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PETITIONER: K.S. SATYANARAYANA

       Vs.

RESPONDENT: V.R. NARAYANA RAO

DATE OF JUDGMENT:       27/07/1999

BENCH: S.Saghir Ahmad, D.P.Wadhwa

JUDGMENT:

D.P. Wadhwa, J.

       Leave granted.

     This  is plaintiff’s appeal against the judgment dated March  3,  1998 of the Karnataka High Court  dismissing  his appeal.   Earlier plaintiff’s suit had been dismissed by the trial  court  against respondent, who was arraigned  as  1st defendant.  The suit had been partly decreed against the 2nd defendant.

     Respondent  - the 1st defendant - is the owner of  the property  in  Malleswaram,  Bangalore,  which  consisted  of ground  floor  and two upper floors.  1st defendant  entered into an agreement to sell dated December 26, 1991 respecting his  said property with the 2nd defendant.  Name of the  2nd defendant  is R.  Sridhar.  1st defendant further authorised in  writing  (Exh.P-1)  R.  Sridhar to enter into  any  sale agreement  of this property with anyone.  This writing is as under:-

     "Mr.   R.  Sridhar, s/o Sri Rama Raju, residing at No. 17/2,  7th  Temple  Road, Malleswarama, Bangalore,  has  got every  right to enter into any Sale Agreement on my property bearing  No.  25, 4th Temple Road, Malleswarama,  Bangalore, consisting  of Ground Floor, First Floor and Second Floor of my side measuring 30’x40’."

     On  the strength of this writing 2nd defendant entered into  agreement  with the plaintiff to sell ground floor  of the said property for a consideration of Rs.5,55,000/-.  The agreement to sell with R.  Sridhar of the whole of the house envisaged  consideration  of Rs.12,85,000/-.   Towards  sale consideration  plaintiff  gave  an amount of Rs.2  lakhs  by means  of  cheques,  one  lakh  was given  to  each  of  the defendants.   Cheques  when  presented   for  payment   were encashed  by the respective payees.  Sale agreement with the plaintiff,  which was entered into by the 2nd defendant,  is dated  February 22, 1992.  This sale agreement fell through. Plaintiff  did not go for specific performance of  agreement to sell against both the defendants.  Rather he demanded his money  back.  While the 2nd defendant repaid him Rs.50,000/-

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1st defendant refused to return the money alleging breach of the agreement of sale between him and the 2nd defendant.  In the  suit filed by the plaintiff for recovery of Rs.2,12,637 against  both the defendants, he claimed Rs.1,36,167/-  from the  1st  defendant and Rs.76,470/- from the 2nd  defendant. Both  these amounts included interest at the rate of 14% per annum.   The  suit of the plaintiff was decreed against  the 2nd  defendant for Rs.76,470/- with proportionate costs  and future  interest  at  the  rate  of 10%  per  annum  on  the principal amount of Rs.50,000/- from the date of decree till realization.   Suit against the 1st defendant was,  however, dismissed  on  the  ground  that there  was  no  privity  of contract  between  the  1st  defendant  and  the  plaintiff. Plaintiff’s  appeal  to  the High Court met the  same  fate. High  Court  was  also  of the view that  the  suit  of  the plaintiff  against the 1st defendant was bad as there was no privity of contract between them.

     Facts  of the case which we have set out above are not in  dispute.   The  issue  on the basis  of  which  the  1st defendant  succeeded was:  Whether the 1st defendants proves that  he  is not liable to pay the amount.  There  was  some dispute  if  the  writing (Exh.P-1) was signed  by  the  1st defendant.   High  Court noticed that the 1st defendant  did not  unequivocally deny the receipt of rupees one lakh  from the  plaintiff.   But then the High Court proceeded even  on the  assumption  that  1st   defendant  authorised  the  2nd defendant  to enter into a sale agreement in respect of  his property  with any one but said that that would not  advance the case of the plaintiff any further.

