21 January 1953
Supreme Court
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LAL BHAGWANT SINGH Vs RAI SAHIB LALA SRI KISHEN DAS

Case number: Appeal (civil) 101-103 of 1951


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PETITIONER: LAL BHAGWANT SINGH

       Vs.

RESPONDENT: RAI SAHIB LALA SRI KISHEN DAS

DATE OF JUDGMENT: 21/01/1953

BENCH: MAHAJAN, MEHR CHAND BENCH: MAHAJAN, MEHR CHAND DAS, SUDHI RANJAN BHAGWATI, NATWARLAL H.

CITATION:  1953 AIR  136            1953 SCC  539  CITATOR INFO :  D          1966 SC 948  (5)

ACT: Civil Procedure Code (V of 1908), s. 144- Compromise decree- Stipulation  to sell property to decreeholder within a  week for  amount  due-- Amendment of  decree  allowing  judgment- debtor to pay in instalments, whole amount being payable  on default of 3 instalments-- Original decree restored by  High Court-Sale  in  execution-Amended decree restored  by  Privy Council-Validity   of  sale-Restitution  U.  P.   Encumbered Estates Act (1934 as amended in 1939)-Proceedings under s. 4 quashed  by  Board  of  Revenue-Sale  of  judgment  debtor’s property  before Amendment Act-Application  under  Amendment Act to amend previous application- Whether fresh proceedings --Validity of sale.

HEADNOTE: Under  a compromise decree the amount due to  the  plaintiff was  fixed by mutual consent and it was further agreed  that the  defendant  should within one week of the  date  of  the decree   convey  to  the  plaintiff  immoveable   properties sufficient to satisfy the decree.  The U. P.  Agriculturists Relief  Act of 1934 having come into force, the  decree  was subsequently  amended  by the Civil Judge  by  reducing  the amount  and  directing  that the amount may be  paid  in  12 annual   instalments  with  the  condition  that  if   three instalments  were in default the whole amount was to  become immediately  payable.  The amended decree was set  aside  by the  Chief  Court in 1938.  The  decree-holder  applied  for execution,  and a sale deed was executed by the Civil  Judge in  1939  for the entire decree amount.  The  Privy  Council reversed  the  decree of the Chief Court  and  restored  the amended  decree  of the Civil Judge in 1944.   The  judgment debtor applied for restoration of the properties with  mesne profits by way of restitution: Held, confirming the decree of the Chief Court, that, as the judgment-debtor  bad  not  obtained any  order  staying  the operation  of the amended decree pending  the  dereeholder’s appeal  to  the Chief Court he was bound to  carry  out  the terms  of the amended decree, and, as the Privy Council  had merely  restored  the amended decree  without  altering  the

