property in execution of a decree, seeks to recover the same by reason of the appellate decree in his favour, he is not initiating any original proceeding, but he is only concerned with the working out of the appellate decree in his favour.
The application flows from the appellate decree and is filed to implement or enforce the same.
He is entitled to the relief of restitution, because the appellate decree enables him to obtain that relief, either expressly or by necessary implication.
He is (1) [1922] L.R. 49 I.A. 351, 355.
451 recovering the fruits of the appellate decree.
Prima facie therefore, having regard to the history of the section, there is no reason why such an application shall not be treated as one for the execution of the appellate decree.
Now let us consider the arguments pressed on us for taking the contrary view.
It is said that when an appellate Court makes a decree setting aside the decree of the first Court without providing for restitution, there is no executable decree for restitution.
But this argument concedes that if the appellate Court provides for restitution, an application for restitution will be an application for execution of a decree.
Even if it is an execution application, the procedure to be followed and the power of the Court to order a restitution would be confined to section 144 of the Code.
Therefore, an execution application for restitution would be governed by section 144 of the Code of Civil Procedure.
If the argument of the learned counsel for the appellant be accepted, it will lead to inconsistent positions depending upon whether the appellate decree gave a direction for restitution or it did not.
If it did not, the application would become an original petition; if it did, it would be an execution application.
This inconsistency can be avoided, if such a direction for restitution be implied in every appellate decree setting aside or modifying the decree of the lower Court, even if it does not expressly give such a direction.
The second objection is that if the view of the High Court is correct, section 144 would become redundant, as section 47 of the Code covers the same field.
Even under the Act of 1882 there were two sections, namely, section 583, corresponding, to some extent, to section 144 of the present Code, and section 244, corresponding to section 47 of the present Code.
Even so, there was a conflict under the old Code as regards the scope of restitution and also as regards the question of the bar of a suit in a civil Court.
Section 144 was enacted to avoid the conflict, to clarify the doubts, and to define the powers of the Court.
Sub section (2) of section 144 of the Code of Civil Procedure, 1908, was enacted to obviate any further debate on the question of bar of a suit.
The next criticism is that while execution proceedings are confined to Part 11 and Order XXI of the Code of Civil Procedure, the Legislature, presumably to make it clear that an application for restitution is not an execution application, placed it in Part XI thereof under the heading "Miscellaneous".
The placing of a particular section in a Part of the Code dealing with a specific subject matter may support the contention that section deals 452 with a part of the subject dealt with by that Part, but that cannot be said when a particular section appears under a Part dealing with miscellaneous matters.
The Part under the heading "Miscellaneous" indicates that the sections in that Part cannot be allocated wholly to a Part dealing with a specific subject, for the reason that the sections entirely fall outside the other Parts or for the reason that they cannot entirely fail within a particular Part.
They may have a wide scope cutting across different parts dealing with specific subjects.
Section 144 may have been placed in Part Ill. as relief of restitution may cover cases other than those arising in execution of a decree of an appellate Court setting, aside the decree of a Court under appeal.
Indeed there is a conflict on the question whether 144 applies to an order setting aside an ex parte decree, to a decree setting aside another decree in a collateral proceeding and to dependent decrees etc.
That apart, even under the earlier Code, section 583 was not placed in the chapter dealing with "execution", but only in the chapter dealing with appeals.
Indeed, some of the sections in Part XI partly deal with execution a matters : see sections 132(2), 135(3), 135A, etc.
The fact that a section has been placed in a particular Part for convenience of arrangement cannot affect the question if in reality the application is one for execution : at the most it is only one of the circumstances relevant to the present enquiry; it is lot decisive of the question one way or other.
Nor can we accept the argument that if an application under section 144 of the Code of Civil Procedure is an application for execution, it will be inconsistent with section 38 of the Code.
Under section 144 an application can be filed only before the Court of the first instance whereas under section 38 a decree may be executed either by the Court which passed it or by the Court to which it is sent for execution.
But under section 37 the expression "Court which passed a decree", or words to that effect, shall in relation to the execution of decrees, unless there is anything repugnant in the subject or context, be deemed to include, (a) where the decree to be executed has been passed in the exercise of appellate jurisdiction, the Court of first instance, and (b) where the Court of first instance has ceased to exist or to have jurisdiction to execute it, the Court, which, if the suit wherein the decree was passed was instituted at the time of making the application for the execution of the decree, would have jurisdiction to try such suit.
It is, therefore, clear that the expression "Court which passed a decree" includes the Court of first instance where the decree to be executed has been passed in the exercise of appellate jurisdiction.
A combined reading of 453 sections 37 and 38 indicates that the Court of first instance is the Court which passed the decree within the meaning of s 38, and, therefore, an application for execution of the decree can be filed therein.
If the Court of first Instance is deemed to be the Court which passed the decree, we do not see any difficulty in holding that the ,aid Court can transfer the decree under section 39 of the Code.
The contention that the determination of a question under section 144 of the Code is included in the definition of a decree under section 2(2) of the Code has also no relevance to the question before us.
The said definition takes in both an order made under section 47 and that made under section 144 of the Code.
The said two sections are included for the purpose of giving a right of appeal.
If an execution application to which section 47 applies does not cease to be an execution application by reason of the section being included in the definition of "decree", an execution application under section 144 cannot likewise cease to be one for the reason that the said section is included in the definition of "decree".
If the argument of the appellant be accepted, it will lead to many anomalies.
If a respondent in the appeal did not execute the decree in his favour and the appeal was dismissed, the period of limitation for executing the decree would be governed by article 182 of the Limitation Act, whereas if he executed the decree and had illegally taken the property from the appellant, though the appeal was allowed, the period of Limitation for restitution would be governed by article 181 of the Limitation Act.
