Thursday, April 17, 2014

Nagar Palika Parishad, Mihona and Anr. Vs. Ramnath and Anr

Specific Relief Act, 1963 - Section 38 - Perpetual injunction when granted.
 M.P. Municipalities Act, 1961 - Section 187 - Section 319 - Bar of suit in absence of notice.
Supreme Court of India
Civil Appeal No. 4454 OF 2014
Hon'ble Judge(s):  SUDHANSU JYOTI MUKHOPADHAYA, V. GOPALA GOWDA.
Date of Judgment: APRIL 9 2014
  Nagar Palika Parishad, Mihona and Anr. Vs. Ramnath and Anr
N.V.RAMANA, J.
SUDHANSU JYOTI MUKHOPADHAYA, J. 

Leave granted. 

2. This appeal has been preferred by the appellants-Nagar Palika Parishad, Mihona (hereinafter referred to as “Nagar Palika”) against the judgment dated 11th April, 2012 passed by the High Court of Madhya Pradesh Bench at Gwalior in Second Appeal No.568 of 2009. By the impugned judgment the High Court dismissed the Second Appeal and affirmed the judgments passed by the first appellate court and the trial court. 

3. The case of the appellant–Nagar Palika is that on finding that respondent No.1 – plaintiff has made encroachment on a public road, namely, Khitoli Road, a notice under Section 187 of the M.P. Municipalities Act, 1961 (hereinafter referred o as “Act, 1961”) dated 26th November, 1982 was issued to respondent No.1–plaintiff calling upon him to remove the encroachment from Khitoli Road at Mihona, District Bhind, M.P. (hereinafter referred to as “suit land”). As respondent No.1 – plaintiff refused to comply with the aforesaid notice and also failed to show any title over the encroached land, another notice was issued on 23rd December, 1982, intimating respondent No.1–plaintiff that if the encroachment is not removed by him it shall be removed by the appellant, in exercise of power conferred under Section 109 read with Section 223 of the Act, 1961. 

4. Instead of complying with the aforesaid notices, respondent No.1 – plaintiff filed Civil Suit No.79/90 in the Court of 1st Civil Judge, Class- I, Lahar, District Bhind for declaration of his title and permanent injunction for restraining the appellants from interfering in his possession over the suit land contending that the suit land was his ancestral property. The aforesaid suit was contested by the appellant by filing written statement contending, inter alia, that the suit land is a public road which the appellants intend to make a Pakka (Road) in consonance with the public policy and public interest due to which the action for removal of encroachment has been taken and that the suit was not maintainable for want of notice under Section 319 of the Act, 1961. 

5. The trial court on hearing the parties by its judgment and decree dated 20th August, 2008 decreed the suit in favour of respondent No.1–plaintiff. The trial court held that no notice under Section 319 of the Act, 1961 is required to be issued before filing a suit for permanent injunction. The aforesaid judgment was upheld by the first appellate court by the judgment and decree dated 31st August, 2009 in C.A. No.20/09. 

6. The second appeal preferred by the appellant was dismissed by the High Court though the appellant raised one of the following substantial questions of law: ?.Whether the suit filed by respondent No.1 - plaintiff was maintainable for non-compliance of statutory requirement of notice as contemplated by Section 319 of the Act, 1961. 

7. Section 319 of the Act, 1961 bars suits in absence of notice and reads as follows: 

“Section 319-Bar of suit in absence of notice.-(1) No suit shall be instituted against any Council or any Councilor, officer or servant thereof or any person acting under the direction of any such Council, Councilor, officer or servant for anything done or purporting to be done under this Act, until the expiration of two months next after a notice, in writing, stating the cause of action, the name and place of abode of the intending plaintiff and the relief which he claims, has been, in the case of a Council delivered or left at its office, and, in the case of any such member, officer, servant or person as aforesaid, delivered to him or left at his office or usual place of abode; and the plaint shall contain a statement that such notice has been delivered or left. 

(2) Every suit shall be dismissed unless it is instituted within eight months from the date of the accrual of the alleged cause of action. 

(3) Nothing in this section shall be deemed to apply to any suit instituted under Section 54 of the Specific Relief Act, 1877 (I of 1877).” 

8. Respondent No.1-plaintiff filed the suit for declaration of title and permanent injunction. In view of bar of suit for declaration of title in absence of notice under Section 319 the suit was not maintainable. The Courts below wrongly held that the suit was perpetual injunction though the respondent No.1-plaintiff filed the suit for declaration of title and for permanent injunction. 

9. Respondent No.1-plaintiff cannot derive advantage of sub Section (3) of Section 319 which stipulates non-application of the Section 319 when the suit was instituted under Section 54 of the Specific Relief Act, 1877 (old provision) equivalent to Section 38 of the Specific Relief Act, 1963 and reads as follows: 

“Section 38.Perpetual injunction when granted.-(1)Subject to the other provisions contained in or referred to by this Chapter, a perpetual injunction may be granted to the plaintiff to prevent the breach of an obligation existing in his favour, whether expressly or by implication. 

(2) When any such obligation arises from contract, the Court shall be guided by the rules and provisions contained in Chapter- II. 

(3) When the defendant invades or threatens to invade the plaintiff’s right to, or enjoyment of, property, the Court may grant a perpetual injunction in the following cases, namely: 

(a) where the defendant is trustee of the property for the plaintiff; 

(b) where there exists no standard for ascertaining the actual damage caused, or likely to be causes, by the invasion; 

(c) where the invasion in such, that compensation in money would not afford adequate relief; 

(d) where the injunction is necessary to prevent a multiplicity of judicial proceedings.” 

The benefit aforesaid cannot derive by Respondent No.1-plaintiff as the suit was filed for declaration of title coupled with permanent injunction. Respondent No.1 having claimed title, the suit cannot be termed to be suit for perpetual injunction alone. 

10. Along with the trial court and the appellate court, the High Court also failed to appreciate the aforesaid fact and also overlooked the valuable interest and right of public at large, to use the suit land which is a part of public street. Further, in absence of challenge to the notice of eviction issued by the appellant, it was not open to the trial court to decide the title merely because permanent injunction coupled with declaration of title was also sought for. 

11. In view of our finding, we set aside the impugned judgment dated 11th April, 2012 passed by the High Court in second appeal as also the judgment and decree passed by the first appellate court and the trial court. It will be open to the appellant to proceed in accordance with law. The appeal is allowed with aforesaid observations.
 

Monday, April 14, 2014

V. Kala Bharathi & Ors. Vs. The Oriental Insurance Company Ltd., Branch Chittoors

The Code of Civil Procedure, 1908  - Order XXI Rule (1) -Whether the amount deposited by the judgment debtor in a decree is to be adjusted first towards interest or towards principal decretal amount? - If the amount deposited by the judgment debtor falls short of the decretal amount, the decree-holder is entitled to apply the rule of appropriation by appropriating the amount first towards interest, then towards costs and subsequently towards principal amount due under the decree - The appellants herein are entitled to the amount awarded by the Executing Court, as the amounts deposited by the judgment debtor fell short of the decretal amount - After such appropriation, the decree-holder is entitled to interest only to the extent of unpaid - principal amount. Hence, interest be calculated on the unpaid principal amount.


Supreme Court of India
Civil Appeal No. 3056 of 2008
Hon'ble Judge(s):  P. SATHASIVAM, RANJAN GOGOI,N.V. RAMANA.
Date of Judgment: April 1, 2014
  V. Kala Bharathi & Ors. Vs. The Oriental Insurance Company Ltd., Branch Chittoors
 


