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1947 DIGILAW 53 (CAL)

Bank of Calcutta Ltd. v. National Insurance Co. Ltd.

1947-03-14

body1947
JUDGMENT Mitter, A.C.J. 1. Premises No. 3, Dalhousie Square and No. 2/1, Mission Row belonged to Ezekiel Abraham Gubbay, who is Respondent No. 2 in this appeal. He mortgaged the same to the National Insurance Company, Ltd., hereafter called the company. The company is Respondent No. 1 in the appeal. After the mortgage Gubbay was adjudicated an insolvent on the 26th March, 1928, and his properties including the mortgaged premises vested in the Official Assignee. Gubbay was discharged on the 11th April, 1930. Thereafter on the 29th April, 1933, the company instituted the suit to enforce the mortgage. Gubbay was the Defendant, but the Official Assignee was not impleaded in that suit. The preliminary and final decrees were passed on the 16th June, 1933, and 17th December, 1934, respectively. In execution of the final decree the mortgaged properties were put up to sale by the Registrar on the 4th August, 1945, and at the sale the Appellant, the Calcutta Bank, Ltd., hereafter called the Bank, purchased the properties for Rs, 6,30,000. The conditions of sale were those of the standard form given in Form No. 1 of Part I of Appendix J of the Original Side Rules. The Bank deposited Rs. 1,57,000 being 25 per cent, of the purchase money, on that date in compliance with the conditions of sale. On the 5th September, 1945, leave was given to the Bank to deposit the balance of the purchase money, namely, Rs. 4,72,500 by the 13th September following or within such further time as the Court may extend without any prejudice to any question as to the title to the premises sold. Time to deposit the said amount was extended up to the 15th September following and it was deposited in Court oil that date. It remained in Court uninvested and no portion was withdrawn by the company. Thereafter a reference was made to the Registrar to enquire and report as to whether a good title had been or could be made out. The Registrar made a report to the effect that a good title had been made out. An exception to his report was allowed by our learned brother Clough, J., who held by his order dated 18th January, 1940, that a good title had not been and could not be made out. He set aside the sale, directed the refund of Rs. An exception to his report was allowed by our learned brother Clough, J., who held by his order dated 18th January, 1940, that a good title had not been and could not be made out. He set aside the sale, directed the refund of Rs. 6,30,000 to the Bank and allowed costs, charges and expenses occasioned by its bidding and costs of and incidental to the setting aside of the sale to the Bank. He reserved the question as to whether the Bank was entitled to interest on the purchase money deposited by it from the dates of the deposits to the date of refund for further consideration. By a judgment dated the 21st January, 1946, he disallowed the claim of the Bank to such interest. It is against this last mentioned judgment that the Bank has preferred this appeal. The conditions of sale did not provide for payment of interest by the decree-holder or the person having the carriage the proceedings on the sale being set aside. Rule 37 of Chapter XXVII of the Original Side Rules does not provide for such interest on the sale being set aside, but enjoins payment to the purchaser of "his costs charges and expenses occasioned by his bidding for and being declared the purchaser of the property and of and incidental to the setting aside of the sale." 2. Such being the position the Bank can get interest only if it can invoke the aid of any general principle of law to sustain its claim. As the money paid by it was kept in deposit in Court and had not been withdrawn by the decree-holder it cannot call in aid the provisions of Or. 21, r. 93 of the Civil Procedure Cede for that rule is not applicable as the sale has not been set aside on the grounds mentioned in Or. 21, rr. 89, 90 or 91, and as the money deposited by the Bank was kept in Court and had not been paid over to the company. The Bank is not entitled to get interest from the company by way of damages for detention of its money in Court for many reasons. 21, rr. 89, 90 or 91, and as the money deposited by the Bank was kept in Court and had not been paid over to the company. The Bank is not entitled to get interest from the company by way of damages for detention of its money in Court for many reasons. Firstly, because the detention of the money in Court was justified till the sale was set aside; secondly, because the company was not responsible for the money lying in Court; it had to he in Court to the credit of the suit under the rules; thirdly the money lay unproductive as no application for investment had been made, and fourthly, even if the company be taken to Have been responsible for its detention in Court no interest could be claimed by it on the ground of detention for even if the money had been detained by the company itself the Bank could not have claimed interest by way of damages under sec. 73 of the Indian Contract Act [Bengal Nagpur Railway Co. v. Ruttanji Ramji L.R. 65 IndAp 66 at 73: (1937) 42 C.W.N. 985, Pattinson v. Bindhya Debi ILR (1932) Pat. 216 and Nirupama Devi v. Surabala Dassi (1938) 42 C.W.N. 1004]. 3. The Bank can, therefore, claim interest only (1) if the case can be brought within the jurisdiction of Courts of Equity on the principles and conditions in which Courts of Equity in England assume jurisdiction, [Maine and New Brunswick Electrical Power Company v. Hart [1929] A.C. 631 at 9640 and Bengal Nagpur Railway Company v. Ruttanji Ramji L.R. 65 IndAp 66 at 73: (1937) 42 C.W.N. 985], or (2) if a sale held under Chapter XXVII of the Original Side Rules can be treated on the same footing as a sale by private treaty. 