If the appellate Court gave a direction in the decree for restitution, the period of limitation for executing the decree would be governed by article 182 of the Limitation Act, whereas if no such direction was given, it would be governed by article 181 thereof.
Where an appellant was a minor or under a disability he could not take advantage of the periods of extension provided under sections 6 and 7 of the Limitation Act, though the appeal was allowed in his favour, by filing an application for restitution; whereas if the appeal was dismissed, the respondent, if he happened to be a minor or under a disability, would get the extension for executing the decree.
If an application for restitution was not an application for execution of a decree and if the restitution was stayed by a second appellate Court, under section 15 of the Limitation Act the time during which the party was prevented from applying for restitution could not be excluded, even if ultimately the appeal was dismissed, with the result the application for restitution would get barred.
The construction suggested by the learned counsel for the appellant will lead to 454 the said anomalies.
The existence of anomalies may have no relevance when a provision of a statute is clear and unambiguous, but it will certainly have a bearing when the section is ambiguous.
As we have already indicated, there are strong currents of judicial opinion expressing conflicting views on the construction of section 144 of the Code of Civil Procedure.
The Madras High Court in Somasundaram vs Chokkalingam(1) and Chittoori Venkatarao vs Chekka Suryanarayana (2) , the Bombay High Court in Kurgodigouda 'vs Ningangouda (8) and Hamidalli vs Ahmedalli (4) , the Patna High Court in Bhaunath vs Kedarnath(5), the Chief Court of Oudh in Chandika vs Bital(6), the Rangoon High Court in A.M.K.C.T. Muthuukarauppan Chettiar vs Annamalai(7), the High Court of Travancore Cochin in Kochu Vareed vs Mariyam(8), and the Madhya Pradesh High Court in Choudhary Hariram vs Pooran Singh(9) held that an application under section 144 of the Code of Civil Procedure was an application for execution of a decree, while it had been held by the High Court of Allahabad in Parmeshwar Singh vs Sitaldin Dube(") and other cases, the Calcutta High Court in Sarojebhushan vs Debendranath(11) and Hari Mohan Dalal vs Parmeshwar Shau(12) and other cases, the Nagpur High Court in Khwaja Allawali Kesarimal(13), and the Punjab High Court in Mela Ram vs Dharam Chand and Amrit Lal(14) that it was not an application for execution.
We have gone though the judgments carefully and we have derived great assistance from them.
If we are not dealing with each of the cases specifically, it is only because we have practically dealt with all the views.
We realize that the opposite construction for which the appellant contended is also a possible one; but it ignores the history of the legislation and the anomalies that it introduces.
On a procedural matter pertaining to execution when a section yields to two conflicting constructions, the Court shall adopt a construc tion which maintains rather than disturbs the equilibrium in the field of execution.
The historical background of section 144 of the Code of Civil Procedure, the acceptance of the legal position that an application for restitution is one for execution of a decree by a number of High Courts, the inevitable adoption of the said (1) Mad.
(2) I.L.R. (3) Bom.
(4) Bom.
(5) Pat.
411 (F.B.).
(6) Luck.
(7) Rang.
(8) A.I.R. 1952 T.C. 40.
(9) A.I.R. 1962 M.P. 295.
(10) All. 26 (F.B.).
(11) Cal.
(12) Cal.
(13) I.L.R. (14) [1958] I.L.R. Xi (1) Punj.
407(F.B.) 455 legal position by innumerable successful appellants within the jurisdiction of the said High Courts, the possible deleterious impact of a contrary view on such appellants, while there will be no such effect on similar appellants within the jurisdiction of the High Courts which have taken a contrary view, also persuade us to accept the construction that the application for restitution is one for execution of a decree.
We, therefore, hold on a fair construction of the provisions of section 144 of the Code of Civil Procedure that an application for restitution is an application for execution of a decree.
Coming to the second application, namely, Special Darkhast No. 7 of 1953, filed for recovery of costs, undoubtedly it is governed by article 182 of the Limitation Act.
But the appellant contends that the High Court wrongly held that the said application being within 3 years from the date of the amended decree, namely, August 24, 1950, it was within time.
Under cl.
(4) of article 182 of the Limitation Act an application for execution of a decree can be filed within 3 years, where the decree has been amended, from the date of the amendment.
Dr. Barlingay contended that the amendment dated August 24, 1950, was only analogous to a correction of a clerical mistake and.
was not an amendment affecting, the rights of the parties and, therefore, it was not an amendment within the meaning of article 182(4) of the Limitation Act.
It is not necessary to decide in this case whether the expression "amendment" in the said clause takes in an amendment of a clerical error, for we are satisfied that on the facts of the case the amendment was a substantial one and that it did affect the rights of the parties under the decree.
It may be recalled that there were 7 appellants in the High Court and the appellate Court set aside the decree passed by the Trial Court against them.
By the amendment dated August 24, 1950, the name of the 7th appellant was struck out from the decree.
The result of the amendment was that while the original appellate decree was in favour of the 7 appellants, the amended appellate decree was only in favour of 6 appellants.
To that extent the rights of the parties were modified by the amended decree.
It is, therefore, clearly a case where the decree has been amended within the meaning of cl.
(4) of article 182 of the Limitation Act.
If so, the application for execution as well as that for restitution having been filed within 3 years from.
that date, both were Sup./65 13 456 clearly within time.
In the result, the appeals fail and are dismissed with cost.
ORDER In accordance with the Opinion of the Majority the Appeal is dismissed with costs.