N.V.RAMANA, J.
1. The short question to be answered in this appeal is whether the amount deposited by the judgment debtor in a decree is to be adjusted first towards interest or towards principal decretal amount.
2. The facts of the case are - On account of demise of an Engineering Graduate, Mr. V. Raja Kumar on 29.04.1993 in a road accident, his legal heirs, i.e., the appellants herein filed a claim petition being M.V.O.P. 774 of 1993 before the Motor Accident Claims Tribunal (for short, 'the Tribunal') claiming -
3. compensation to the tune of Rs.2 crores. The vehicle involved in the said accident was insured by the respondent - Insurance Company. The Tribunal vide its Award dated 29.04.1997 awarded an amount of Rs.98,40,500/- as compensation with interest @ 12% p.a. from the date of the petition, i.e., 25.10.1993 till the date of realization, apart from costs quantified at Rs.99,443/-.
4. Being aggrieved, the respondent - Insurance Company filed an appeal under Section 173 of the Motor Vehicles Act, 1988 (for short, 'the Act') and to comply with the provisions contained therein, deposited a sum of Rs.25,000/-. On 15.12.1997, the High Court in C.M.A. No. 1726 of 1997 granted stay of execution of the Award dated 29.04.1997 subject to the condition of depositing a sum of Rs.30 lakhs and Rs.99,443/- costs, which amounts were undisputedly deposited. The said order was made absolute on 15.07.1998 subject to the condition of depositing a further sum of Rs.30 lakhs, which was also complied with. A Division Bench of the High Court partly allowed the appeal on 19.12.2001 thereby -
5. reducing the compensation amount from Rs.98,40,500/- to Rs.56,40,000/- , however, the interest rate of 12% p.a. was retained. The respondent - Insurance Company also deposited a sum of Rs.23,27,635/- on 19.09.2002, claiming to be full and final satisfaction of the award.
6. The appellants filed Execution Petition No. 11 of 2003 on 06.06.2003 before the Executing Court / Tribunal claiming an amount of Rs.20,16,700/-, which claim was denied by the respondent - Insurance Company on the ground that its liability to pay interest gets discharged when it deposits the award amount in full. Thus, relying on the principle of accrual method, the respondent - Insurance Company claimed that since it satisfied the award amount in full, no more interest was payable and as per its calculation, only a sum of Rs.36,650/- was liable to be paid, which was deposited on 29.07.2003.
7. While adjudicating the aforesaid Execution Petition, the Executing Court took a view that the amounts deposited by the respondent - Insurance Company from time to time were liable to be adjusted -
8. towards the component of interest first and thereafter to the portion of the decretal amount. After taking into consideration the amounts deposited by the respondent - Insurance Company on different dates, its liability was fixed vide order dated 18.08.2004 to the extent of Rs.17,70,657/- together with interest @ 12% p.a. from the date of filing of the Execution Petition till the date of realization.
9. The respondent - Insurance Company assailed the aforesaid calculation / order of the Executing Court dated 18.08.2004 in Civil Revision Petition No. 4337 of 2004. The appellants herein also filed Civil Revision Petition No. 6108/2004 thereby challenging that the Executing Court could not have adjusted the amount paid as costs towards the decretal amount. The learned single Judge of the High Court of Judicature, Andhra Pradesh, by judgment dated 29.07.2005, allowed both the Civil Revision Petitions while holding that
(i) the part payments deserve to be adjusted towards the principal decretal amount and not any component of interest accrued upto that date; and
(ii) the amount deposited towards costs, in -
10. pursuance of the directions of the court, must be adjusted towards that, and not towards payment of the decretal amount.
Learned counsel for the appellants vehemently contended that the impugned order cannot be sustained being contrary to law of the land declared under Article 141 of the Constitution of India (for short, 'the Constitution'). He also contended that judicial discipline to abide by declaration of law made by this Court cannot be forsaken under any pretext by any authority or court, be it even the highest Court in a State. It tantamount to judicial indiscipline.
In support of his submissions, the learned counsel relied upon the judgment of this Court Industrial Credit and Development Syndicate (ICDS) Ltd. Vs. Smithaben H. Patel & Ors. 1999 (3) SCC 80, Venkatadri Appa Rao Vs. Parthan Sarathy Appa Rao AIR 1922 PC 233, Meghraj Vs. Bayabai 1969 (2) SCC 274 and Gurpreet Singh Vs. Union of India 2006 (8) SCC 457. 12. On the other hand, learned counsel appearing for the respondent - Insurance Company contended that, in the facts and circumstances of the case, there is no -
reason to interfere with the impugned order passed by the High Court.
We have heard learned counsel for the parties and gone through the entire material available on record.
Before adverting to the various issues involved in the case and the contentions advanced by the counsel on either side, we have given our anxious consideration to the judgment impugned of the learned single Judge of the Andhra Pradesh High Court. The learned Judge, while adjudicating the issue, has considered the judgments of this Court in Meghraj (supra), Industrial Credit and Development Syndicate (supra) and Rajasthan State Road Transport Corporation, Jaipur Vs. Poonam Pahwa, AIR 1997 SC 2951 and has passed the judgment by giving reasons which are basis for his conclusion.
11. We feel that it is appropriate to extract the relevant paragraphs from the impugned judgment. "It is true that in a plethora of judgments, the Supreme Court as well as the High Courts took the view that any amount deposited under Rule 1 of Order 21 CPC must be first adjusted towards interest. Discussion on those judgments vis-à-vis sub-rules (4) and (5) of Rule 1 - of Order 21 C.P.C. is prone to be taken or mistaken as an attempt to explain the judgments of the Supreme Court or High Courts. However, since some of the judgments of the Supreme Court were delivered at a time, when sub rules (4) and (5) were not on the statue book, and in the judgments rendered thereafter, the attention of the Hon'ble Supreme Court and the High Courts was not pointedly invited to these provisions in certain cases or they did not fall for consideration, it is felt necessary to address the issue..."
"Viewed from this context, it is evident that Parliament added sub rules (4) and (5) with a definite and avowed object of assessing the running of interest on the deposits made by the decree holder into a Court. The background in which those provisions came to be incorporated has already been indicated in the preceding paragraphs. Sub Rules (4) and (5) by themselves do not disclose as to whether the amount should be adjusted towards principal or interest. However, the expression "interest if any" occurring in both the provisions is significant. A decree may comprise of principle amount claimed in the suit, as well as a component of interest up to the date of decree. Once a decree is passed for certain amount, it becomes a principle by itself and the liability to pay interest thereon, and if so, the rate at which it is to be paid, would depend upon the terms of decree.
The amount that carries the interest till the date of realization would be the one stipulated in the decree. It is not permissible for a Court to award interest on interest. Sub section (3) of Section 3 of the - Interest Act clearly prohibits grant of interest on interest. Therefore, the only component of the decree that can be related to the expression "interest if any" occurring in sub sections (4) and (5) of Rule (1) is the decretal amount, which, in other words, is the principal." "It is true that the cases decided so far, do not strictly support this view, and in a way, may suggest the other point of view. However, an effort is made by this Court, to explain the purport of sub-rules (4) and (5) of Rule 1. This Court is conscious of the requirement to follow the precedents, as well as its obligation, to give effect to the legislative mandate. An endeavor is made to honour both the obligations. Having regard to the importance of the issue and the implications involved in it, further discussion may ensue at appropriate levels."
12. From the above findings of the learned Judge, it appears that he passed the order basing on three considerations: Firstly, the judgments relied upon by the claimants are based on the pre-amended provisions of Order 21 Rule 1 C.P.C. Secondly, in the cases which were decided subsequent to amendment, the issue - of appropriation of amounts has not fallen for consideration. Thirdly, a decree comprises of principal claimed in the suit as well as component of interest. Hence, once a decree is passed for certain amount, it becomes principal by itself and Section 3(3) of Interest Act clearly prohibits grant of interest on interest.
13. Now, before we proceed to decide the legality or otherwise of the order passed by the learned Judge, it is worthwhile to examine Rule 1 of Order XXI of the Code of Civil Procedure, 1908 (for short, 'the CPC'), which reads as under:
"ORDER XXI
EXECUTION OF DECREES AND ORDERS
1. Modes of paying money under decree. -
(1) All money, payable under a decree, shall be paid as follows, namely:-
a) by deposit into the Court whose duty it is to execute the decree, or sent to that Court by postal money order or through a bank; or
b) out of Court, to the decree-holder by postal money order or through a bank or - c) by any other mode wherein payment is evidenced in writing; or
d) otherwise, as the Court which made the decree, directs.
(2) Where any payment is made under clause (a) or clause (c) of sub-rule (1), the judgment-debtor shall give notice thereof to the decree-holder either through the Court or directly to him by registered post, acknowledgement due.
(3) Where money is paid by postal money order or through a bank under clause (a) or clause (b) of sub-rule (1), the money order or payment through bank, as the case may be, shall accurately state the following particulars, namely:-
a) the number of the original suit;
b) the names of the parties or where there are more than two plaintiffs or more than two defendants, as the case may be, the names of the first two plaintiffs and the first two defendants;
c) how the money remitted is to be adjusted, that is to say, whether it is towards the principal, interest or costs;
d) the number of the execution case of the Court, where such case is pending; and e) the name and address of the payer.
(4) On any amount paid under clause (a) or clause (c) of sub- rule (1), interest, if any, shall cease to run from the date of service of the notice referred to in sub-rule (2).
(5) On any amount paid under clause (b) of sub-rule (1), interest, if any, shall cease to run from the date of such payment.
Provided that, where the decree-holder refuses to accept the postal money order or - payment through a bank, interest shall cease to run from the date on which the money was tendered to him, or where he avoids acceptance of the postal money order or payment through bank, interest shall cease to run from the date on which the money would have been tendered to him in the ordinary course of business of the postal authorities or the bank, as the case may be."
14. A bare perusal of the aforesaid provisions makes it amply clear that the scope of Order XXI Rule 1 of the CPC is that the judgment debtor is required to pay the decretal amount in one of the modes specified in sub- rule (1) thereof. Sub-rule (2) of Rule 1 provides that once payment is made under sub-rule (1), it is the duty of the judgment debtor to give notice to the decree-holder through the Court or directly to him by registered post acknowledgement due.
Sub-rule (3) of Rule 1 merely indicates that in case money is paid by postal money order or through a bank under clause (a) or clause (b) of sub-rule (1) thereof, certain particulars are required to be accurately incorporated while making such payment. Sub-rules (4) and (5) of Rule 1 states from which date, interest shall cease to run - in case amount is paid under clause (a) or (c) of sub- rule (1), - interest shall cease to run from the date of service of notice as indicated under sub-rule (2); while in case of out of court payment to the decree- holder by way of any of the modes mentioned under clause (b) of sub-rule (1), interest shall cease to run from the date of such payment.
15. The language contained in the aforesaid sub-rules clearly indicates the appropriation of amount to be made in case the decree contains a specific clause, specifying the manner in which the money deposited to be appropriated. Sub-rule (1)(c) of Rule 1 indicates the money deposited to be appropriated as per the direction of the Court, if there is a provision in that behalf. In the absence of specific direction with regard to appropriation, then only the manner of appropriation would arise for consideration. Sub-rules (2) to (5) of Rule 1 indicate the procedure to be followed when the deposit is made either under clause (a) or (b) of sub-rule (1) thereof, but it does not leave any scope for interpretation with regard to appropriation of deposited amount by the decree-holder. -
16. In this regard, it is also pertinent to extract Rule 472 of the Andhra Pradesh Motor Vehicles Rules, 1989 (for short, 'the A.P.M.V. Rules'), which is as under:
"472. Enforcement of an award of the Claims Tribunal:-
Subject to the provisions of Section 174, the Claims Tribunal shall, for the purpose of enforcement of its award, have all the powers of a Civil Court in the execution of a decree under the Code of Civil Procedure, 1908, as if the award were a decree for the payment of money passed by such Court in a Civil Suit."
The above-said Rule indicates that the award passed by the Claims Tribunal is to be treated as if the decree for the payment of money passed by the Civil Court in a civil suit. Hence, in view of the specific provision contained in the A.P.M.V. Rules, the award passed by the Claims Tribunal is to be treated as a money decree. In Rajasthan State Road Transport Corporation, Jaipur (supra), this Court held that in executing the award of the Claims Tribunal, Executing Court is competent to invoke the beneficial provision under Order 21 Rule 1 of C.P.C. -
17. The Privy Council in Venkatadri Appa Rao Vs. Parthasarathi Appa Rao AIR 1922 PC 233, held as follows: "The question then remains as to how, apart from any specific appropriation, these sums ought to be dealt with. There is a debt due that carries interest. There are moneys that are received without a definite appropriation on the one side or on the other, and the rule which is well established in ordinary cases is that in those circumstances the money is first applied in payment of interest and then when that is satisfied in payment of the capital." (Emphasis supplied) The above principle was reiterated by the Privy Council in Rai Bahadur Sethnemichand Vs. Seth Rada Kishen AIR 1922 PC 26.
18. We may notice that the principle laid down in the above case has been not only approved by the Supreme Court, but also followed in several other subsequent cases. In Meghraj (supra), it was held as under: "4.... Unless the mortgagees were informed that the mortgagors had deposited the amount only towards the principal and not towards the interest, and the mortgagees agreed to withdraw the money from the Court accepting the conditional deposit, the normal rule that - the amounts deposited in Court should first be applied towards satisfaction of the interest and costs and thereafter towards the principal would apply."
19. In Mathunni Mathai (supra), it was held that the right of the decree- holder to appropriate the amount deposited by the judgment debtor, either in the Court or paid outside, towards interest and other expenses is founded both on fairness and necessity. It was observed that the courts and the law have not looked upon favourably where the judgment debtor does not pay or deposit the decretal amount within the time granted as one cannot be permitted to take advantage of his own default. Therefore, the normal rule that is followed is to allow the deposit or payment, if it is in part, to be adjusted towards the interest due, etc.
20. In Industrial Credit and Development Syndicate (supra), it has been held that in cases where the trial court has not prescribed any mode for payment of decretal amount, except fixing the instalments, in the absence of agreement between the parties, regarding the mode of payment of decretal amount, the - general rule of appropriation of payments towards decretal amount is that the said amount is to be adjusted firstly strictly in accordance with the directions contained in the decree and in the absence of such direction, it is to be adjusted firstly towards interest and costs and thereafter towards principal amount. This is, of course, subject to the exception that the parties can agree to the adjustment of payment in any other manner despite the decree. In that case, the Supreme Court had an occasion to consider the method of appropriation and after noticing various decisions of the English Courts and the Privy Council, followed the judgment in Meghraj's case (supra).
21. We may also notice that in Prem Nath Kapur & Anr. Vs. National Fertilizers Corporation, 1996 SCC (2) 71, while differing with the view taken in Mathunni Mathai (supra), it was held that the normal rule of appropriation contained in Order XXI Rule 1 of the CPC relating to execution of decrees for recovery of money stands excluded by Sections 28 and 34 of the - Land Acquisition Act, 1894 and the principles contained therein could not be extended to execution of award decrees under the said Act. The relevant para of the said judgment, being portion of para 14, reads as under:

  • "14. Equally, the right to make appropriation is indicated by necessary implication, by the award itself as the award or decree clearly mentions each of the items. When the deposit is made towards the specified amounts, the claimant/owner is not entitled to deduct from the amount of compensation towards costs, interest, additional amount under Section 23 (1-A) with interest and then to claim the total balance amount with further interest.
... ... ... ... ... ... ... ... ... ... ..."
22. In Gurpreet Singh (supra), the Constitution Bench of this Court had an occasion to consider the issue regarding execution of money decree, the principle of appropriation and its applicability, which was recently followed by this Court in Bharath Heavy Electricals Ltd. Vs. RS Avthar Sing & Co., 2013 (1) SCC 243, and culled down the principles laid down in Gurpreet Singh's case as follows:
a) The general rule of appropriation towards a decretal amount was that -
b) such an amount was to be adjusted strictly in accordance with the directions contained in the decree and in the absence of such directions, adjustment be made firstly towards payment of interest and costs and thereafter towards payment of the principle amount subject, of course, to any agreement between the parties.
c) The legislative intent in enacting sub rules (4) and (5) is clear to the points that interest should cease to run on the deposit made by the judgment debtor and notice given or on the amount being tendered outside the Court in the manner provided in Order 21 Rule 1 sub clause (D).
d) If the payment made by the judgment debtors falls short of the decretal amount, the decree holder will be entitled to apply the general rule of appropriation by appropriating the amount deposited towards the interest, then towards costs and finally towards the principal amount due under the decree.
e) Thereafter, no further interest would run on the sum appropriated towards the principal. In other words, if a -
f) part of the principal amount has been paid along with interest due thereon as on the date of issuance of notice of deposit of interest on the part of the principal sum will cease to run thereafter.
g) In case where there is a shortfall in deposit of the principal amount, the decree holder would be entitled to adjust interest and costs first and then balance towards the principal and beyond that the decree holder cannot seek to reopen the entire transaction and proceed to recalculate the interest on the whole of the principal amount and seek for re-appropriation.
23. In the judgment referred to by the High Court in the impugned judgment, this Court and the Privy Council consistently have taken a view that in case of appropriation of amount unless the decree contains a specific provision, the amounts have to be appropriated as contemplated under Order 21 Rule 1. If there is a shortfall in deposit, the amount has to be adjusted towards interest and costs, then it has to be adjusted towards principal. The High Court has - failed to appreciate this fact and misdirected itself in observing that these judgments are prior to the amendment to Order 21 Rule 1.
In our considered view, as far as this aspect is considered, there is no much difference in the provisions prior to or subsequent to the amendment, because in the objects and reasons for amendment to Order XXI Rule 1, as observed by the Constitution bench in Gurpreet Singh the legislative intent in enacting sub-rules (4) and (5) is that interest should cease on the deposit being made and notice given or on the amount being tendered outside the court in the manner provided. The intent of the rule making authority is to leave no room for any frivolous pleas of payment of money due under a money decree.
24. We may add that the High Court proceeded on the assumption as if sub-rules (4) and (5) of Rule 1, which were inserted pursuant to Amendment to C.P.C. in 1976, there is change in procedural law and the tenor of sub- rule (1) thereof. But, sub-rules (4) and (5) do not have any relevance with regard to appropriation, except stating when interest ceases to - run. Thus, it is no way guide for appropriation of amount as contemplated under Order XXI Rule 1 of the CPC. In Industrial Credit Development Syndicate (supra) which is subsequent to the amendment to the provision, this Court has categorically observed the procedure to be followed and which squarely applies to the case, but the High Court has given its own interpretation to the judgment and failed to consider the law laid down by this Court in its proper perspective.
25. The next finding of the High Court is with regard to interest on interest. In money suit, the amount consists of principal and interest till the suit is filed. But, in case of award passed under the Act, the question of inclusion of any interest on the decretal amount does not arise. Unfortunately, the High Court proceeded on the assumption that it amounts to interest on interest which is prohibited under Section 3(3)(c) of Interest Act, 1978 (for short, 'the Interest Act').
This is not so, as in the facts and circumstances of the present case, the decree passed by the trial Court or - the appellate Court does not contain the mode of appropriation and in the absence of any such direction, the decree-holder is entitled to appropriate the amount deposited by the judgment debtor first towards interest, then cost and thereafter towards principal.
26. In view of above and more particularly keeping in view the ratio of the Constitution Bench judgment in Gurpreet Singh (supra), where considering an identical question in respect of Order XXI Rule 1 of the CPC, it was held that if the amount deposited by the judgment debtor falls short of the decretal amount, the decree-holder is entitled to apply the rule of appropriation by appropriating the amount first towards interest, then towards costs and subsequently towards principal amount due under the decree; we are of the opinion that the appellants herein are entitled to the amount awarded by the Executing Court, as the amounts deposited by the judgment debtor fell short of the decretal amount. After such appropriation, the decree-holder is entitled to interest only to the extent of unpaid - principal amount. Hence, interest be calculated on the unpaid principal amount.
27. We, therefore, allow the appeal, set aside the impugned judgment dated 29.07.2005 passed by the High Court and restore that of the Executing Court dated 18.08.2004.
28. No orders as to costs.
.................C.J.I. (P. SATHASIVAM)
.....................J. (RANJAN GOGOI)
.....................J. (N.V. RAMANA)
New Delhi,
April 01, 2014.