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provisions  as  to payment by instalments or  extending  the time  for payment by instalments and its decree  did  not-in any way alter the position of the parties as it stood  under the amended decree, and, the sale was not in consequence  of any  error in a decree which was reversed on appeal  by  the Privy  Council,  the  judgment-debtor was  not  entitled  to restitution. Dayal  Sardar v. Tari Deshi (I.L.R. 59 Cal. 647)  and  Gansu Ram v. Parvati Kuer (A.I.R. 1941 Pat. 130) approved. 560 The  judgment-debtor  in the above  mentioned  case  applied tinder s. 4 of the U. P. Encumbered Estates ’Act, 1934,  for administration  of  his estate in 1936 but  the  proceedings were  quashed by the Board of Revenue in 1938.  As no  order for  stay of execution was obtained, a sale was effected  in execution   of  the  decree in February, 1939.   The  U.  P. Encumbered  Estates (Amendment) Act, 1939, came  into  force after  the date of the sale and the judgment-debtor  applied on   the  10th  October,  1939,  foe  amending  his   former application,  but  it was ultimately decided  by  the  Chief Court that the amendment application of 1939 must be treated as fresh proceedings: Held,  confirming the decision of the Chief Court,  that  as the  proceedings which were started in 1936 were quashed  by the  Board  of Revenue in 1938, the sale held  in  February, 1939, was unaffected by the bar imposed by s. 11 of the Act. The order made on the application of the 10th October was an order  on  a  fresh application under s. 4  and  it  had  no retrospective  effect and could not affect the  validity  of the  sale  effected  when  no application  under  s.  4  was pending.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil AppealS Nos.  101 ,  102 and 103 of 1951. Civil Appeal No. 101 of 1951 was an appeal from the Judgment and decree dated the 13th March, 1946, of the Chief Court of Avadh  at  Lucknow  in First Civil Appeal No.  132  of  1943 arising out of the Judgment dated the 25th September,  1943, of  the Court of Special Judge, 1st Grade, Sitapur in E.  E. Act Suit No. 27/1 of 1938. Civil Appeals Nos. 102 and 103 of 1951 were appeals from the Judgment and Decree dated the 13th March, 1946, of the Chief Court  of  Avadh at Lucknow in Execution of  Decree  Appeals Nos. 103 of 1944 and 23 of 1945 arising out of the  Judgment dated  the 16th November, 1944, of the Court  of  Additional Civil Judge, Lucknow, in Miscellaneous Case No. 70 of 1944. B.   I. Bishan Singh for the appellant. M.   C.  Setalvad  (Nazimuddin Siddique, with him)  for  the respondent. 1953.  January 21.  The- Judgment of the Court was delivered by MAHAJAN J, 561 MAHAJAN  J.-Shortly stated, the factS giving rise  to  these three appeals are these On  the  4th July, 1933, Rai Bahadtir Lala Hari  Kishen  Das obtained from the court of The civil judge, Sitapur, a final compromise  decree  in  the sum  Of  Rs.  3,88,300-2-6  with pendente  lite and future interests’ and costs, on the  foot of  two simple mortgages executed in his favour in 1928  and 1931  by  Thakur  Raghuraj Singh.  It was  provided  in  the compromise that Raghtiraj Singh mould within a week sell  to Hari  Kishen Das at agreed prices some villages out  of  the

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mortgaged property selected by him and sufficient to satisfy the  decree.  He reserved to himself the right to  get  back the sold villages after five years and before the expiry  of fifteen  years  on payment of the  stipulated  prices.   The computation of the price of the sold lands was to be made in the manner laid down in clause (6). Hari  Kishen  Das made a selection of  eight  villages,  and deeds  of  sale and relinquishment in respect of  them  were duly prepared and executed on 4th July, 1933 Before     they could be presented for registration,    the parties received information that a notification    for  assumption  by   the Court  of Wards of the management of the  talukdar’s  estate had  been  issued  and  that it was  likely  to  render  the conveyances   ineffectual.    In  view  of   the   impending notification the sale transaction felt through and a  refund was obtained of the amount spent on the stamp papers, On the 20th January, 1934, the Court of Wards decided that it would not take the estate under its supervision.  Hari Kishen  Das then revived his demand against the judgment-debtor for  the completion of the sale deeds but the judgment-debtor did not pay  any heed to his- request with the result that  on  26th May,  1934,  he  made an application for  execution  of  the compromise decree.  To the execution of this decree a number of  objections  were raised by Raghuraj Singh.   Before  the disposal of these objections the U.P. Agriculturists’ Relief Act (XXVII of 1934) and the U.P. Encumbered Estates Act (XXV 562 of  1934) came into operation.  Under the provisions of  Act XXVII  of 1934, the judgment-debtor became entitled  to  the amendment,  of the decree by reduction of interest, and  for payment of the decretal sum in instalments.  Under the other Act,  a landlord-debtor whose property was encumbered  could -apply to the court for the administration of his estate for liquidation  of his debts.  Raghuraj Singh was not  slow  in seeking  the aid of these laws to reduce the amount  of  his indebtedess and to save his property.  He made  applications under  both the Acts.  In the application under  the  Relief Act  he  prayed for the scaring down of the  amount  of  the decree  and  for  instalments.   In  the  application  under section  4  of  the  Encumbered Estates  Act  he  asked  for liquidation ,of his debts by the civil judge. On  the  11th  January, 1936, the  civil  judge  of  Sitapur altered  the  decretal  amount of Rs.  3,88,300-2-6  to  Rs. 3,76,790-4-3  exclusive  of costs and  future  interest  and directed  Raghuraj  Singh to pay the money in  twelve  equal annual instalments payable in the month of December of  each year, the first instalment being payable in December,  1936, and also provided that in the case of default in payment  of three  instalments, the whole amount then due  would  become immediately  payable.  Against this order, Hari  Kishen  Das filed an application in revision to the Chief Court and  was successful  in having the amended decree set aside  on  15th February, 1938. In  the proceedings commenced under the  Encumbered  Estates Act on 29th October, 1936, Raghuraj Singh obtained an  order under  section  6 of the Act but this order  was  eventually quashed  by the Board of Revenue on 13th August,  1938,  and the debtor’s application under section 4 was dismissed. Having  succeeded  in his application in  revision  in  the Chief  Court,  Hari Kishen Das revived  the  proceedings  in execution of the compromise decree and called upon  Raghuraj Singh  to  execute a sale deed in respect  of  the  selected villages in his favour.  On his failure to comply with  this demand, the court 563