summary:
The appellant filed a suit for recovery of certain properties from the respondents.
The suit was decreed by the trial court The respondents appealed to the High Court, but pending the appeal, the appellant, in execution of the decree of the trial court, obtained possession of the suit properties and recovered the costs awarded.
Only July 13, 1949, the High Court set aside the decree of the trial court, and on August 24, 1950, the appellate decree was amended by deleting the name of one of the decree holders from the decree.
The respondents filed two applications one on February 11, 1953 for costs and the other on February 13, 1953 for restitution of the properties and costs paid, under section 144 of the Civil Procedure Code, 1908.
The trial court ordered execution to proceed and on appeal the High Court confirmed the order.
In the appeal to the Supreme Court, it was contended that: (i) the application for recovery of costs was barred by limitation under article 182 of the Limitation Act, 1908, as it was filed beyond 3 years from the date of the appellate decree and (ii) the application for restitution was not an application for execution and was therefore governed by article 181 of the Limitation Act; and as the period of limitation of 3 years under that article, starts from the date when the right to apply accrues the application for restitution was also barred by limitation.
HELD (by Full Court): (i) The execution application for the recovery of costs was within time.
[439 E; 455 H] By the amendment of August 24, 1950, the name of one of the decree holders was struck out from the decree and the result was, to that, extent, the rights of the parties were modified by the amended decree.
it was therefore.
a case where the decree has been amended within the meaning of article 132(4) of the Limitation Act, and the application for execution could be filed within 3 years from the date of the amendment.
[455 G] (ii) (Per Subba Rao, Raghubar Dayal, Rajagopal Ayyangar and Mudholkar JJ.) : On a fair construction of the provisions of section 144 of the Code, an application for restitution must be held to be one for execution of a decree, and having been filed within 3 years from the date of the amended decree was within time.
[455 B, H] Having regard to the history of the section, there is no reason why such an application should not be treated as one for execution of the appellate decree.
The object of the section is to make the scope of restitution clear and unambiguous.
It does not say that an application for restitution, which till the Code of 1908 was enacted was an application for execution, should be treated as an original petition.
Whether an application is one for execution of a decree or in an original application depends upon the nature of the application and the relief asked for.
When a party, who lost his property in execution of a decree, seeks to recover it back by 437 reason of the appellate decree in his favour, he is not initiating any original proceeding but is concerned only with the working out of the appellate decree in his favour.
[450 E H; 451 A] it would be inconsistent to hold that an application for restitution would be an original petition, if the appellate decree did not give a direction for restitution, and that it would be an execution application if it did.
Such an inconsistency could be avoided if a direction for restitution were implied in every appellate decree setting aside or modifying the decree of the lower court.
[451 C E] The existence of section 47 in the Code would make section 144 redundant.
The latter section was enacted to prescribe the procedure, define the powers of the court and expressly bar the maintainability of a suit in respect of a relief obtainable under it.
[451 E, G] The fact that the section has been placed in the "Miscellaneous" part of the Code for convenience of arrangement, cannot affect the question if in reality the application for restitution is one for execution : at the most it is only one of the circumstances relevant to the enquiry and it is not decisive.
[452 D E] Merely because, under section 144, the application has to be filed in "the court of first instance" and under section 38, a decree may be executed both by "the Court which passed if ' or by "the court to which it is sent for execution.
" an application under section 144, does not ease to be one for execution.
For under section 37, the expression "Court which passed a decree" includes the "Court of first instance", when the decree to be executed has been passed in the exercise of appellate jurisdiction.
[452 E G] If an execution application to which section 47 applies does not cease to be an execution application by reason of the section being included in the definition of a "decree" under a. 2(2), an execution application under section 144 cannot likewise cease to be one for the reason that the said section is included in the definition of decree.
The two sections were included only for the purpose of giving a right of appeal.
[453 C D] To construe an application for restitution as not one for execution would lead to anomalies specially under sections 6, 7 And 15 of the Lemitation Act.
The existence of anomalies may have no relevance when a provision of a statute is clear and unambiguous, but will certainly have a bearing when the section is ambiguous.
Further, in a procedural matter pertaining to execution when a section yields to two conflicting constructions, the court should adopt a construction which maintains rather their disturbs the equilibrium in the field of execution.
[453 H; 454 A, F] Per Sarkar J. (dissenting) : The application under section 144 is not one in execution and therefore would not be governed by article 182 of the Limitation Act but by article 181.
Since, under article 181 time starts to Tun from the date the right to apply accrues and the period provided is three years, the application for restitution would be barred.
[442 D F] Apart from the fact that the application is not described as one in execution the provision in the section for the making of an order for the purpose of effecting restitution would lead to the conclusion that it is this order that is to be executed for obtaining restitution; and therefore the earlier application resulting in such order, could not be one for execution.
[440 D E] if the application under section 144 is one for execution, then the pro@ion in the section that no suit shall be instituted for the Purpose of obtaining restitution, and the inclusion of the determination of a question under section 144 within the definition of decree in section 2(2) would be unnecessary because of section 47.
The latter ion which relates to questions arising in 438 execution bars a suit to obtain the same relief, and the determination of any question under that section is included within the definition of decree.
[440 F H] Further, under a. 144, the application has to be made to "the Court of first instance" and not to a transferee court, whereas, under sections 38 and 39 and OXXI, r. 10, the holder of a decree desiring to execute it shall apply to the court to which the decree has been sent for execution.
[441 A C] While the section 583 of the Code of 1882, expressly provided that restitution would be by way of execution, section 144 of the Code of 1908, deliberately omits reference to execution.