Brijesh Kumar & Ors. Vs. State of Haryana & Ors

Limitation Act  S.5 - Condonation of delay - Delay of more than 10 years in filing appeal - No sufficient grounds assigned - simply because in some of the cases filed appeal in time, were given enhanced compensation - there is no obligation on the part of court to condone the delay . Order of High Court refusing to condone delay giving cogent and valid reasons is proper.

The Courts should not adopt an injustice-oriented approach in rejecting the application for condonation of delay. However the Court while allowing such application has to draw a distinction between delay and inordinate delay for want of bona fides of an inaction or negligence would deprive a party of the protection of Section 5 of the Limitation Act, 1963. Sufficient cause is a condition precedent for exercise of discretion by the Court for condoning the delay. Supreme Court has time and again held that when mandatory provision is not complied with and that delay is not properly, satisfactorily and convincingly explained, the Court cannot condone the delay on sympathetic grounds alone. It is also a well settled principle of law that if some person has taken a relief approaching the Court just or immediately after the cause of action had arisen, other persons cannot take benefit thereof approaching the Court at a belated stage for the reason that they cannot be permitted to take the impetus of the order passed at the behest of some diligent person. In the present case, after considering the facts and circumstances and the reasons for inordinate delay of 10 years 2 months and 29 days in filing appeal under S. 54 of the Land Acquisition Act the High Court did not find sufficient grounds to condone the delay

Supreme Court of India
Special Leave Petition (Civil) Nos. 6609-6613 of 2014
Hon'ble Judge(s):  DR. B.S. Chauhan & J. Chelameswar.
Date of Judgment: March 24, 2014
                                                                     Brijesh Kumar & Ors. Vs. State of Haryana & Ors
 
Cases Referred:  Mewa Ram (Deceased by L.Rs) & Ors. v. State of Haryana, AIR 1987 SC 45; State of Nagaland v. Lipok AO & Ors., AIR 2005 SC 2191; D. Gopinathan Pillai v. State of Kerala & Anr., AIR 2007 SC 2624; General Fire and Life Assurance Corporation Ltd. v. Janmahomed Abdul Rahim, AIR 1941 PC 6; P.K. Ramachandran v. State of Kerala & Anr., AIR 1998 SC 2276; Esha Bhattacharjee v. Raghunathpur Nafar Academy & Ors. (2013) 12 SCC 649; Basawaraj v. Land Acquisition Officer (2013) 14 SCC 81; State of Karnataka & Ors. v. S.M. Kotrayya & Ors., (1996) 6 SCC 267; Jagdish Lal & Ors. v. State of Haryana & Ors., AIR 1997 SC 2366; M/s. Rup Diamonds & Ors. v. Union of India & Ors., AIR 1989 SC 674 

JUDGMENT
DR. B.S. Chauhan, J .
1. These petitions have been filed challenging the judgment and order dated 22.11.2013, passed by the High Court of Punjab & Haryana at Chandigarh dismissing the Civil Misc. Applications in RFA No.5793 of 2012 for condonation of delay of more than10 years in filing the appeal under Section 54 of the Land Acquisition Act, 1894 (hereinafter referred to as the 'Act').
2. The land of the petitioners alongwith the lands of others admeasuring 134 acres, 5 kanals and 10 marlas situate in revenue estate of village Manakpur, Hadbast No.386, Tehsil Jagadhri, District Yamuna Nagar stood notified under Section 4 of the Act on 8.9.1993. In respect of the same, the award was made by the Land Acquisition Collector on 8.10.1997 assessing the market value of the land of the petitioners @ Rs.1,75,000/- per acre.
3. Aggrieved, the petitioners and other persons interested filed references under Section 18 of the Act for enhancement of compensation and the Reference Court made the award on 7.9.2001 assessing the market value of the land @ Rs.1,85,000/- per acre and they were also given other statutory benefits.
4. Aggrieved, some of the persons interested filed appeals before the High Court, however, petitioners had chosen not to file appeal at the initial stage but filed the same in the year 2012 after a lapse of 10 years 2 months and 29 days. The High Court refused to condone the delay in spite of the fact that other persons who had preferred the appeals in time had been given a higher compensation. Hence, these petitions.
5. Shri Shish Pal Laler, learned counsel appearing for the petitioners has submitted that it was a fit case where the delay ought to have been condoned and the High Court has committed an error in not entertaining the appeal on merit.
6. The High Court had given cogent and valid reasons and relied upon large number of judgments of this Court while rejecting the application for condonation of delay including Mewa Ram (Deceased by L.Rs) & Ors. v. State of Haryana, AIR 1987 SC 45; State of Nagaland v. Lipok AO & Ors., AIR 2005 SC 2191; and D. Gopinathan Pillai v. State of Kerala & Anr., AIR 2007 SC 2624.
7. The issues of limitation, delay and laches as well as condonation of such delay are being examined and explained every day by the Courts. The law of limitation is enshrined in the legal maxim "Interest Reipublicae Ut Sit Finis Litium" (it is for the general welfare that a period be put to litigation). Rules of Limitation are not meant to destroy the rights of the parties, rather the idea is that every legal remedy must be kept alive for a legislatively fixed period of time.
8. The Privy Council in General Fire and Life Assurance Corporation Ltd. v. Janmahomed Abdul Rahim, AIR 1941 PC 6, relied upon the writings of Mr. Mitra in Tagore Law Lectures 1932 wherein it has been said that "a law of limitation and prescription may appear to operate harshly and unjustly in a particular case, but if the law provides for a limitation, it is to be enforced even at the risk of hardship to a particular party as the Judge cannot, on applicable grounds, enlarge the time allowed by the law, postpone its operation, or introduce exceptions not recognised by law."
9. In P.K. Ramachandran v. State of Kerala & Anr., AIR 1998 SC 2276, the Apex Court while considering a case of condonation of delay of 565 days, wherein no explanation much less a reasonable or satisfactory explanation for condonation of delay had been given, held as under:- "Law of limitation may harshly affect a particular party but it has to be applied with all its rigour when the statute so prescribes and the Courts have no power to extend the period of limitation on equitable grounds."
10. While considering a similar issue, this court in Esha Bhattacharjee v. Raghunathpur Nafar Academy & Ors. (2013) 12 SCC 649 laid down various principles inter alia:
" x x x
v) Lack of bona fides imputable to a party seeking condonation of delay is a significant and relevant fact
vi) The concept of liberal approach has to encapsule the conception of reasonableness and it cannot be allowed a totally unfettered free play
x x x
ix) The conduct, behavior and attitude of a party relating to its inaction or negligence are relevant factors to be taken into consideration. It is so as the fundamental principle is that the courts are required to weigh the scale of balance of justice in respect of both parties and the said principle cannot be given a total go by in the name of liberal approach.
x x x
xvii) The increasing tendency to perceive delay as a non-serious mater and, hence, lackadaisical propensity can be exhibited in a nonchalant manner requires to be curbed, of course, within legal parameters."
(See also: Basawaraj v. Land Acquisition Officer (2013) 14 SCC 81)
11. The courts should not adopt an injustice-oriented approach in rejecting the application for condonation of delay. However the court while allowing such application has to draw a distinction between delay and inordinate delay for want of bona fides of an inaction or negligence would deprive a party of the protection of Section 5 of the Limitation Act, 1963. Sufficient cause is a condition precedent for exercise of discretion by the Court for condoning the delay. This Court has time and again held that when mandatory provision is not complied with and that delay is not properly, satisfactorily and convincingly explained, the court cannot condone the delay on sympathetic grounds alone.
12. It is also a well settled principle of law that if some person has taken a relief approaching the Court just or immediately after the cause of action had arisen, other persons cannot take benefit thereof approaching the court at a belated stage for the reason that they cannot be permitted to take the impetus of the order passed at the behest of some diligent person.
13. In State of Karnataka & Ors. v. S.M. Kotrayya & Ors., (1996) 6 SCC 267, this Court rejected the contention that a petition should be considered ignoring the delay and laches on the ground that he filed the petition just after coming to know of the relief granted by the Court in a similar case as the same cannot furnish a proper explanation for delay and laches. The Court observed that such a plea is wholly unjustified and cannot furnish any ground for ignoring delay and laches.
14. Same view has been reiterated by this Court in Jagdish Lal & Ors. v. State of Haryana & Ors., AIR 1997 SC 2366, observing as under:- "Suffice it to state that appellants kept sleeping over their rights for long and elected to wake-up when they had the impetus from Vir Pal Chauhan and Ajit Singh's ratios. Therefore desperate attempts of the appellants to re-do the seniority, held by them in various cadre.... are not amenable to the judicial review at this belated stage. The High Court, therefore, has rightly dismissed the writ petition on the ground of delay as well."
15. In M/s. Rup Diamonds & Ors. v. Union of India & Ors., AIR 1989 SC 674, this Court considered a case where petitioner wanted to get the relief on the basis of the judgment of this Court wherein a particular law had been declared ultra vires. The Court rejected the petition on the ground of delay and laches observing as under:- "There is one more ground which basically sets the present case apart. Petitioners are re-agitating claims which they have not pursued for several years. Petitioners were not vigilant but were content to be dormant and chose to sit on the fence till somebody else's case came to be decided."
16. In the instant case, after considering the facts and circumstances and the reasons for inordinate delay of 10 years 2 months and 29 days, the High Court did not find sufficient grounds to condone the delay.
17. In view of the facts of the case and the above-cited judgments, we do not find any fault with the impugned judgment. The petitions lack merit and are accordingly dismissed.