4. We do not feel impressed by the argument of the Appellant based on Rule 3 of Chapter XL of the Original Side Rules. That Rule, in our judgment, has in contemplation the procedural or adjective law. Its meaning is that where there are no specific rules regulating procedure the procedure sanctioned by practice is to be followed. 4. We do not feel impressed by the argument of the Appellant based on Rule 3 of Chapter XL of the Original Side Rules. That Rule, in our judgment, has in contemplation the procedural or adjective law. Its meaning is that where there are no specific rules regulating procedure the procedure sanctioned by practice is to be followed. The question as to whether a purchaser would be entitled to get interest on the purchase money deposited by him on the reversal of the sale is one which concerns substantive law, and his claim can only be sustained either on the basis of contract or on the basis of statutory law or rules having the force of law or on general principles of substantive law. The fact that there has grown up a practice in this Court to allow him interest is in our judgment of no value. The cases cited by the Appellant where interest was allowed without any reason being assigned for the purpose of showing the practice prevalent in the Original Side are accordingly of no assistance. As there is no statutory law, as the rules of Chapter XXVII do not confer on it the right and as the conditions of sale do not give it the right to get interest on the sale being set aside, the Bank in order to succeed must bring its case within either of the above-mentioned two categories. 5. In the case of a sale by private treaty it is settled law that the purchaser is entitled to have back the earnest money or the purchase money as the case may be, with interest thereon from the date of payment by him, if the vendor is unable to show a good title or a title in accordance with the contract for sale. This rule, in our judgment, cannot be made applicable to a sale by the Court through its officer, the Registrar, under Chapter XXVII of the Original Side Rules. This rule, in our judgment, cannot be made applicable to a sale by the Court through its officer, the Registrar, under Chapter XXVII of the Original Side Rules. If the analogy of vendor and purchaser be at all applicable or apposite, the Court would occupy the position of a vendor, and we do not see on what principle the decree-holder, who on the analogy is not the vendor, but who is entitled in law to invoke the aid of the Court for realising the fruits of his decree, and who has not had the use of the purchaser's money, is to he made to pay interest, if the Court fails to have a good title made out. In Freeman on "Void Judicial Sales" at page 163 (fourth edition) the matter is put in the following maimer: With respect to defects in the title the purchaser would be released, and any payment made by him and remaining within the control of the Court will be returned, if the erudition of the title is such that be would not be required to accept it, were the contract between him and a private individual. The Court is the vendor, and it will not enforce a contract in its own favour, of which it would refuse to decree the execution, if the vendor was a private person. 6. The matter has been put in a slightly different language by Kekewich, J., in Holliwell v. Seacombe [1906] 1 Ch. 426 at 431, His observations are as follows: It is always recognised that it is the bounden duty of the Court to uphold a very high standard of conduct as regards sales by the Court-more so indeed than would be the case in a sale by a stranger out of Courts. It is on this principle that the purchaser is released from his bid arid the effect of the release is that the purchaser is entitled to be re-instated in exactly the same position that he stood in when attended the sale, and to be indemnified against all the expenses he has been put to. [Per Bacon, V.C., in Powell v. Powell L.R. (1875) 19 Eq. 422 at 445]. [Per Bacon, V.C., in Powell v. Powell L.R. (1875) 19 Eq. 422 at 445]. The "usual order" as Romilly, M.R., puts it, would in such cases be "Discharge the purchaser and tax his costs, charges and expenses properly incurred occasioned by his bidding for and becoming the purchaser, and also his costs of the reference as to title and all proceedings thereon, including his costs of and occasioned by the exceptions to the Master's report and the order thereon, and of his application and consequent thereon " [per Kekewich, J., in Holliwell v. Seacombe [1906] 1 Ch. 426 at 431] and this is what Rule 37, Chapter XXVII of the Original Side Rules provides for. 7. The case is not of such a description where the purchaser for getting release from his bid has to allege or rely upon circumstances which would attract the equitable jurisdiction of Equity Courts of England, for that jurisdiction is exercised only in cases of fraud, accident or breach of confidence or where the remedy at law is inadequate. We, therefore, hold that the Bank is not entitled to claim interest on the deposits. We are not unmindful of the fact that in some reported cases and in many unreported ones, learned Judges sitting singly on the Original Side have allowed interact to the purchaser, and that in the case of Ram Lal Sen v. Suradhani Sundari Pal (1935) 39 C.W.N. 897, a Division Bench of this Court also allowed interest, but we do not consider ourselves hound to do so, as there was no decision by the Division Bench on the point. Moreover, it seems that the matter was not argued at the Bar for, otherwise reasons would have been given by the learned judges. The result is that this appeal is dismissed but in the circumstances of the case, and especially in view of the fact that in a number of cases of a like nature interest had been allowed in the past to the purchaser, though it may be as a matter of course, we direct the parties to bear their respective costs of the appeal. Sharpe, J. I agree.