This departure in the terminology used, would tend to the view that it was intended that the procedure under the new section would not be by way of execution.
[441 F G] If the language of the section by itself clearly indicates that the procedure is not to be by way of execution, it would not be legitimate to interpret the section in a different way because of the deprivation of the benefits under sections 6, 7 and 15 of the Limitation Act.
[442 B] It cannot be said that the right to apply for restitution accrued when the appellate decree was amended, for under section 9 of the Limitation Act, case began to run from the date of the appellate decree, when the right to apply first accrued.
[442 H]


judgement:
Appeal No. 136 of 1964.
415 Appeal from the judgment and order dated February 24, 1961 of the Bombay High Court in Misc.
Application No. 333 of 1960.
A. V. Viswanatha Sastri, T. A. Ramachandra, J. B. Dadachanji, 0.
C. Mathur and Ravinder Narain, for the appellant.
R. Ganapathy lyer, R. H. Dheber and R. section Sachthey, for the respondent.
The Judgment of the Court was delivered by Sikri, J.
This is an appeal on a certificate granted by the High Court of Bombay against its judgment dated February 24, 1961, dismissing the petition filed by the appellant under article 226 of the Constitution of India.
This appeal raises a short question as to the construction of section 49E of the Indian IncomeTax Act, 1922, hereinafter referred to as the Act.
Before we deal with this question, it is necessary to set out the relevant facts.
The appellant, at the material time, carried on business not only in India but also outside India, i.e. Ceylon, the former States of Kolhapur and Kapurthala and other places.
It is not necessary to give the facts relating to the income in Ceylon and Kolhapur because if the facts relating to the income made in Kapurthala are stated, these will bring out the real controversy between the appellant and the Revenue.
We may mention that it is common ground that the facts relating to Ceylon income and Kolhapur income are substantially similar.
On July 9, 1954, the appellant wrote a letter to the Income Tax Officer, Companies Circle, Bombay, stating that for the assessment year 1949 50, it was entitled to refund on the income taxed in Kapurthala State.
It attached an original certificate for tax showing payment of Rs. 37,828/11/ , and requested that a refund order be passed at an early date.
On June 27, 1956, the Income Tax Officer rejected the claim on the ground that the claim filed by the appellant was not within the time limit of four years laid down in r. 5 of Income Tax (Double Taxation Relief) (Indian States) Rules 1939 hereinafter called the Indian States Rules.
On December 18, 1956, the appellant filed a revision, under section 33A of the Act, against the said order, before the Com missioner of Income Tax, Bombay.
The appellant stated in the petition that "unfortunately the Company 's assessment for the year in question was completed by the Income Tax Officer on 416 the last day of the financial year 1953 54, i.e., 31 3 1954 being the last date on which their claim for double income tax relief should have been lodged.
In absence of the assessment order being received by the Company it was not physically practicable for the assessee to lodge its claim for double income tax relief and as such the time prescribed under Section 50 had already expired when the assessment order was received by the company.
" The Commissioner made some enquiries.
The appellant, in its letter dated June 30, 1958, replied that no provisional claim for double income tax relief was made by the appellant within the time prescribed.
The appellant reiterated its own plea that it was not "physically practicable" for the assessee to lodge its claim for double tax relief within the time prescribed.
The Commissioner, however, rejected the petition.
He observed that "the assessment in the Kapurthala State was made on 20 3 1950, i.e., much before the assessment was completed by the Bombay Income tax Officer.
Nothing prevented the petitioner, therefore, from filing a provisional claim before the period of limitation was over.
At least, it should have made such a claim before the Income Tax Officer at the time of assessment.
I regret I cannot condone the delay in filing the claim as there is no provision under Section 50 for such condonation.
" The appellant then approached the Central Board of Revenue.
The Central Board of Revenue, by its letter dated December 31, 1958, declined to interfere in the matter.
The appellant did not take any steps to apply to the High Court under article 226 for quashing the above orders of the Commissioner of Income Tax or the Central Board of Revenue.
On August 28, 1959, the Income Tax Officer issued three notices of demand under section 29 of the Act in respect of the Assessment years 1949 50, 1950 51 and 1951 52.
The appellant then wrote a letter dated September 4, 1959, requesting the IncomeTax Officer to set off the refunds to which the appellant was entitled pursuant to the Provisions of Income Tax (Double Taxation Relief) (Ceylon) Rules, 1942, and read with the provisions of sections 49A and 48 of the Income Tax Act, in respect of the assessment years 1942 43, 1943 44 and 1944 45, relating to Ceylon, and the assessment year 1947 48 and 1949 50 relating to Kolhapur and Kapurthala, against the said demands.
In this letter the appellant gave arguments in support of its request.
In short, the argument was that although the applications claiming those refunds were submitted beyond the prescribed time limit, nevertheless the appellant had a right still, pursuant to the the provisions of section 49E, to call upon the Income Tax Officer to 417 set off the refunds found to be due to the appellant against the tax demands raised by the Income Tax Officer on the appellant.
The appellant also approached the Central Board of Revenue,.
urging similar points.
The Central Board of Revenue, however, by its letter dated June 24, 1960, declined to interfere in the matter.
The appellant then on October 7, 1960, filed a petition under article 226 of the Constitution.
After giving the relevant facts and submissions, the appellant prayed that the High Court be pleased to issue a writ in the nature of Mandamits or a writ, direction or order under article 226 of the Constitution, directing the respondents to set off the refunds due to the petitioner under the aforesaid double taxation relief rules against the tax payable by it for the assessment year 1955 56.