Kesharbai @ Pushpabai Eknathrao Nalawade (D) by LRS. & ANR. Vs. Tarabai Prabhakarrao Nalawade & Ors

Civil Procedure Code O.20, R. 18 -Suit for partition - Burden of proof - Plaintiff claiming that suit property though joint was left out of family arrangement - Burden to prove that suit property is not self-acquired property is on plaintiff ” Cannot be placed on defendant.  
Where in joint family partition has been made it is presumed that there is complete partition of all properties. In case suit is filed by plaintiff for partition of one property which is claimed to be joint but left out of partition in that circumstance plaintiff has to prove that such property is not self-acquired property. Placing this burden of proof on defendant is not proper.

Supreme Court of India
CIVIL APPEAL NO . 3867 of 2014
(Arising out of SLP (C) No.27916 of 2009)
Hon'ble Judge(s):  Surinder Singh Nijjar, A.K.Sikri]
Date of Judgment: March 14, 2014
Kesharbai @ Pushpabai Eknathrao Nalawade (D) by LRS. & ANR. Vs. Tarabai Prabhakarrao Nalawade & Ors.

JUDGMENT
Surinder Singh Nijjar, J .
1. Leave granted.
2. This appeal has been filed against the judgment and decree dated 23rd March, 2009 of the High Court of Bombay (Aurangabad Bench) rendered in First Appeal No.468 of 2004 whereby the High Court has partly allowed the First Appeal of the plaintiffs/respondent Nos. 1 to 3. The High Court has dismissed the suit of the plaintiffs in respect of the agricultural lands and house property at Chikalthan and Neem Dongri. At the same time, the High Court has set aside the judgment of the trial court on Issue No.3 relating to the question as to whether house bearing No.4.13.78 bearing CTS No.4705 admeasuring 138.2 sq. meters alongwith house structure standing therein situated at Nageshwarwadi, Aurangabad is the self acquired property of deceased Eknathrao.
3. The admitted facts are that plaintiff Nos. 1 and 2 to 4 are the wife and children of deceased Prabhakarrao s/o Saluba respectively. Defendant Nos. 7 and 8 to 12 are the wife and children of deceased Trimbakrao s/o Deorao respectively. Defendant Nos. 13 to 15 are the subsequent purchasers of land from the plaintiff. For better understanding of the inter-se relationship between the parties, it would be appropriate to reproduce here the genealogy table of the family, as noticed by the trial court: Mahipati Deorao (son) died on Sauba (son) died 15.7.1974 on 6.10.1980 Shewantabai (wife) died Ansabai (wife) died Prabhakar (son) died Eknathrao (Son) Trimbakrao (son) Tarabai Santosh Satish Manisha Died on /11/97 died on 31.5.86 (P-1) (P-2) (P-3) (P-4) Indubai (wife) D-1 Kamlabai (wife) D-7 Kiran Kranti Asha Jyoti Bharti D-2 D-3 D-4 D-5 D-6 Pramod Vinod Rajendra Vidya Vijaya D-8 D-9 D-10 D-11 D-12
4. The plaintiffs filed a suit for partition and separate possession of half share of the plaintiffs in the following properties :-
(I) Agricultural land Gat No.453 whose survey number is 210 adms. 19 acre 1 guntha situated at village Chikalthana Tq. Kannad.
(II) Land bearing Gat No.146 of whose survey number is 65 adms. 27 acre 39 gunthas situated at Nimdongri Tq. Kannad.
(III) House property bearing No.725 adms. 26.39 sq. meters situated at Chikalthana Tq. Kannad.
(IV) Open plot bearing CTS No.709 adms. 64.3 squ. meter known as 'Girnichi Jaga' situated at Chikalthana Tq. Kannad.
(V) House bearing No.4.13.78 of whose CTS No. is 4705 adms. 138.2 sq. meters along with house structure standing thereon situated at Nageshwarwadi Aurangabad.
5. It was claimed that property at Sl.Nos.I and II were jointly purchased by deceased Deorao and deceased Saluba in the name of Deorao. The house at Sl.No.III was said to have been constructed on a plot jointly purchased by the two brothers. Both the brothers were residing in the same house during their life time. With regard to property at Sl.No.V, it was stated that both the brothers had purchased the plot on which the house is constructed. It was further claimed that the plot was purchased in the name of Eknathrao and his family was residing in that house.
In short, it was claimed that during the life time of Deorao and Saluba, all the properties were jointly cultivated and were jointly enjoyed by all the family members. Trimbakrao was residing at Kannad and Eknathrao was residing at Aurangabad due to their employment. Similarly, Prabhakarrao was in service at different places. It was also the case of the plaintiffs that there was a family arrangement between Eknath, Trimbak and Prabhakarrao. Property at Sl.No.I was allotted to Trimbakrao and Prabhakarrao to the extent of half share each. Similarly, land at Sl.No.II was allotted to Trimbakrao (7 acres) and to Prabhakarrao (6 acres and 39 gunthas). Eknathrao was allotted 14 acres.
After the family arrangement, it was alleged that everyone was in possession of the respective parts of land and their names were entered in the revenue record. It is the further claim of the plaintiffs that in the same family arrangement house at Sl.No.III was given in possession of Trimbakrao and Prabhakarrao to the extent of half share each. Eknathrao was put in possession of the entire open space known as 'Girnichi Jaga'. It was specifically pleaded that house at Sl.No.V (hereinafter referred to as Nageshwarwadi Property) was not part of the family arrangement. It was exclusively in possession of the deceased Eknathrao and now in possession of petitioners herein, defendant Nos. 1 and 2 in the suit.
6. The plaintiffs also claimed that Prabhakarrao during his life time did not raise any objection with regard to the unequal allotment in the share of the joint properties in the family arrangement. It was stated that Prabhakarrao was an alcoholic and, therefore, remained under the domination of the petitioners. It is also admitted in the plaint that after the death of Prabhakarrao, out of necessity to survive, certain agricultural lands are sold by the plaintiffs to defendant No.13 to 16. This was necessary to clear up the dues of the co-operative societies and hand loan of other relatives taken by the deceased Prabhakarrao.
After the death of Prabhakarrao, the plaintiffs claimed to have requested the petitioners i.e. defendants to undo the injustice done to Prabhakarrao at the time of the family arrangement. Instead of partitioning the joint properties equitably, it was claimed that after the death of Eknathrao, defendant No.1 to 12, which include petitioner No.1 and 2, were trying to enter their names in the revenue records with regard to the Nageshwarwadi Property at Aurangabad. Since the defendants had declined the request for partition, the plaintiffs were constrained to file the suit.
7. In the written statements filed by the defendants, it was pointed out that there was no ancestral joint family nucleus to purchase the agricultural lands and the house at Sl.No.III. It is further claimed that the suit properties are not coparcenery properties in which Deorao and Saluba had equal shares. It was contended that at the most property can be deemed as a joint property of Deorao, Saluba, Eknathrao and Prabhakarrao. It was also claimed that the partition of the suit property had taken place on 22nd April, 1985, the respective shares were allotted, and final distribution of the property was made. It was contended that the partition having been completed, the suit ought to be dismissed. On the basis of the pleadings of the parties, the trial court framed 8 issues. The trial court records the issues and the findings as follows:-
ISSUES FINDINGS
1. Do plaintiffs prove that the suit Properties are the joint family Properties? In Negative
2. Do defendants prove that there Was already partition on 22.4.85 And all shares holders are in Possession of their respective Shares? In affirmative
3. Do they further prove that suit Property mention at Sr.No.5 is self acquired property of deceased Eknath? In affirmative
4. Whether suit is maintainable? In affirmative
5. Whether the suit is barred by limitation? In negative
6. Whether plaintiffs are entitled to partition and possession of half share in the suit properties? In negative
7. Whether plaintiffs are entitled to future mesne profit? In negative
8. What decree and order? As per final order. On the basis of the aforesaid findings, the suit of the plaintiffs was dismissed with costs.
8. Aggrieved by the aforesaid judgment and decree, the plaintiffs filed First Appeal No.468 of 2004 before the High Court. The High Court formulated the points for consideration in appeal which are as follows:
(i) Whether the property at Nageshwarwadi, Aurangabad is self- acquired property of Eknathrao and as such is not liable for partition?
(ii) Whether the transaction entered into on 22.4.1985 by Eknathrao, Trimbakrao and Prabhakarrao was family arrangement not amounting to partition?
(iii) Whether Civil Application No.10005 of 2007 filed for filing additional evidence should be allowed and in case it is allowed can the partition list dated 22.4.1985 be admitted in evidence?
9. Upon consideration of the entire material, the High Court has answered point No.(i) in the negative and Point Nos.2 and 3 in the affirmative. As a result of the aforesaid findings, the suit in respect of agricultural lands and house property at Chikalthan and Neem Dongri has been dismissed. However, the plaintiffs/respondent Nos. 1 to 3 are held to be entitled to partition of Nageshwarwadi House at Aurangabad. It has been further directed that the respondents who are legal representatives of deceased Prabhakarrao are entitled to half share on the one hand and the remaining half share is to be divided equally by the petitioners and respondent No.1 to 6 on the other.
