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TMI Blog1974 (10) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... torical material much of which has been. wisely jettisoned to help turn the forensic focus on the three- pronged attack on the decree made by counsel for the appellant Shri S. T. Desai. Even so, the sequence and significance of events leading up to the current controversy, sprawling across India and Pakistan and surviving for nearly three decades now, may be unfolded with advantage. Now to the story. Lahore was the venue of the earlier forensic episodes. The legal saga formally began in undivided India when the 1st appellant, Kuthalia, the owner of Sedous Hotel, agreed to sell it on October 2, 1946 for a price of ₹ 52,75,000/- to the 1st respondent Oberoi, who became a name in the hotel industry. An earnest money of ₹ 5,00,0001- was advanced and the time fixed for completion of the sale was January 20, 1947. On alleged breach of contract, Civil Suit No. 514/61 of 1946 was filed in the Court of the Senior Sub-Judge, Lahore, by the 1st respondent (Oberoi) as the 1st plaintiff and the Associated Hotels of India Ltd., as the 2nd plaintiff, for recovery of the earnest money with interest. A decree in favour of the 1st plaintiff was made in the sum of ₹ 5,08,333-5-4 wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rehabilitate evacuees on either side. As part of this package, the Pakistan (Administration of Evacuee Property) Ordinance, 1949 was promulgated. This legislation defines an 'evacuee' and, as stated earlier, the contestants in this case are both admittedly evacuees. Section 2(3) of the Pakistan Ordinance defines 'Evacue property'and one of the points in controversy before us is as to whether the decree passed by the Federal Court of Pakistan for the sum of around ₹ 5,00,0001- or the deposit of ₹ 3,00,000/- in connection with that decree, is 'evacuee property'. We may have to dilate on the scheme and provisions of this Pakistan Ordinance a little later, but it is sufficient to state, at Custodians of Evacuee Property and invests them with certain powers. Right away we may read s.6 (1) of the Ordinance since its effect has impact on one of the important contentions urged by Mr. Desai : "6(1) All evacuee property shall vest and shall be deemed always to have vested in the Custodian with effect from the first day of March, 1947." In simplistic terms, if we may here anticipate Shri Desai's submission, there was a statutory vesting of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lahore the 4th January, 1954 Subject:-Hedous Hotel Lahore Deposit of ₹ 3 lacs in the High Court of Lahore. MEMORANDUM A sum of ₹ 3,00,000 was deposited by R.B. Jodha Mal of Hoshiarpur, in the High Court Lahore for the benefit of the Associated Hotel of India Limited. A decree was passed by the Senior Civil Judge Lahore in favour of the Associated Hotel of India Limited against R.B. Jodha Mal for a sum of ₹ 5,08,333-5-4. The deposit of ₹ 3,00,000 was made in part payment of the above decree. R.B. Jodha Mal preferred an appeal in the High Court against the order of the Civil Judge. This appeal was accepted on 24th November, 1949. Against this decree of the High Court the Associated Hotel of India Limited, filed an appeal in the Federal Court of Pakistan. This appeal was accepted by the Federal Court on 21st of December, 1953. 2.Since both the contesting parties are evacuees the amount in question can not be paid until instructions from Government of Pakistan are received in the matter. It is therefore requested that the amount of ₹ 3,00,000 may please be deposited in the Treasury under the detailed head. "Sale proceeds of Immovable Property and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was deposited for the due performance of such decree as may ultimately be passed in his favour. The said decree-holder contends that no other person has any right or interest in the said amount and that the same is lying with this Court in trust for payment to him. The judgment-debtor has accepted this position, and claims no right or interest in the said amount." Although the High Court declined to uphold the claim for transfer of the deposit under Act. VI of 1954, on being approached by the decree-holder the matter received different treatment at the bands of the Supreme Court. Shri Oberoi's contention was: "That the Federal Court of Pakistan having passed a decree in favour of the petitioner and the sum deposited being for the satisfaction of the decretal amount this Hon'ble Court has erred in holding that the petitioner had no interest in the deposit. it was neither within its jurisdiction to decide the same nor its decision on that point is legal and correct." Cornelius C. J., speaking for the Court, overruled the pretended claim of the 2nd plaintiff, the Associated Hotels of India Ltd., rejected the Custodian's objections and ruled: ". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the executability of the decree were placed by the judgment debtor but the High Court of Punjab at Chandigarh, assisted by eminent counsel, elaborately considered the many legal questions and dismissed the execution petition. The Court found that the situs of the decree which was 'property' was Lahore and so Oberoi, an evacuee, had been divested of all interest therein, the Pakistan Custodian being the repository of all such rights. The property in the decree being negatived, the present respondent failed. Many other findings hostile to his claim were also rendered by the High Court However, the quietus to this Operation execution was given by the Supreme Court of India where the parties, engaging top legal talent, hopefully reached, obtaining leave under Art. 133(1)(a) and (c) of the Constitution. In that appeal the judgment debtor (present appellant) resisted the proceedings, filing a statement of the case through his advocate Shri Naunit Lal, as required by the Supreme Court Rules (This statement has pertinence to the point regarding limitation vis-avis s. 19 of the Limitation Act, to be dealt with later). The Court, after stating the facts of the long litigation, punctu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court of India, was misconceived. In other words, the forum for enforcement and the process for getting relief viz., a suit under s. 9 and 13 of the C.P.C. in the competent Court of original jurisdiction could not be circumvented or short-circuited by resort to the exceptional methodo logy indicated in s. 4(1) or (3) of the Indian Independence (Legal Proceedings) Order. This extinguished the fires of controversy regarding executability but ignited the current original suit. Shri Oberoi, discomfited in execution, was driven to filing a regular suit for recovery of the decree amount based on the foreign judgment in his favour and indeed success attended his efforts, since the trial Court and the High Court made shortshrift of all the pleas to non-suit him. It is this defeat on all points that has escalated the appellant's litigation to the top judicial deck, this Court, urging his triple opposition to the plaintiff's decree. Shri Desai's 'submissions' logically and sequentially, were three. Firstly, the decree of the Federal Court of Pakistan, which was the foundation of the present action, had vested automatically in the Custodian under the Pakistan Ordinance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acuee' legislation. A foreign judgment is enforceable by a suit upon the judgment which creates In obligation between the parties. Indeed, it 'shall be conclusive as to any matter thereby directly adjudicated upon between the same parties' subject to the exceptions enumerated in s. 13 C.P.C. None of these nullifying clauses being attracted, prima facie the foreign judgment on which the plaintiff founds his present action is unassailable. Certainly, the judgment of the Pakistan Court was in favour of the plaintiff and, being conclusive under s. 13, the defendant could not be heard to urge to the contrary. Even so, let us' analyses the evacuee law based bar, to see if it has substance. To appreciate the merit of this argument, it is necessary, as earlier pointed out, to follow the provisions of the evacuee legislation in Pakistan. The Ordinance of 1949 defines 'evacuee' [s. 2(2) and both the parties herein fall squarely within that definition. The second question then is whether the decree, which is the source of the pla- intiff's rights, is 'evacuee property' as defined in s. 2(3) of the 1949 Ordinance or is 'Property' as defined in s.2( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt. 1 17 of the Limitation Act had admittedly run out. The rescue raft on which Shri Oberoi clutched O survival of his right to sue was S. 19 and his life-belt, as it were, was s. 14. The facts and law are fairly clear; their rival interpretations by counsel n-verticle s diverged so much that the encounter generated at the bar as 'much heat as light-inevitable, 'May be, in an adversary system. Be that as it may, we will scrutinise the case urged by the plaintiff to attract these rejuvinatory and exclusionary provisions. Courts must as far as is reasonably permissible put a liberal construction on documents to save, not to scuttle, when faced with a plea of limitation to non-suit an otherwise good claim. Section 19, to help renew limitation., requires, as rightly stressed by Shri Desai, an intention to own a subsisting liability by the debtor to the particular creditor. Mere chronicles of litigations and recitals of documentary events, it is argued, cannot be regarded as acknowledgement if the whole drift of the writing is a denial of the plaintiff's claim. But, in the view we take of the applicability of s. 14, a further probe into or pronouncement on the legal labyrint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he merits, comes within the scope of the section and a liberal touch must inform the interpretation of the Limitation Act which deprives the remedy of one who has a right (see (1971)2 SCR 397 at 401). In the Associated Hotels case (i.e. the very lis in its earlier round on the execution side this Court pointed out [1961] 1 SCR 259 at 272) that the question was one of initial jurisdiction of the Court to entertain the proceedings. Thus in this very matter, the obstacle was jurisdictional and the exclusionary operation of s. 14 of the Limitation Act was attracted. Equitable Adjustment The last ditch battle fought by the appellant relates to the deposit of ₹ 3,00,000/- which, if deducted from the date of payment into Court from the amount decreed a huge scaling down of the figure will be the result. While Shri Desai staked his case on equitable considerations which must be applied while executing foreign decrees, Shri Ashok Sen wondered what legal principle could sanction such inroad into sums legitimately due. While Shri Desai's two earlier defences are easily vulnerable, we think his plea on equity, in a less extreme form, is impregnable. "What is truth said jesting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or drawing the money from Court in July 1949 when the 1949 Ordinance vesting evacuee property in the Custodian had not been promulgated. And since the appeal was allowed by the High Court and the suit dismissed, the deposit ceased to be security for the decree, although factually the money did not leave the custodia legis. Shri Oberoi's decree was re-born, as it were, only when the Federal Court allowed his appeal on December 21, 1953. Till then he had only a potential right to claim the money. Now, a close-up of the post-decretal happenings with special reference to the conduct of either party bears on the 'conscience' of the situation. Neither party was blameworthy and indeed both were agreed at a stage that the deposit should go in satisfaction of the decree affirmed by the final court. The judgment was delivered on December 21, 1953. Most probably the Christmas vacation intervened and soon after the reopening-(January 6, 1954) the judgment debtor rushed to the Lahore High Court with the request that his application for withdrawal of deposit filed 4 years' back be dismissed as withdrawn and it be adjusted towards the decree. 