It appears that in the meantime the petitioner had paid tax for the assessment years 1949 50 and 1950 51, and the demand for Rs. 89,000.58 for the assessment year 1951 52 was kept in abeyance, and later when the assessment for 1955 56 was completed, the Income Tax Officers had agreed to keep in abeyance Rs. 79,430.19 out of the total demand relating to the assessment year 1955 56, till the decision of the Central Board of Revenue.
The second prayer was that the High Court be pleased to issue writs in the nature of Prohibition or other direction or order under article 226 of the Constitution prohibiting the respondents, their officers, servants and agents from demanding or recovering from the petitioner the tax payable by it for the assessment year 195556 without first setting off against that tax the refunds due to the petitioner under the aforesaid double tax relief rules.
It will be noticed that no prayer was made for quashing the order of the Commissioner, dated August 23, 1958, and the order of the Central Board of Revenue dated December 31, 1958.
It was indeed contended by Mr. section P. Mehta, the learned counsel for the appellant before the High Court that the appellant was not challenging the orders of the Income Tax Officer rejecting his application for refund, but was only challenging the orders made by them rejecting its application for grant of set off.
Mr. Viswanatha Sastri, the learned counsel for the appellant first urged that as compliance with r. 5 of the Indian States Rules, 1939 was physically impossible, r. 5 did not apply, and consequently the refund due to the appellant notwithstanding r. 5.
But we cannot go into the question whether r. 5 was rightly or wrongly applied by the Income Tax authorities.
The 418 orders dated August 23, 1958 and December 31, 1958, cannot be attacked in these proceedings.
Therefore, we must proceed on the basis that those orders were validly passed.
We express no opinion whether the view of the Income Tax authorities that r. 5 was applicable in the circumstances of the case was correct or not.
This takes us to the construction of section 49E. Section 49E reads thus : "49E. Power to set off amount of refunds against tax remaining payable.
Where under any of the provisions of this Act, a refund is found to be due to any person, the Income tax Officer, Appellant Assistant Commissioner or Commissioner, as the case may be may, in lieu of payment of the refund, set off the amount to be refunded, or any part of that amount against the tax, interest or penalty if any, remaining payable by the person to whom the refund is due.
" The High Court held that section 49E of the Act did not give :any assistance to the appellant because, according to it, there ,must be prior adjudication in favour of the appellant.
The High Court observed that "the expression found to be due" clearly means that there must, prior to the date set off is claimed, be an adjudication whereunder an amount is found due by way of refund to the person claiming set off." Mr. Sastri contends that it is not necessary that there should be a prior adjudication to enable a person to claim set off.
He says that the Income Tax Officer can decide the question whether refund is due or not when an application for refund is made to him.
On the facts, he says that it is clear that the appellant is entitled to refund under r. 3 of Indian States Rules, 1939, and the Income Tax Officer has only to calculate the relief due and then set it off.
The learned counsel for the respondent, Mr. Ganapath lyer, on the other hand, contends that the orders of the Commissioner and the Central Board of Revenue having become final, there was no obligation on the Income Tax Officer to make any payment of refund, and he says that it is a condition precedent to the applicability of section 49E that the Income Tax Officer must be under an obligation to make a payment.
He points out that the expression "in lieu of payment of the refund ' clearly indicates that the Income Tax Officer must be under an obligation to make a payment of refund.
He further contends 419 that the refund is not due under the Act but under the said Rules, and therefore, section 49E does not apply.
There is no difficulty in refuting the contention of the learned counsel for the Revenue that the refund, if due, was due under the provisions of the Act.
Section 59(5) provides that the rules made under this section shall have effect as if enacted under this Act.
This provision thus makes the Indian State Rules, 1939, part of the Act, and consequently if a refund is due under the Rules, it would be refund due under the Act within the meaning, of section 49E.
The question then arises as to whether there should be a prior adjudication existing before a set off can be allowed under 49E, and whether there is any other condition which is necessary to be fulfilled before the section becomes applicable.
We are of the opinion that it is not necessary that there should be a prior adjudication before a claim can be allowed under section 49E.There is nothing to debar the Income Tax Officer from determining the question whether a refund is due or not when an application is made to him under section 49E.
The words "is found" do not necessarily lead to the conclusion that there must be a prior adjudication.
But this is not enough to sustain the claim of the, appellant.
It must ,till show that a refund is due to it.
The words "found to be due" in section 49E may possibly cover a case where the claim to refund has been held barred under r. 5 of the Indian State Rules but that this is not the correct meaning is made clear by the expression "in lieu of payment".
This expression, according to us, connotes that payment is outstanding, i.e. that there is subsisting obligation on the Income Tax Officer to pay.
If a claim to refund is barred by a final order, it cannot be said that there.
is a subsisting obligation to make a payment.
The expression "in lieu of" was construed in Stubbs vs Director of Public Prosecutions(1).
It was held there that where a liability has to be discharged by, A in lieu of B, there must he a binding obligation on B to do it before A can be charged with it.
In our opinion, there must be a subsisting obligation to make the payment of refund before a person is entitled to claim a set off under section 49E.
In this case in view of the orders of the Commissioner and the Central Board of Revenue mentioned above there was no subsisting obli gation to pay, and therefore, the claim of the appellant must (1) 420 Therefore, agreeing with the High Court, we hold that section 49E of the Act is of no assistance to the appellant and that the petition was rightly dismissed by the High Court.
The appeal accordingly fails and is dismissed, but in the circumstances of the case there will be no order as to costs.
Appeal dismissed.

dataset_name: IN-Abs

summary:
The appellant company made a claim under section 5 of the Income tax (Double Taxation Relief) (Indian States) Rules, 1939, for refund of the income tax paid by it in an Indian State.