10. Aggrieved by the aforesaid judgment of the High Court, the petitioners who were defendants in the suit have filed the S.L.P. (C) No.27916 of 2009 giving rise to the present appeal.
11. We have heard the learned counsel for the parties.
12. Mr. Shekhar Naphade, learned senior counsel appearing for the appellants submitted that in Paragraph 25 of the impugned judgment, the High Court has accepted the fact that there was a complete partition between the parties. The High Court has held that the family arrangement amounts to final distribution of property amongst sharers. Plaintiffs themselves have also treated the property allotted to them as their exclusive property. Treating the property allotted to their share as their exclusive property, they have sold some portions of the land to respondent Nos. 13 to 16.
The High Court also held that the plaintiffs are estopped from challenging the existence and validity of the partition effected in the year 1985. The High Court even held that they are not entitled to fresh partition of the properties which were admittedly covered by the partition of 1985. Mr. Naphade submitted that having held that there was a final partition between the parties, the High Court committed an error of jurisdiction in reversing the findings recorded by the trial court on Issue No.III. According to Mr. Naphade, the High Court has wrongly placed the burden of proof on the petitioners, who were defendants in the suit to prove that Nageshwarwadi property was self-acquired property of Eknathrao. Learned senior counsel also submitted that the High Court ignored the evidence produced by the parties, which would establish that the parties had always treated the Nageshwarwadi property as the self-acquired property of Eknathrao.
13. On the other hand, learned counsel appearing for the respondents has submitted that the trial court had wrongly decided the Issue No.III against the plaintiffs. The defendants (petitioners herein) have failed to prove that Eknathrao had sufficient independent income to have acquired the Nageshwarwadi property. It is submitted that although the defendants had claimed that Eknathrao was employed with the Indian Army, no proof with regard to the employment was produced.
14. We have considered the submissions made by the learned counsel for the parties.
15. Mr. Naphade is quite correct in his submission that the High Court having accepted the findings of the trial court that there was completed partition between the parties, has committed an error of jurisdiction in putting the burden of proof on the defendants on Issue No. III.
16. The trial court on appreciation of the entire evidence had concluded that "the evidence on record discloses that as contended, family arrangement alleged to have taken place in the year 1985 in presence of three brothers and by accepting it, every one took possession of their respective shares and was enjoying the same. Not only this but their names were mutated to revenue records. Everything was done in presence of deceased brother."
17. The trial court also finds that mutation entry bearing No.726 and No. 1116 were effected on the strength of the partition deed dated 22nd April, 1985. Furthermore, the mutation entries were confirmed by issuing notices to the parties. It was specifically noticed on the mutation entries that no objection was taken by any of the parties. The trial court, in our opinion, has rightly concluded that no objections having been taken at the time when the mutation entries were confirmed, the plaintiffs are estopped from saying that these entries are effected on wrong basis of partition. Noticing the conduct of the parties, even further, the trial court held that the plaintiffs by selling the land allotted to them, treating the same to be their exclusive property. This property was sold without the consent of defendant Nos. 1 to 12. Thus treating the same to be their exclusive property and not coparcenary property.
18. On Issue No.III, the trial court has held that there is no evidence except the bare words of the plaintiffs to show that Nageshwarwadi property is purchased by the deceased Deorao and deceased Saluba in the name of Eknathrao. The trial court, in our opinion, has correctly held that all the other joint property had been purchased either in the name of Deorao or deceased Saluba. There was no explanation as to why the property at Nageshwarwadi was purchased by them exclusively in the name of Eknathrao.
On the basis of the evidence, the trial court found that Eknathrao was residing exclusively in the aforesaid property. At that time Prabhakarrao himself was living in rented premises. No explanation is given as to why Prabhakarrao was not living in the aforesaid house, in case, it was joint property of Eknathrao and Prabhakarrao. The trial court also noticed that it was not only Nageshwarwadi property, which was not made part of the partition but also the house of Trimbakrao at Kannad was kept outside partition. The trial court also held that Eknathrao had independent means to purchase Nageshwarwadi property. He was employed with the Military as a Head Clerk from 1944 to 1956. On the basis of the entire evidence, the trial court came to the conclusion that Nageshwarwadi property was the self-acquired property of Eknathrao.
The High Court had reversed the aforesaid findings on the basis that the petitioners, who were defendants in the civil suit had not led any evidence to show that Eknathrao had independently purchased Nageshwarwadi property at Aurangabad. The High Court has reversed the findings of the trial court on the basis that petitioners have failed to prove that Eknathrao was working in the Ammunition Factory, Khadki, Pune from 1944 to 1956. The High Court further held that in this case, a presumption would arise that Nageshwarwadi property was joint property, purchased from the income derived from the other joint property, which form the nucleus. Therefore, it was for the petitioner to prove that Nageshwarwadi property was acquired without the aid of the joint family.
19. In our opinion, the aforesaid presumption is wrong in law in view of the fact that the High Court has affirmed the findings of the trial court that in 1985, there was a complete partition and the parties had acted on the same. It is a settled principle of law that once a partition in the sense of division of right, title or status is proved or admitted, the presumption is that all joint property was partitioned or divided. Undoubtedly the joint and undivided family being the normal condition of a Hindu family, it is usually presumed, until the contrary is proved, that every Hindu family is joint and undivided and all its property is joint.
This presumption, however, cannot be made once a partition (of status or property), whether general or partial, is shown to have taken place in a family. This proposition of law has been applied by this court in a number of cases. We may notice here the judgment of this Court in Bhagwati Prasad Sah & Ors. Vs. Dulhin Rameshwari Kuer & Anr.[1], wherein it was inter alia observed as under: "8. Before we discuss the evidence on the record, we desire to point out that on the admitted facts of this case neither party has any presumption on his side either as regards jointness or separation of the family.
The general principle undoubtedly is that a Hindu family is presumed to be joint unless the contrary is proved, but where it is admitted that one of the coparceners did separate himself from the other members of the joint family and had his share in the joint property partitioned off for him, there is no presumption that the rest of the coparceners continued to be joint. There is no presumption on the other side too that because one member of the family separated himself, there has been separation with regard to all. It would be a question of fact to be determined in each case upon the evidence relating to the intention of the parties whether there was a separation amongst the other co-parceners or that they remained united. The burden would undoubtedly lie on the party who asserts the existence of a particular state of things on the basis of which he claims relief."
20. This principle has been reiterated by this Court in Addagada Raghavamma & Anr. Vs. Addagada Chenchamma & Anr.[2]
21. In this case, the trial court as well as the High Court has held that there was a complete partition in the year 1985. Therefore, the presumption would be that there was complete partition of all the properties. Consequently, the burden of proof that certain property was excluded from the partition would be on the party that alleges the same to be joint property. Therefore, in our opinion, the High Court clearly committed an error in placing the burden of proof on the petitioners, who were defendants in the suit to prove that the Nageshwarwadi property at Aurangabad was a self-acquired property of Eknathrao.
22. In view of the aforesaid, we allow the appeal and set aside the findings recorded by the trial court on Issue No. III. The judgment of the Trial Court is confirmed on Issue No. III also. Consequently, the suit filed by the plaintiffs (respondents herein) shall stand dismissed.