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executed  a  deed of sale in his favour  on  24th  February, 1939,  and in due course delivered to him possession of  the property covered by the deed. Thakur  Raghuraj Singh died in -the year 1941,  leaving  him surviving   the  present  appellant  as  his  successor   in interest.   An  appeal  had been taken by  him  against  the decision  of  the  Chief Court dated  15th  February,  1938, setting aside the amended decree to His Majesty in  Council. By  an  order  of  His Majesty in  Council  passed  on  20th January,  1944, the decision of the Chief Court  dated  15th February,  1938, was reversed and the amended decree  passed by  the  Civil Judge of Sitapur on 11th January,  1936,  was restored.   Liberty was given to the appellant to  apply  to the court of the civil judge, Sitapur, for such relief as he might  be  entitled  to with reference to  the  recovery  of possession of the property. In view of the decision of the Privy Council, Bhagwant Singh (appellant)   made   an  application  for   restoration   of possession and for recovery of profit:,, wrongfully realized by  Hari Kishen Das and after his death by his  adopted  son Sri  Kishen Das.  This application was strenuously  resisted by  the creditor and it was pleaded by him that  even  under the  amended  decree  a sum of  Rs.  4,31,148-9-9  including interest and costs had become due to the decreeholder on the date of the sale since three instalments which had till then fallen  due had remained unpaid and the default  clause  had come  into operation and the sale in execution could not  be set aside, as it has not caused any injury to the  judgment- debtor  and  had not in any way caused loss to  him  in  the absence  of  proof  that  he  had  the  money  to  pay   the instalments. The   subordinate   judge  allowed   the   application   for restitution conditional on Bhagwant Singh paying within  two months  the  accumulated  sum that had  fallen  due  to  the decreeholder under the unpaid instalments up to the date  of the  order.  He held that the arrears up to December,  1943, came to Rs. 3,58,914-8-9, and deducting from this amount the net profits 73 564 realized  during the period of his possession  amounting  to Rs. 73,294-8-5 and the costs of appeal allowed by the  Privy Council,  a.  sum of Rs. 2,85,620-074 was due  and  directed that  if this amount was not deposited in court  within  two months,  the  application would stand  dismissed.   Bhagwant Singh applied for extension of time but this application was summarily dismissed. Rai Sabib Sri Kishen Das and Bhagwant Singh both appealed to the  Chief Court against this decision.  The appeal  of  Sri Kishen Das was numbered as 103 of 1944.  His contention  was that the judgment-debtor was not entitled to restitution  at all.   The  appeal of Bhagwant Singh was numbered as  23  of 1945.  His grievance was that he wag entitled to restitution without   any  condition.   The  Chief  Court  allowed   the decreeholder’s appeal (103 of 1944) with costs and dismissed the judgment-debtor’s appeal (23 of 1945) but without costs, and  dismissed  the application of the  judgment-debtor  for restitution on the 13th March, 1946.  Appeals 102 and 103 of 1951 arise out of this decision. Appeal No. 101 of 1951 arises out of another decision of the Chief  Court  dated 13 th March, 1946, which  confirmed  the decree  dated 26th September, 1943, of the special judge  of Sitapur  under the Encumbered Estates Act.  The facts  about this matter are these : As  already stated, on 28th October, 1936,  Thakur  Ragburaj