The claim was rejected by the Income tax Officer as time barred.
The Commissioner of Income tax and the Central Board of Revenue refused to interfere and the appellant sought no further legal remedy against their orders.
Subsequently on certain tax demands being made by the Income tax Officer, the appellant made representation that the amounts in respect of which application had earlier been made under r. 5 should be set off against the demand as provided by section 49E of the Indian Income tax Act, 1922.
The Income tax authorities having rejected this claim also, the appellant went to the High Court under article 226 of the Constitution.
The High Court held that the expression found to be due" in section 49E clearly meant that there must be, prior to the claim of set off, an adjudication whereunder an amount is found due by way of refund to the person claiming set off.
Since there was no such adjudication in the appellant 's favour, the writ petition was dismissed.
However a certificate of fitness under article 133(1) (c) was granted to the appellant.
HELD : (i) It is not necessary that there should be a prior adjudication before a claim can be allowed under section 49E.
There is nothing to debar the Income tax Officer from determining the question whether a refund is due or not when an application is made to him under section 49E.
The words "is found" do not necessarily lead to the conclusion that there must be a prior adjudication.
[419 D E] (ii) The set off under section 49E must however be "in lieu of payment ' which expression connotes that payment is outstanding i.e. there is a subsisting obligation on the Income tax Officer to pay.
If a claim to refund is barred by a final order, it cannot be said that there is a subsisting obligation to make the payment.
[419 F G] Stubbs vs Director of Public Prosecutions , relied on.
(iii) In the present case the orders of the Commissioner and the Central Board of Revenue rejecting the appellant 's claim under r. 5 of the Indian State Rules had become final.
They were not challenged even in the petition under article 226.
There was thus no subsisting obligation on the part of the Income tax Officer to make payment to the appellant, and the claim of the appellant under section 49E must therefore, fail.
[419 G H]


judgement:
Appeal No. 180 of 1962.
Appeal by special leave from the judgment and decree dated January 28, 1959, of the Calcutta High Court from original Decree No. 226 of 1952.
B. Sen and section N. Mukherjee, for the appellant.
Hem Chandra Dhar, section section Khanduja and Ganpat Rai, for the respondent.
The Judgment of the Court was delivered by Mudholkar, J.
This appeal, like Satyabrata Ghose vs Mugnee ram Bangur & Co. and another(1) relates to the effect of requisitioning orders made by the Government during the last war under which they took possession of land belonging to the appellant company which had been divided into building plots by them in pursuance of what is known as the Lake Colony Scheme, by constructing roads and drains.
The plaintiff respondent was one of the various persons who had entered into contracts with the company for purchase of plots, in pursuance of the public offers made by the company.
This he did by addressing the following letter to the company and paying Rs. 202/ by way of earnest money. "To Mugneeram Bangur and Company Land Department.
Russa Road, South, Tollygunge, Calcutta.
No. 499, Phone: South 135.
Through Babu Re : Plots Nos.
New Nos.
245 and 246 on 30 feet road in the premises No. Lake Colony Scheme No. 1, Northern: Block.
Area measuring 10 ks.
x sqr.
ft more or less.
(1) ; 632 Dear Sir, I am willing to purchase the above plot of land from you at the average rate of Rs. 1,075/ (Rupees one thousand and seventyfive only) per katta irrespective of the condition of the soil and I am ready to deposit Rs. 202/ of the actual value as an earnest money at once.
I undertake to complete the transaction within one month from the date on(?) (of) completion of road on payment of the balance of the consideration money and time must be deemed as essence of the contract.
If I fail to do so within the said period the earnest money deposited by me will be forfeited and you will be free to resell the land and I shall be liable for all damages that may result thereby.
I also agree to sign a formal agreement in the form required by you if you so desire.
Yours faithfully, Name, Gurbachan Singh, Address: 48/ 1, Chakraberia Road, North.
Dated the 19 .
Witness : (Illegible) Address . . .
N.B. I agree to pay half of the value at the time of registration of the deeds and the balance within 6 years bearing interest at the rate of 6 per cent per annum with half yearly rests and the said plots Nos : 245 and 246 purchased by me shall remain charged for the payment of the balance of the purchase money in manner as aforesaid and the necessary security deed charged should be executed and registered by me at my own cost.
Name: Gurbachan Singh Address : Witness (Illegible) 4, Baktiar Shah Road, Tollygunge.
The letter does not bear any date; but probably it was written on May 14, 1941 which is the date on which the company issued a receipt in his favour.
Different portions of the land covered by the scheme were requisitioned by Government between November 12, 1941 and July 25, 1944.
The plots which the respondents had contracted to purchase are said to form part of the land which was requisitioned by virtue of an order made by the Government on February 18, 1944.
633 According to the company, on December 24, 1943, a circular notice was sent to all those persons who had entered into contracts for purchase of plots from them stating that a considerable portion of the land comprised in the Lake Colony Scheme area had been requisitioned under the Defence of India Rules and was taken into possession by the Government.
It was not possible to say how long the Government would continue to be in possession and, therefore, it was not possible for the company to carry on the work of the construction of roads and drains during the continuance of the war and possibly for many years even after the termination of the war.
The circular then proceeded to state as follows : "In these circumstances we have decided to treat the agreement as cancelled and give you the option of taking of the refund of the earnest money deposited by you within one month from the receipt of this letter.
In the event of your refusal to treat the contract as cancelled, we are offering you, in the alternative, to complete the registration of the conveyance of the sale deed within one month from the receipt of this letter.