     Writing (Exh.P-1) was put to the 1st defendant when he appeared as witness in the court.  He denied the writing and his  signatures on it.  He also denied his signatures on the agreement  to  sell,  which  was entered  into  between  the plaintiff  and  the  2nd defendant (Exh.P-2).   In  fact  he denied  knowledge of any such agreement.  His only plea  was that  he  was not liable to pay any amount to the  plaintiff since  there was no privity of contract between him and  the plaintiff.   He  said that the cheque of the  plaintiff  was handed  over  to him by the 2nd defendant and the  same  was encashed  by  him.  He was cross-examined.  He was asked  if the  Vakalatnama  given by him in favour of his counsel  was signed  by him.  He denied his signatures on the Vakalatnama (Exh.P-6).  Then he was asked if the written statement filed by  him  was  signed by him at two places.   He  denied  his signatures  on the written statement as well (Exh.P-7).   He admitted that the plaintiff had come to him in 1991 but that he  said was at the instance of the 2nd defendant.  Now this very  written statement (Exh.P-7) has been filed by the  1st defendant  as an annexure to his counter affidavit filed  in this  Court  on  notice being issued to him in  the  Special Leave Petition.

     A  piquant  situation had developed before  the  trial court  when  the 1st defendant denied his signatures on  the written  statement and Vakalatnama in favour of his counsel. Trial  court should have immediately probed into the matter. It should have recorded statement of the counsel for the 1st defendant  to  find  out if Vakalatnama in  his  favour  and written  statement were not signed by the 1st defendant whom he  represented.  It was apparent that the 1st defendant was trying  to get out of the situation when confronted with his signatures  on the Vakalatnama and the written statement and his  having  earlier  denied his signatures on  Exh.P-1  and

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Exh.P-2  in  order  to defeat the claim  of  the  plaintiff. Falsehood  of the claim of the 1st defendant was writ  large on the face of it.  Trial court could have also compared the signatures of the 1st defendant as provided in Section 73 of the  Indian  Evidence  Act.   Section 73  is  reproduced  as under:-

     "Comparison  of signature, writing or seal with  other admitted or proved.

     73.   In  order  to  ascertain  whether  a  signature, writing,  or seal is that of the person by whom it  purports to  have  been written or made, any signature,  writing,  or seal  admitted or proved to the satisfaction of the Court to have  been  written or made by that person may  be  compared with the one which is to be proved, although that signature, writing,  or  seal has not been produced or proved  for  any other purpose.

     The  Court  may direct any person present in Court  to write  any words or figures for the purpose of enabling  the Court  to  compare the words or figures so written with  any words  or  figures  alleged  to have been  written  by  such person.

     This   section  applies  also,   with  any   necessary modifications, to finger impressions."

     It was a case where instead of going into a protracted trial,  trial  court  could  have decreed the  suit  of  the plaintiff  against the 1st defendant as well at the stage of Order X (Examination of Parties by the Court) of the Code of Civil  Procedure.   After the 1st defendant admitted  having received  rupees  one lakh from the plaintiff he  could  not retain  that  money on the spacious plea that there  was  no privity  of contract between him and the plaintiff.   Amount of rupees one lakh had been given to him by the plaintiff as he  wanted  to purchase ground floor of his  property.   The agreement  to sell for the purpose was entered into  through the  2nd defendant whom the 1st defendant had authorised  to enter  into any such agreement on his behalf.  The plaintiff could not have paid to the 1st defendant rupees one lakh but for  the agreement to sell in respect of ground floor of his property.   It  is  only  on the  basis  of  this  agreement (Exh.P-2)  which is entered into by the 2nd defendant on the strength  of Exh.P-1 that the plaintiff paid rupees one lakh each  to  the  1st  and 2nd defendants.  If  we  accept  the pleadings of the 1st defendant then the amount of rupees one lakh had been given by the plaintiff under some mistake.  In any  case, it was not a payment gratuitously made.  Doctrine of undue enrichment would squarely apply in the present case and the plaintiff would be entitled to restitution.  In this connection  Sections  70 and 72 of the Indian Contract  Act, 1872 may be referred to, which are as under:-

     "70.   Obligation  of  person   enjoying  benefit   of non-gratuitous  act.- Where a person lawfully does  anything for  another  person,  or  delivers  anything  to  him,  not intending  to  do  so gratuitously, and  such  other  person enjoys  the  benefit  thereof, the latter is bound  to  make compensation to the former in respect of, or to restore, the thing so done or delivered.