'It is therefore respectfully pray ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Hon'ble Court is requested to transfer the deposits of ₹ 3,00,000 along with the records relating thereto to such officer or authority in India as the Central Government has by order, specified in this behalf or specifies in future as the provision of the said Act fully applies to it. In the alternative the said decree-holder further prays that if for some reasons, this Hon'ble Court decides that the said deposits cannot be transferred to India under the provisions of the said Act, it be held that the Custodian of Evacuee Property is not entitled to the same and it be paid to the said decree-holder at Lahore." Without being too literal or legalistic, it is clear that tile decree-holder had laid claim to the sum to the exclusion, not only of the Custodian but also of the judgment-debtor. He should have got the money, but did not. But all that the appellant could do to help Sri oberoi obtain the deposit he did. Taking a pragmatic view of the justice of the case, the Court has to see who should bear the loss in these circumstances. Should the decree-holder be eligible for his 'pound of flesh' since he had not got a paise towards his legal dues? Should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd can be considered to be partly interested in the deposit and therefrom it is contended that neither it is contemplated that the Court would invite all claimants or creditors to make claims regarding the deposit a nd would then adjudicate regarding the bona-fides of their claims and order the distribution of the deposit amongst them accordingly, nor was enquiry of this nature, contemplated, as no procedure for enquiry of this nature has been provided for in this Section. The Court is merely transmitting authority to transfer the deposit. But as this Point is still to be decided by this Hon'ble Court and as this Hon'ble Court might take a contrary view to the one stated above, it is submitted that to avoid unnecessary delay, the Court might be pleased to issue such notices that it considers proper to the public or to any other parties it considers fit to do so that the matter may be finally adjudicated at the next date of hearing. It is, therefore, prayed that it be ordered accordingly." The fair inference flows from this stream of facts that the judgment debtor had washed his hands off this sum and the decree-holder had clung to it with a quasi-proprietary claim. in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess, to carry out the directions of its municipal courts. This uniqueness cannot be missed. (1) Current Legal Problems, 1952 Vol. 5, Stevens & Song Ltd., London p.1. () Keeton-Sheriden on "Equity" p. 37, 1969 Edn. Sir Isaac Pitrnan and Sons Ltd. London, Sri Desai drew our attention to Chowthmull Manganmull v. The Calcutta Wheat and Seeds Association(I.L.R. 51 Cal. 1010.); Sheo Gholam Sahoo v. Rahut Hossein(I.L.R. 4 Cal. 6.); Mehar Chand v. Shiv Lal & Anr.( (1955) 57 P.L.R. 350.(); Kothamasu Venkata Subbayya v. Udatha Pitchayya(A.I.R. 1960 Andhra Pradesh 349,); Ex parte Banner In re Keyworth(1874(9) Ch. 379.) and Bird v. BarstoW(6). A few other cases also were cited but since nothing fresh is contributed by them reference is not made to them. What are the principles vis-a-vis the problem here ? That a mere security deposit does not become an automatic satisfaction of the decree when the appeal fails is simple enough. But when the judgment debtor has paid into court cash by way of security conditioned by its being made available to discharge the decree on disposal of the appeal and for means beyond the control or conduct of the judgment debtor the money is not forthcoming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et it for extra- legal reasons as here. We are of the view that the justice of the case, without crossing the path of any legal provision, warrants our upholding the equity set up by the appellant., Had the decree been executed in the haleyon days in the Lahore Court this deposit would have been credited and adjusted and the freak consequences of Partition should not disadvantage the judgment debtor. In India the historical and artificial distinction between Equity and Law does not exist and equity itself is enforced as law with all the built-in limitations we have adverted to. To dispel possible misapprehension we declare that the whole deposit and accretions will be drawable only by the decree- holder. Though a formal order of the Lahore Court directing adjustment of the amount towards the decree has not been passed, we direct the whole sum, whether it remain in Pakistan or is eventually transferred to India, belong to and withdrawable only by, the decree-holder, since justice and good conscience plainly require it. Equitable remedies by courts an institutionalised strategy in the myriad situations of complex modern societies are an expanding universe, but, for the obvious relief ..... X X X X Extracts X X X X X X X X Extracts X X X X
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