In such a case you have to take the lands as it is now, the road and drain will be made by us as soon as circumstance will permit after the termination of the War.
If you do not exercise your option in any of the two ways mentioned above the agreement will be deemed to have been cancelled and your earnest money forfeited.
" On May 8, 1946 the respondent 's attorneys, acting under instructions, wrote to the company saying that the respondent had learnt from the company 's office that the government would be de requisitioning lands taken over by them and inquiring of the company as to when it would be possible for the company to deliver possession of the plots to the respondent.
In reply to that letter the company wrote on May 29, 1946 drawing his attention to their circular letter and said that by reason of the failure of the respondent to exercise the options given by them therein the agreement stood cancelled and the earnest money had been forfeited.
On June 13, 1946, the respondent 's attorneys expressed sur prise at the company 's reply and stated that the respondent had not received the circular referred to in the company 's reply and ended by saying as follows : "That my said client, therefore, now hereby asks you as to when you are going to complete the roads, so that he may do the needful for completion of the conveyances 634 within one month from such date of completion of the roads.
That my said client hereby calls upon you to intimate to him within seven days from date the expected exact date of completion of roads to enable him to complete the conveyance as per agreement, failing which he will be forced to take legal steps against you in the matter as he may be advised in the matter, without further reference which please note.
" Apparently the company did nothing with the result that the present suit was instituted by the respondent on August 8, 1946 in the court of the Second Subordinate Judge at Alipore.
The company resisted the suit on various grounds but only two are material for the purpose of this appeal because Mr. Sen has confined his argument only to those matters.
One is that the contract has been discharged by reason of frustration and the second is that the suit was premature.
The suit was decreed and that decree was upheld by the High Court in appeal.
A certificate that the case was fit for appeal to this Court having been refused by the High Court the company sought and obtained from this court special leave to appeal.
That is how the matter comes up before us.
This case would really appear to be covered by the decision of this court to which we have referred at the outset.
Mr. Sen, however, points out that the question as to whether the contract could be said to have been discharged because of the fact that its performance was rendered unlawful as a result of the requisitioning orders made by the Government which was sought to be raised before this Court in that case was not permitted to be raised by it and has been left open.
He admits that certain observations made by this Court towards the concluding portion of the judgment would indicate that this Court was not prepared to accept the con tention sought to be urged before it.
But, Mr. Sen says that as the contention was not permitted to be raised, the observations of this Court could be said to have been made merely in passing and at best be regarded as a tentative expression of its views.
We think Mr. Sen is right in the sense that the question has been actually left open by this Court.
But even so, we will have to consider whether the grounds upon which the previous decision rests would not be relevant for consideration in connection with the argument advanced by Mr. Sen. 635 In so far as discharge of contract by reason of frustration is concerned there is no question of implying a term in the contract a term fundamental for its performance, as is done by the courts in England because we have here the provisions of section 56 as well as those of section 32 of the Contract Act.
This is what was held by this Court in the earlier case and that decision binds us.
No doubt, a contract can be frustrated either because of supervening impossibility of performance or because performance has become unlawful by reason of circumstances for which neither of the parties was responsible.
In the earlier case this Court has held that where the performance of an essential condition of the contract has become impossible due to supervening circumstances the contract would be discharged.
This Court has further held that the impossibility need not be an absolute one but it is sufficient if further performance becomes impracticable by some cause for which neither of the parties was responsible.
It, however, held that the mere fact that the performance of an essential term of the contract that is to say, of undertaking development of the area under the scheme could not be undertaken because the land had been requisitioned, did not have the effect of frustrating the contract.
For though the term regarding development was an essential term of the contract, the requisitioning of the land was only for a temporary period.
Further the parties had deliberately not placed any time limit within which roads and drains had to be made apparently because they were aware of the difficulties in carrying on the work on account of scarcity of materials and the various restrictions which the Government had placed on such activities.
This Court also pointed out: "Another important thing that requires notice in this connection is that the war was already on, when the parties entered into the contract.
Requisition orders for taking temporary possession of lands for war purposes were normal events during this period." (pp. 326 327).
Though these observations were made while dealing with the argument that the contract has been frustrated by reason of impossibility of performance they would not be wholly out of place while considering the argument based upon the ground that continued performance of the contract had been rendered unlawful.
What section 56 speaks of is a contract, the performance of which has become unlawful.
Now, it is true that no order was made under the Defence of India Rules prohibiting the company from carrying on the work of construction of roads and drains.
The 636 actual order served upon the company, among other things, provides : "The owner/occupier of the said land: (a) shall place the said land at the disposal and under the control of the Military Estates Officer Bengal Circle on and from the 14th November, 1941 at 1 P.M. Bengal time until six months after the termination of the present war unless relinquished earlier." In consequence of this order the company lost possession of the land and automatically lost access thereto.
Without getting on to the land the company could not carry out its obligation to the purchasers of constructing the roads and drains.
If, in disobedience of this order, the company 's servants, agents or contractors were to carry on the work of construction of the roads and drains by entering on the land of which the possession was with the government, they would have been liable to punishment under sub r. (7) of r. 75 (a) of the Defence of India Rules and also the company.
We were informed that the land was used by the Government for military purposes.
It is, therefore, possible that the land might have been declared as a protected place under r. 7 of the Defence of India Rules.
Even, however, without such a declaration, we agree with Mr. Sen that it would not have been possible for the company, its agents, servants or contractors to go on the land during the continuance in force of the order of requisition without being rendered liable at law.
Even so it is clear that all that had become unlawful was to construct roads and drains while the land was bound to be given up by the Government sometime or other and, therefore, in essence the activities which were rendered unlawful were not forbidden for all time but only temporarily.