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Singh applied under section 4 of the U.P. Encumbered Estates Act (XXV of 1934) for administration of his estate so as  to liquidate  his  debts amounting to about 14 lakhs.  on  13th August,  1938, the Board of Revenue quashed the  proceedings under  the  Encumbered  Estates  Act  initiated  by   Thakur Raghuraj   Singh.   As  no  order  for  stay  of   execution proceedings  was obtained by Raghuraj Singh from  the  Chief Court or the Privy Council, the civil judge to whom the exe- cution proceedings had been transferred, on 13th 565 February,  1939,  ordered the judgment-debtor to  execute  a sale  deed  and on his making a default the civil  judge  on 24th  February, 1939, executed a sale deed on behalf of  the judgment-debtor  in, favour of Rai Bahadur Hari Kishen  Das. The U.P. Encumbered Estates Amendment Act (XI of 1939)  came into  operation after this sale.  It allowed the  applicants to amend their applications, proceedings in respect of which had  been  quashed previously.  On the 10th  October,  1939, Raghuraj  Singh  applied for amendment of  his  application. This  application was allowed by the sub-divisional  officer who  passed an order under section 6 of the U.P.  Encumbered Estates Act on 18th October, 1939, and forwarded the amended application to the special judge, first grade, Sitapur.   On 31st  July, 1940, the special judge passed an order  to  the effect  that the proceedings would start  afresh.   Raghuraj Singh  went up in revision to the Chief Court  against  this order  contending that the proceedings should not be  deemed as  fresh  proceedings.   The  Chief  Court  dismissed   the revision  on 9th December, 1940.  On a  notification  issued under section 11 of the Encumbered Estates Act, Hari  Kishen Das  filed objection on 14th August, 1942, under section  11 claiming that the villages sold to him were his property and were  not  liable to be attached and sold for the  debts  of Raghuraj Singh.  This objection was contested by the debtor. The special judge by his decree dated 25th September,  1943, declared Rai Bahadur Hari Kishen Das to be the proprietor of all  the  eight villages included in the sale deed  of  24th February, 1939.  Against the decree of the special judge  an appeal  was  filed in the Chief Court which  confirmed  that decree  on  13th March, 1946.  Appeal No. 101  of  1951  now before us is directed against that decree. This  appeal  can be shortly disposed of.   The  proceedings under the Encumbered Estates Act having been quashed by  the Board of Revenue in August, 1938, the sale held in February, 1939, was unaffected by the bar imposed by section 7 of  the Act.  In 566 view of the decision of the Chief Court dated 9th  December, 1940,  the  appellant could not be allowed  to  agitate  the point  that  the proceedings should have been deemed  to  be pending in February,.1939, because of the provisions of  the amending  Act.   This point was stressed before  us  by  the learned counsel for the appellant and he contended that  the provisions  of the amending Act XI of 1939 should have  been given  retrospective operation and the date of his  original application  should  have been treated as the  date  of  the start  of the proceedings under the Encumbered Estates  Act. This  contention, in our opinion, was rightly  negatived  in the  courts  below, and it was rightly held that  the  order made  under section 6 on 18th October, 1939, was made  on  a fresh  application under section 4. of the  U.P.  Encumbered Estates Act preferred on 10th October, 1939, and this  could not affect the validity of the sale deed executed at a  time when  no  application under section 4 was pending.   It  was argued in the courts below that the sale deed  was a nullity