Thursday, April 19, 2012

United India Insurance Co. Ltd. Vs. Laxmamma & Ors.

Motor Vehicles Act - Sections 145, 147 and 149- Liability of insurance company towards third party when cheque of insured is bounced.
Where the policy of insurance is issued by an authorized insurer on receipt of cheque towards payment of premium and such cheque is returned dishonoured, the liability of authorized insurer to indemnify third parties in respect of the liability which that policy covered subsists and it has to satisfy award of compensation by reason of the provisions of Sections 147(5) and 149(1) of the M.V. Act unless the policy of insurance is cancelled by the authorized insurer and intimation of such cancellation has reached the insured before the accident. In other words, where the policy of insurance is issued by an authorized insurer to cover a vehicle on receipt of the cheque paid towards premium and the cheque gets dishonored and before the accident of the vehicle occurs, such insurance company cancels the policy of insurance and sends intimation thereof to the owner, the insurance companyb s liability to indemnify the third parties which that policy covered ceases and the insurance company is not liable to satisfy awards of compensation in respect thereof.

Supreme Court of India
CIVIL APPEAL NO . 3589 OF 2012
(Arising out of SLP(C) No. 23511 of 2009)
Hon'ble Judge(s):  R.M. Lodha and H. L. Gokhale
Date of Judgment: April 17, 2012 
United India Insurance Co. Ltd. Vs. Laxmamma & Ors.