It may be that the duration of the embargo was uncertain but not permanent.
It would, therefore, be relevant to enquire whether a contract could properly be held to be frustrated because for a certain period of time its performance has become unlawful.
According to Mr. Sen the moment it became unlawful for one of the parties to the contract to continue with the performance, the contract was discharged and in this connection he referred us to certain observations of Lord Wright in Denny Mott & Diskson Ltd. vs james B. Fraser & Co. Ltd.,() and certain other portions of the report.
We put to him the question as to what would be the.
effect of a requisitioning, say, for a period of one month.
Would that operate as &charge of the (1) ; , 274.
637 contract ? To that his answer was in the negative and we think that the answer was right.
The question then would be : would it make any difference if unlawfulness would attach to the performance of the contract for an indeterminate period ? In our judgment if time is of the essence of the contract or if time for performance is set out in the contract it may be that the contract would stand discharged even though its performance may have been rendered unlawful for an indeterminate time provided unlawfulness attached to the performance of the contract at the time when the contract ought to have been performed.
Thus, where the performance of a contract had been rendered unlawful by reason of some subsequent event the contract would stand discharged but such discharge will take place not necessarily from the date on which the further performance was rendered unlawful, unless further performance was rendered unlawful for all time.
If the performance of the contract is rendered unlawful either for a determinate period of time or for an indeterminate period of time the contract would not stand discharged unless the ban on its performance existed on the day or during the time in which it has to be performed.
Here it is pointed out by Mr. Sen that the respondent had made time the essence of the contract but that only applies to the grant of conveyance after the completion of the roads and drains.
As already pointed out, parties were wholly silent as to the time within which the roads and drains were to be completed.
Therefore, in so far as this aspect of the contract is concerned time was in no sense made the essence of the contract.
According to Mr. Sen, however, where the parties have failed to specify in the contract time within which it has to be performed section 46 of the Contract Act comes in and the parties may be presumed to have agreed that the contract will be performed within reasonable time.
To that the answer would be the same as that given in the earlier case, that is, the parties when they entered into the contract, knew the prevailing circumstances and must have home in mind the possibility that something like what actually happened may happen and, therefore, did not specify the time within which the land had to be developed.
In other words, the parties intended to exclude from the computation of reasonable time such time as was taken up in procuring the necessary material which was not easy to obtain and such as may be taken up if the land were requisitioned by government.
Thus, in our view it cannot be said that because of the requisitioning orders which had the effect of making the entry by or on behalf of the company on the land illegal during the subsistence of the period of requisitioning the contract stood discharged.
p.55 7 638 Then remains the other point argued by Mr. Sen. He said that the suit for specific performance was premature because under the agreement the respondent did not get a right to obtain a sale deed till after the development of the land comprised in the scheme was completed.
That is perfectly true.
But the fact remains that this work had been completed when the appeal was heard by the High Court.
The Court would in such a case be justified in taking notice of subsequent events in moulding its relief accordingly.
In our judgment the courts below were right in upholding the respondent 's claim.
The apeal is dismissed with costs.
Appeal dismissed.

summary:
In May 1941, the respondent had entered into a contract with the appellant company for the purchase of a plot of land in a Colony Scheme.
He had paid the earnest money and had undertaken to complete the transaction within on month from the date of completion of certain development work by the appellant.
Thereafter, the land in question was requisitioned by the Government under the Defence of India Rules and the company was therefore unable to undertake the development work during the continuance of the war.
On learning that the Government proposed to de requisition the lands taken over by them, in May 1946, the respondent approached the company to ascertain when it would complete development work after the de requisitioning of the land, so that he might complete the transaction within one month thereafter.
The company claimed that the contract stood cancelled since the respondent had failed to comply with the terms of a circular letter issued by it in December 1943, offering all purchasers an option between accepting refund of the earnest money or completing the transaction immediately by accepting the land in an undeveloped state.
The respondent denied having received the circular letter and filed a suit in August 1946, which was decreed by the trial court and the decree was upheld by the High Court in appeal.
In the Supreme Court it was contended on behalf of the company that the contract was discharged by reason of frustration because its performance was rendered unlawful as a result of the requisitioning orders made by the Government, and furthermore, that the suit for specific per formance was premature,, because, under the contract the respondent did not get the right to obtain a sale deed till after the development work was complete.
HELD : (i) It cannot be said that because of the requisitioning orders which had the effect of making the entry by or on behalf of the company on the land illegal, during the subsistence of the period of requisitioning, the contract stood discharged by frustration.
[637 H] If time is of the essence of the contract, or if the time for the performance is set out in the contract, the contract would stand discharged even though its performance may have been rendered unlawful for an indeterminate time, provided unlawfulness attached to the performance at the time when the contract ought to have been performed.
[637 A C] In the present case, it could not be said that time was of the essence of the contract or that the contract had been discharged because it had not been performed in a reasonable time within the meaning of section 46 of the Contract Act.
When the parties entered into the contract, they knew the prevailing circumstances and must have borne in mind the possibility of difficulties in obtaining the necessary material or the possibility of the land being requisitioned by the Government.
[637 E H] 631 Denny Mott & Dickson Ltd. vs James B. Frasser & Co. Ltd. ; and Satyabrata Ghose and Ors.
vs Mugneeram Bangur & Co. & Anr. ; referred to.
(ii) The contention that the suit was premature could not be accepted because the development work had been completed when the appeal was heard by the High Court.
In such a case the court would be justified in taking notice of subsequent events in moulding its relief accordingly.
[638 A B]