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because  it  was executed while execution  proceedings  were pending before the collector under schedule III of the  Code of  Civil Procedure.  The point was not argued before us  in this  appeal.  This appeal therefore fails and is  dismissed with costs. As  regards  appeals Nos. 102 and 103, the  main  point  for decision  is whether in the circumstances of this  case  the appellant was entitled to restitution by way of  restoration of possession and grant of mesne profits after the  reversal of  the  compromise  decree by the  Privy  Council  and  the restoration  of  the amended decree as passed by  the  civil judge under the Relief Act. Having regard to the provisions of section 144 of the  Code of Civil Procedure, the Chief Court was of the opinion  that the  sale  in 1939 was inevitable and could  not  have  been avoided  if  the amended decree had been then in  force  and that if it was set aside it would confer on the appellant an advantage  to  which his predecessor was  not  entitled,  he having defaulted 567 in  the  payment of three instalments before the  sale  took place.  The following passage from the judgment of the Chief Court expresses the view that it took on this point :- "For  purposes  of section 144 we have in the words  of  the section  ’to place, the parties in the position  which  they would have occupied but for such decree or such part thereof as  has been varied or reversed.’ So placing them the  issue which falls for determination is whether the judgment-debtor would have paid the accumulated amount of three  instalments namely Rs. 1,37,839-1-11 in December, 1939.  On the evidence the  lower  court has come to the conclusion with  which  we agree  that Thakur Raghuraj Singh owed no less  than  rupees fourteen  lakhs to other creditors, and computing the  value of  the entire landed property at the rate specified in  the compromise  of  1133, it was only rupees  nine  lakhs.   Lal Bhagwant  Singh produced no evidence to establish  that  his father  was  otherwise in a position to pay  the  amount  of three instalments in December, 1938.  We may mention that no objection  has  been  taken at the bar to  the  estimate  of indebtedness  or  to the evaluation of the  estate.   Taking them,  therefore, to be correct it is impossible to  believe that  the judgment-debtor could have prevented the  sale  on 24th  February, 1939, if the parties were then  governed  by the   decree  of  1936.   The  result  which  followed   was inevitable and cannot be attributed solely to the  erroneous order passed by this court in February, 1938." In our opinion, no exception can be taken to the judgment of the Chief Court in the facts and circumstances of this  case and both these appeals would therefore have to be dismissed. On  account  of  the order of His  Majesty  in  Council  the amended  decree passed by the civil judge, Sitapur, on  11th January,  1936, must be deemed to have been  subsisting  all along.  All the terms of the compromise were embodied in the amended  decree  and  there was no  difference  in  the  two decrees except for the reduction of 568 the  sum due from Rs. 3,88,300-2-6 to Rs.  3,76,790-4-3  and the  reduction of pendente lite and future interest and  for provision  for instalments.  The compromise decree with  the necessary  adaptations  and amendments  became  the  amended decree  and was enforceable as such.  It gave the  judgment- debtor, an opportunity to satisfy the decree by  instalments if  he  committed no default and to save the  property  from being  sold  in  satisfaction of it but in  case  the  whole amount of the decree became due according to its terms or if

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any  portion  of  it  remained unpaid,  it  yet  had  to  be satisfied  in  the same manner as  the  original  compromise decree.   During the pendency of the decreeholder’s,  appeal before  the Chief Court the judgment-debtor did  not  obtain any  order staying the operation of the amended decree.   He was thus bound to carry out the terms of that decree but  he failed  to pay any of the instalments that fell due in  1936 or  1937.   The third instalment, it is true,  fell  due  in December, 1938, after the amended decree had been set  aside by the Chief Court but the judgment-debtor had appealed  for its  restoration to the Privy Council.  He should  therefore have taken steps to protect himself against being in default with  payment of three instalments.  In order  therefore  to avoid  the  default  which  he  would  otherwise  commit  by nonpayment of the third instalment it was obligatory on  him to pay or offer to pay to the decree-holder an amount  equal to  the amount of one instalment so that  three  instalments will not be in arrears, or to obtain an order from the Privy Council  absolving him from complying with the terms of  the amended decree set aside by the Chief Court, even if it  was eventually restored.  Failing that, he should have  obtained a fresh order from the Privy Council fixing the  instalments and  time  for the payment.  He, however,  did  nothing  and adopted  the  attitude  that he need  make  no  payment  and considered  himself  absolved  from  satisfying  either  the original  decree or the amended decree.  The result of  this attitude  was that the whole of the decretal  amount  became due on his 569 failure  to pay the third instalment provided for under  the amended  decree  in  December, 1938, and he  thus  lost  the benefit  of paying the decretal amount by instalments.   The amount due  from him in February, 1939 under the decree  was the same sum for which the property was sold in execution of the  original  decree. In this situation it cannot  be  said that there was any alteration in the position of the parties by thePrivy Council setting aside the compromise decree  and restoring the decree passed by the civil judge, Sitapur,  in 1936.  The position would have been the same if that  decree was a subsisting one and was in execution.  If the judgment- debtor could have shown that he was in a position to pay the aggregate amount of the instalments in December, 1938, or at least  one instalment so that he could not be said  to  have defaulted in the payment of three instalments, then the sale made  in February, 1939, could not possibly be  regarded  as one  under the amended decree but could only have been  made in  consequence of the original compromise decree, and  that compromise  decree  having been superseded and  the  amended decree  having  been  restored,  the  sale  held  under  the reversed decree would surely have to be set a-side.  On  the other hand, if the sale could not have been avoided even  if the amended decree which was eventually restored had been in operation  at the time of the sale by reason of  default  of payment  of  three  instalments  and the  sale  was  also  a necessary  consequence under the decree of the  civil  judge and  was  inevitable, then it cannot be said that  the  sale held  in February, 1939,-was the result and  consequence  of the reversed decree.  It is true that it is one of the first and  the highest duty of a court to take care that its  acts do  not  injure  any of the suitors and if  any  injury  was caused  to the judgmentdebtor by the sale held in  February, 1931, it was our duty to undo the wrong caused to him.   It, however, cannot be said that in this case any wrong has been done  to  the judgment-debtor which we are  called  upon  to redress.  It is not possible to hold that he