JUDGMENT
R.M . Lodha , J .
Leave granted.
2. The only question that arises for consideration in this appeal by special leave is: whether the appellant, United India Insurance Company Limited (insurer) is absolved of its obligations to the third party under the policy of insurance because the cheque given by the owner of the vehicle towards the premium got dishonoured and subsequent to the accident, the insurer cancelled the policy of insurance.
3. The above question arises in this way. M. Nagaraj (husband of respondent no. 1 and father of respondent nos. 2 and 3) was travelling in a bus bearing registration no. KA 018116 on May 11, 2004. At about 8.50 a.m. on that day due to negligent application of brake by the bus driver, the back door of the bus suddenly opened and M. Nagaraj standing near the door fell down. He sustained grievous injuries and subsequently died. The respondent nos. 1 to 3, to be referred as claimants, filed a claim petition before the Motor Accident Claims Tribunal, Bangalore (for short, ‘Tribunal’) seeking compensation of Rs. 15 lakhs. The present appellant, insurer was impleaded as respondent no. 2 while the owner of the bus was impleaded as respondent no.1. The owner and the insurer contested the claim petition on diverse grounds. The insurer raised the plea in the written statement that the insurance policy dated April 14, 2004 issued by it covering the said bus for the period April 16, 2004 to April 15, 2005 was not valid as the premium was paid through cheque and the cheque got dishonoured and, therefore, there was no liability on it to cover the third party risk.
4. The Tribunal on recording the evidence and after hearing the parties held that the claimants were successful in proving that on May 11, 2004 at 8.50 a.m. the deceased M. Nagaraj was travelling in the bus and he fell down from the bus through the door by sudden application of brake negligently by the driver and died due to the injuries sustained in that accident. The Tribunal also recorded the finding of fact on examination of the documentary and oral evidence that cancellation of policy because of non-payment of the premium was done by the insurer after the accident had taken place and intimation of cancellation was given to the owner on May 21, 2004 whereas accident took place on May 11, 2004. The Tribunal, thus, held that the insurer was liable to the claimants. The Tribunal in its award dated June 28, 2006 held that claimants were entitled to compensation in the sum of Rs. 6,01,244/- and apportioned that amount amongst claimants. Aggrieved by the award of the Tribunal, the insurer preferred appeal before the High Court. The High Court dismissed the insurer’s appeal on November 11, 2008. It is from this order that the present appeal has arisen.
5. Mr. A.K. De, learned counsel for the appellant strenuously urged that having regard to the undisputed fact that the cheque issued by the owner of the vehicle towards the premium for insurance of vehicle was dishonoured, the contract of insurance became void and the insurer could not be compelled to perform its part of promise under the policy. He submitted that no liability can be fastened on the insurers qua third party if the policy of insurance is rendered void for want of consideration to the insurer. Learned counsel submitted that the view taken by this Court in Oriental Insurance Co. Ltd. v. Inderjit Kaur and others, (1998) 1 SCC 371 has been diluted by the later decisions of this Court in the case of National Insurance Co. Ltd. v. Seema Malhotra and others, (2001) 3 SCC 151 and Deddappa and others v. Branch Manager, National Insurance Co. Ltd., (2008) 2 SCC 595. In the alternative, learned counsel for the insurer submitted that if the Court holds that the insurer is liable to pay compensation to the claimants, the amount so paid by the insurer to the claimants must be allowed to be recovered from the insured.
6. Mr. P.R. Ramasesh, learned counsel for respondent no. 4 (owner) supported the view of the High Court. He submitted that on the date of the accident, the policy was subsisting and the liability of the insurer continued and, therefore, the insurer cannot recover the amount paid to the claimants from the insured.
7. Section 64-VB of the Insurance Act, 1938 (for short, ‘Insurance Act’) provides as under :
“64-VB. No risk to be assumed unless premium is received in advance.- (1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner.
(2) For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.
Explanation.- Where the premium is tendered by postal money order or cheque sent by post, the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be.
(3) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent.
(4) Where an insurance agent collects a premium on a policy of insurance on behalf of an insurers, he shall deposit with, or dispatch by post to, the insurer, the premium so collected in full without deduction of his commission within twenty-four hours of the collection excluding bank and postal holidays.
(5) The Central Government, may, by rules, relax the requirements of sub-section (1) in respect of particular categories in insurance policies.
(6) The Authority may, from time to time, specify, by the regulations made by it, the manner of receipt of premium by the insurer.”
The above provision states that no risk is assumed by the insurer unless premium payable is received in advance.
8. The Motor Vehicles Act, 1988 (for short, ‘the M.V. Act’) in Chapter XI deals with insurance of motor vehicles against third party risks. Section 145 in that Chapter provides for definitions:
(a) authorised insurer,
(b) certificate of insurance,
(c) liability,
(d) policy of insurance,
(e) property,
(f) reciprocating country and
(g) third party.
9. Section 146 mandates insurance of a motor vehicle against third party risk. Inter alia, it provides that no person shall use the motor vehicle in a public place unless a policy of insurance has been taken with regard to such vehicle complying with requirements as set out in Chapter XI. The owner of vehicle, thus, is statutorily mandated to obtain insurance for the motor vehicle to cover the third party risk except in exempted and exception categories as set out in Section 146 itself.
10. Section 147 makes provision for requirements of policies and limits of liability. Sub-section (5) thereof is relevant for the present purposes which reads as follows :
“S. 147. – Requirements of policies and limits of liability.- (1) ) to (4)
xxx xxx xxx xxx xxx xxx
(5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons.”
11. Section 149 deals with the duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks. Sub-section (1) which is relevant for the present purposes reads as under:
“S.149.- Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks.- (1) If, after a certificate of insurance has been issued under sub-section (3) of section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (1) of section 147 (being a liability covered by the terms of the policy) or under the provisions of section 163A is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.”
12. The above provisions came up for consideration in the case of Inderjit Kaur. That was a case where a bus met with an accident. The policy of insurance was issued by the Oriental Insurance Company Limited on November 30, 1989. The premium for the policy was paid by cheque but the cheque was dishonoured. The insurance company sent a letter to the insured on January 23, 1990 that the cheque towards premium had been dishonoured and, therefore, the insurance company was not at risk. The premium was paid in cash on May 2, 1990 but in the meantime on April 19, 1990 the accident took place, the bus collided with the truck and the truck driver died. The truck driver’s wife and minor sons filed claim petition. A three-Judge Bench of this Court noticed the above provisions and then held in paragraphs 9, 10 and 12 (pages 375 and 376) as under :
“9. We have, therefore, this position. Despite the bar created by Section 64-VB of the Insurance Act, the appellant, an authorised insurer, issued a policy of insurance to cover the bus without receiving the premium therefor. By reason of the provisions of Sections 147(5) and 149(1) of the Motor Vehicles Act, the appellant became liable to indemnify third parties in respect of the liability which that policy covered and to satisfy awards of compensation in respect thereof notwithstanding its entitlement (upon which we do not express any opinion) to avoid or cancel the policy for the reason that the cheque issued in payment of the premium thereon had not been honoured.
10. The policy of insurance that the appellant issued was a representation upon which the authorities and third parties were entitled to act. The appellant was not absolved of its obligations to third parties under the policy because it did not receive the premium. Its remedies in this behalf lay against the insured.
12. It must also be noted that it was the appellant itself who was responsible for its predicament. It had issued the policy of insurance upon receipt only of a cheque towards the premium in contravention of the provisions of Section 64-VB of the Insurance Act. The public interest that a policy of insurance serves must, clearly, prevail over the interest of the appellant.”
13. In Inderjit Kaur, the Court invoked the doctrine of public interest and held that the insurance company was liable to indemnify third parties in respect of the liability which the policy covered despite the bar created by Section 64-VB of the Insurance Act. The Court did leave open the question of insurer’s entitlement to avoid or cancel the policy as against insured when the cheque issued for payment of the premium was dishonoured.
14. In New India Assurance Co. Ltd. v. Rula and others, (2000) 3 SCC 195 the Court was concerned with a question very similar to the question posed before us. That was a case where the insurance policy was issued by the New India Assurance Co. Ltd. in terms of the requirements of the M.V. Act but the cheque by which the owner had paid the premium bounced and the policy was cancelled by the insurance company but before the cancellation of the policy, accident had taken place. A two-Judge Bench of this Court considered the statutory provisions contained in the M.V. Act and the judgment in Inderjit Kaur. In paragraph 13 (at 0), the Court held as under :
“13. This decision, which is a three-Judge Bench decision, squarely covers the present case also. The subsequent cancellation of the insurance policy in the instant case on the ground that the cheque through which premium was paid was dishonoured, would not affect the rights of the third party which had accrued on the issuance of the policy on the date on which the accident took place. If, on the date of accident, there was a policy of insurance in respect of the vehicle in question, the third party would have a claim against the Insurance Company and the owner of the vehicle would have to be indemnified in respect of the claim of that party. Subsequent cancellation of the insurance policy on the ground of non-payment of premium would not affect the rights already accrued in favour of the third party” (Emphasis supplied)
15. In Seema Malhotra, the Court was concerned with the question whether the insurer is liable to honour the contract of insurance where the insured gave a cheque to the insurer towards the premium amount but the cheque was dishonoured by the drawee bank due to insufficiency of funds in the account of the drawer. In the case of Seema Malhotra2, the above question arose from the following facts : the owner of a Maruti car entered into an insurance contract with National Insurance Company Limited on December 21, 1993; on the same day the owner gave a cheque of Rs. 4,492/- towards the first instalment of the premium; the insurance company issued a cover note as contemplated in Section 149 of the M.V. Act; the car met with an accident on December 31, 1993 in which the owner died and the car was completely damaged; on January 10, 1994 the bank on which the cheque was drawn by the insured sent an intimation to the insurance company that the cheque was dishonoured as there were no funds in the account of the drawer and on January 20, 1994 the business concern of the owner was informed that the cheque having been dishonoured by the bank, the insurance policy is cancelled with immediate effect and the company is not at risk. The widow and children of the owner filed a claim for the loss of the vehicle with the insurance company. When the claim was repudiated, they moved the State Consumer Protection Commission (for short, ‘Commission’). The Commission rejected the claim of the claimants and held that insurer was justified in repudiating the contract as soon as cheque got bounced. The claimants moved the Jammu and Kashmir High Court. The High Court reversed the order of the Commission and held that the insurance company chose to cancel the insurance policy from the date of issuance of communication and not from the date the cheque was issued which got bounced. The matter reached this Court from the above judgment of the High Court. The Court referred to Section 64-VB of the Insurance Act, Sections 25, 51,52,54 and 65 of the Indian Contract Act and the decisions of this Court in Inderjit Kaur and Rula and held (at pages 156 and 157) as under :
“17. In a contract of insurance when the insured gives a cheque towards payment of premium or part of the premium, such a contract consists of reciprocal promise. The drawer of the cheque promises the insurer that the cheque, on presentation, would yield the amount in cash. It cannot be forgotten that a cheque is a bill of exchange drawn on a specified banker. A bill of exchange is an instrument in writing containing an unconditional order directing a certain person to pay a certain sum of money to a certain person. It involves a promise that such money would be paid.
18. Thus, when the insured fails to pay the premium promised, or when the cheque issued by him towards the premium is returned dishonoured by the bank concerned the insurer need not perform his part of the promise. The corollary is that the insured cannot claim performance from the insurer in such a situation.
19. Under Section 25 of the Contract Act an agreement made without consideration is void. Section 65 of the Contract Act says that when a contract becomes void any person who has received any advantage under such contract is bound to restore it to the person from whom he received it. So, even if the insurer has disbursed the amount covered by the policy to the insured before the cheque was returned dishonoured, the insurer is entitled to get the money back.
20. However, if the insured makes up the premium even after the cheque was dishonoured but before the date of accident it would be a different case as payment of consideration can be treated as paid in the order in which the nature of transaction required it. As such an event did not happen in this case, the Insurance Company is legally justified in refusing to pay the amount claimed by the respondents.”
16. In Deddappa, the Court was concerned with the plea of the insurance company that although the vehicle was insured by the owner for the period October 17, 1997 to October 16, 1998 but the cheque issued therefor having been dishonoured, the policy was cancelled and, thus, it was not liable. That was a case where for the above period of policy, the cheque was issued by the owner on October 15, 1997; the bank issued a return memo on October 21, 1997 disclosing dishonour of the cheque with remarks “fund insufficient” and the insurance company, thereafter, cancelled the policy of insurance by communicating to the owner of the vehicle and an intimation to the concerned RTO. The accident occurred on February 6, 1998 after the cancellation of the policy.
17. The Court in Deddappa again considered the relevant statutory provisions and decisions of this Court including the above three decisions in Inderjit Kaur, Rula and Seema Malhotra. In para 24 (at 1) of the Report, the Court observed as under:
“24. We are not oblivious of the distinction between the statutory liability of the insurance company vis-à-vis a third party in the context of Sections 147 and 149 of the Act and its liabilities in other cases. But the same liabilities arising under a contract of insurance would have to be met if the contract is valid. If the contract of insurance has been cancelled and all concerned have been intimated thereabout, we are of the opinion, the insurance company would not be liable to satisfy the claim.”
Then in para 26 (at 2), the Court invoked extraordinary jurisdiction under Article 142 of the Constitution of India and directed the insurance company to pay the amount of claim to the claimants and recover the same from the owner of the vehicle.
18. We find it hard to accept the submission of the learned counsel for the insurer that the three-Judge Bench decision in Inderjit Kaur1 has been diluted by the subsequent decisions in Seema Malhotra and Deddappa. Seema Malhotra and Deddappa turned on the facts obtaining therein. In the case of Seema Malhotra, the claim was by the legal heirs of the insured for the damage to the insured vehicle. In this peculiar fact situation, the Court held that when the cheque for premium returned dishonoured, the insurer was not obligated to perform its part of the promise. Insofar as Deddappa is concerned, that was a case where the accident of the vehicle occurred after the insurance policy had already been cancelled by the insurance company.
19. In our view, the legal position is this : where the policy of insurance is issued by an authorized insurer on receipt of cheque towards payment of premium and such cheque is returned dishonoured, the liability of authorized insurer to indemnify third parties in respect of the liability which that policy covered subsists and it has to satisfy award of compensation by reason of the provisions of Sections 147(5) and 149(1) of the M.V. Act unless the policy of insurance is cancelled by the authorized insurer and intimation of such cancellation has reached the insured before the accident. In other words, where the policy of insurance is issued by an authorized insurer to cover a vehicle on receipt of the cheque paid towards premium and the cheque gets dishonored and before the accident of the vehicle occurs, such insurance company cancels the policy of insurance and sends intimation thereof to the owner, the insurance company’s liability to indemnify the third parties which that policy covered ceases and the insurance company is not liable to satisfy awards of compensation in respect thereof.
20. Having regard to the above legal position, insofar as facts of the present case are concerned, the owner of the bus obtained policy of insurance from the insurer for the period April 16, 2004 to April 15, 2005 for which premium was paid through cheque on April 14, 2004. The accident occurred on May 11, 2004. It was only thereafter that the insurer cancelled the insurance policy by communication dated May 13, 2004 on the ground of dishonour of cheque which was received by the owner of the vehicle on May 21, 2004. The cancellation of policy having been done by the insurer after the accident, the insurer became liable to satisfy award of compensation passed in favour of the claimants.
21. In view of the above, the judgment of the High Court impugned in the appeal does not call for any interference. Civil appeal is dismissed. However, the insurer shall be at liberty to prosecute its remedy to recover the amount paid to the claimants from the insured. No order as to costs.