     72.   Liability  of person to whom money is  paid,  or

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thing  delivered, by mistake or under coercion.- A person to whom money has been paid, or any thing delivered, by mistake or under coercion, must repay or return it."

     In  Mulamchand vs.  State of Madhya Pradesh (AIR  1968 SC  1218), the contract between the appellant and the  State Government  was  held to be void as it was entered  into  in contravention  of the provisions of the Government of  India Act,  1935.   Appellant,  however, sued for  return  of  his deposit  and  for the goods supplied and services  rendered. This Court said:  -

     "In  other words if the conditions imposed by  Section 70  of  the  Indian  Contract Act  are  satisfied  then  the provisions  of that section can be invoked by the  aggrieved party  to the void contract.  The first condition is that  a person  should  lawfully do something for another person  or deliver  something to him;  the second condition is that  in doing  the  said thing or delivering the said thing he  must not  intend to act gratuitously;  and the third condition is that  the other person for whom something is done or to whom something  is delivered must enjoy the benefit thereof.   If these  conditions are satisfied, Section 70 imposes upon the latter  person  the  liability to make compensation  to  the former  in  respect of, or to restore, the thing so done  or delivered.   The important point to notice is that in a case falling  under  Section  70 the person doing  something  for another  or  delivering something to another cannot sue  for the  specific  performance  of  the contract,  nor  ask  for damages  for  the  breach of the contract,  for  the  simple reason  that there is no contract between him and the  other person  for  whom he does something or to whom  he  delivers something.  So where a claim for compensation is made by one person  against  another under Section 70 it is not  on  the basis  of any subsisting contract between the parties but on a  different kind of obligation.  The juristic basis of  the obligation  in such a case is not founded upon any  contract or   tort  but  upon  a   third  category  of  law,  namely, quasi-contract or restitution."

     This  Court quoted with approval two decisions of  the English  Courts,  which are quite illuminating and which  we reproduce as under:-

     1.   "In Bibrosa v.  Fairbairn, 1943 AC 32 Lord Wright has stated the legal position as follows:

     "....any  civilised system of law is bound to  provide remedies for cases of what has been called unjust enrichment or  unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from, another which it is against conscience that he should keep.  Such remedies in English  Law  are  generically different  from  remedies  in contract or in tort, and are now recognised to fall within a third  category  of  the common law which  has  been  called quasi-contract or restitution."

     2.   In  Nelson  v.   Larholt, (1948) 1  KB  339  Lord Denning has observed as follows:

     "It  is  no  longer appropriate  to  draw  distinction between law and equity.  Principles have now to be stated in the  light of their combined effect.  Nor is it necessary to

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canvass  the niceties of the old forms of action.   Remedies now  depend  on the substance of the right, not  on  whether they  can be fitted into a particular framework.  The  right here  is  not  peculiar to equity or contract or  tort,  but falls naturally within the important category of cases where the  court orders restitution if the justice of the case  so requires."

     It  is  unfortunate  that the courts  below  were  not attentive  to  the  procedural  laws and their  duty  to  do substantial  justice  in  the case.  Had that  been  so  the plaintiff  would  have  been   spared  the  tribulations  of knocking  at  the  doors of the highest court of  the  land. Courts  below fell into error in going into the question  of privity  of  contract  and  lost sight of  the  basic  issue involved in the case.

     It  was  a case where perhaps action could  have  been taken  against the 1st defendant as he was apparently guilty of perjury in not only denying his signatures on Exh.P-1 and Exh.P-2  but  also on written statement and the  Vakalatnama filed by him.

     We  allow  the appeal, set aside the judgments of  the trial court as well as of the High Court and decree the suit of the plaintiff for Rs.1,36,167/- against the 1st defendant with  costs throughout.  Plaintiff shall also be entitled to interest  at  the  rate of 10% per annum  on  the  principal amount  of  rupees one lakh from the date of institution  of the suit till realisation.