Dismissed

Nageswara Steel Syndicate, v. A.P. State Financial corporation.

Telangana HC2 Apr 2013SA/136/2000

Case brief

AI extract

What is this about?

In a second appeal regarding recovery of a loan amount, the high court addressed questions of privity of contract and restitution. The court held that the appellant, who received an incorrect benefit due to a court mistake, was liable to make good the loss under Section 144 CPC, dismissing the appeal.

What did the court decide?

Second Appeal dismissed with no costs.

Nageswara Steel Syndicate, Vs A.P. State… — Execution and Attachment | Telangana HC (2013)

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HON'BLE SRI JUSTICE N.R.L. NAGESWARA RAO SECOND APPEAL No.136 of 2000

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JUDGMENT:

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The first defendant in O.S.No.154 of 1984 on the file of the Court of the Subordinate Judge, Rajahmundry, is the appellant herein.

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The suit was filed for recovery of loan amount due from the first defendant.

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The allegations in the plaint go to show that a sum of Rs.3,00,000/- was sanctioned as a loan and a registered mortgage was executed by the second defendant. Thereafter, the second defendant committed default in payment of the money and under Section 29 (4) of the State Financial Corporation Act, the assets were sold to M/s. Vijaya Rerolling Mills for a sum of Rs.8,50,000/-. The District Judge, Rajamundary, by an order dated 27.10.1980, directed the plaintiff to remit a sum of Rs.3,50,000/- to the credit of E.P.No.49 of 1977 in O.S.No.22 of 1977 filed against the second defendant, and accordingly, the said amount was remitted. But, however, only a sum of Rs.3,31,902.45 ps. was available and there was a mistake in the calculation of interest and therefore the plaintiff has remitted an excess amount of Rs.18,097.55 ps. Consequently, the suit was filed for recovery of the said amount with interest.

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The first defendant has filed a written statement

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contending that the plaintiff never informed about the available amount and a sum of Rs.3,50,000/- was deposited and part satisfaction of the decree was recorded. The plaintiff cannot recover the amount as there was willful negligence and is estopped from claiming the said amount. There is no privity of contract between the first defendant and the plaintiff.

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On the basis of the above pleadings, necessary issues have been framed for trial. After considering the evidence on record, the Court below has dismissed the suit holding that there was no privity of contract and also further holding that the interest was not properly taken care of by the plaintiff. Aggrieved by the said judgment, A.S.No.45 of 1993 was preferred and the II Additional District Judge, East Godavari, at Rajahmundry, by the judgment dated 02.11.1999 allowed the appeal and decreed the suit of the plaintiff. Aggrieved by the said judgment, the second appeal is preferred.

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The second appeal was admitted on the following substantial questions of law.

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1) “ Whether the first respondent can seek a decree against the appellant without seeking any relief against the second respondent?

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2) Whether there is any privity of contract between the appellant and the first respondent herein? Whether the lower appellate Court rightly dealt with this aspect?

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3) Whether the appellant who has received the money from the executing Court is in any way directly liable to the plaintiff?

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4) Whether the first respondent has any cause of action against the appellant directly?

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5) Whether the first appellate Court failed to appreciate the fact that the first respondent did not send for amount as per Ex.B4 and B6? And if so whether there is any necessity for passing a decree against the appellant as an amount of Rs.6,848.50 ps. for which the appellant is entitled to recover from the first respondent is still lying with the first respondent?

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6) Whether the appellate Court erred in reversing the well considered judgment of the trial Court without formulating points for determination?

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POINTS:

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So far as the legal contentions are concerned, it is to be noted that no party should be allowed to take advantage of the mistake committed by the Court. In fact, it is the duty of the Court to correct such errors. There is no dispute about the fact that a sum of Rs.3,50,000/- was attached and it was directed to be sent to the credit of the E.A.No.98 of 1981. It is a matter of record and accounts as to what will be the amount available with the plaintiffcorporation after adjusting the amounts due to it. There is no dispute about the fact that the first defendant has obtained decree in O.S.No.22 of 1977 against the second defendant. The right of the first defendant to realise the amount from the second defendant cannot be disputed. If at all by the mistake of the Court or the mistake of the plaintiff any benefit has accrued, it is to the second

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defendant alone who is liable to discharge the debt and to some extent has been burdened with the plaintiff. In this case, the question of contractual obligations or privity of the contract does not arise since all the actions that have been followed are in pursuance of the orders of the executing Court in O.S.No.22 of 1977. Therefore, the general law of contract, which has been applied by the trial Court has no application by simple reasoning that it has to be accepted that a person who got the benefit from irregular proceedings has to make good the loss. In fact, this is the principle of restitution, which has been provided on equitable basis under Section 144 Civil Procedure Code. In fact, the first defendant himself has not gone into the box to plead any inequities or any errors entitling to the benefit, which was extended by the trial Court to him.

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Evidently, the plaintiff reserves the money for finance and it is difficult to expect that it will lend money, which was realised by way of sale of the properties till the entire claim was settled. Therefore, it is quite clear that the several legal questions raised by the appellant have no substance at all and he is the beneficiary of the wrong forced on the plaintiff. The questions of law as framed are substantial questions of fact. In fact, the first appellate Court has rightly decided the questions and there are no grounds to interfere with the judgment of the first appellate Court and consequently there are no merits in the appeal. Accordingly, Appeal is dismissed. No costs.

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Consequently, Miscellaneous Petitions, if any, pending in this appeal shall stand closed.

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_________________________ N.R.L. NAGESWARA RAO, J

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Dated: 02.04.2013 Ska

Nageswara Steel Syndicate, v. A.P. State Financial corporation.

Case brief

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Nageswara Steel Syndicate, v. A.P. State Financial corporation.

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