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570 was  under no obligation to satisfy either one or the  other of the two decrees, and that he was absolved from satisfying the  instalment decree because it had been set aside by  the Chief  Court  and he was also absolved from  satisfying  the original  decree  because it was later on set aside  by  the Privy Council.  Having himself appealed to the Privy Council for  the  restoration  of  the  instalment  decree,  it  was obligatory  on him to carry out the terms of that decree  if he  wanted  to  take advantage of  its  provisions.   Having defaulted in this, he must take its consequences, which  are now different from the consequences of the original  decree. Indeed,  if in this case the prayer of  the  judgment-debtor for  restitution was granted, it would result in  doing  not only  an injustice but a wrong to the decreeholder  and  the court  would not be acting fairly and rightly  towards  him. As  already said, in February 1939 both under  the  original decree  and  the amended decree a sum of  over  rupees  four lakhs became due to him and he was entitled to got a sale of the   villages  selected  by  him  in  his  favour   towards satisfaction  of  this decretal debt.  If this sale  is  set aside  and possession of eight villages is restored  to  the judgment-debtor and mesne profits are decreed in his favour, the  decreeholder  would be deprived of the  fruits  of  his decree which is certainly not the purpose of restitution  in law  or  equity;  it would place the  judgment-debtor  in  a position  of  advantage to which he is  not  entitled.   The executing  court  decreed restoration of possession  of  the eight villages in favour of the appellant conditional on his paying the amount due to the decreeholder under the  amended decree  till  the  date  of  that  order.   This   obviously favourable order passed in his favour by the trial judge was not  availed  of by the judgment-debtor as he has  no  means whatsoever to make any payment.  An order of restitution  in the manner asked for in the circumstances of this case would be contrary to the principles of the doctrine of restitution which  is that on the reversal of a judgment the law  raises an obligation on the party to the record who received the 571 benefit of the erroneous judgment to make restitution to the other party for what he had lost and- that it is the duty of the court to enforce that obligation unless it is shown that restitution would be clearly contrary to the real justice of the case.  The decreeholder in the present case has  derived no advantage* to which he was not entitled and the judgment- debtor  has  lost  nothing.   In  either  event  he  had  to discharge and satisfy the decretal debt due from him whether under  the  first decree or under the second and  that  debt could only be discharged by sale of the villages selected by the  decreeholder.  In the words of Rankin C. J.  in  Dayal. Sardar v. Tari Deshi(1), the judgmentdebtor is not  entitled to recover the properties except upon showing that the  sale was in substance and truth a consequence of the error in the reversed  decree.   The  sale  being  inevitable  under  the amended decree the ’judgment-debtor was clearly not entitled to  restitution.  It was held in, Gansu Ram v. Parvati  Kuer (2),  that where a judgment-debtor could not have paid  even the reduced decretal amount and the sum realized at the sale was  less than the decretal amount the situation  could  not have  been altered in any way had the decree  been  modified before,  instead of after the sale, and the  judgment-debtor could  not invoke the provisions of section 144,  except  by showing  that  the  sale  was  in  substance  and  truth   a consequence  of  the  error in  the  original  decree.,  The observations made in this case have apposite application  to

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the facts and circumstances of this case. For the reasons given above we are of the opinion that there is  no merit in either of these appeals and we dismiss  both of them with costs. Appeals dismissed. Agent for the appellant: C. P. Lal. Agent for the respondent: Rajinder Narain. (1)(1932) I.L.R. 59 Cal, 647, (2) A.I.R. 1941 Pat. 130. 74 572