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PETITIONER: P.V.G. RAJU GARU

       Vs.

RESPONDENT: STATE OF ANDHRA PRADESH

DATE OF JUDGMENT24/01/1990

BENCH: SAWANT, P.B. BENCH: SAWANT, P.B. MUKHARJI, SABYASACHI (CJ) REDDY, K. JAYACHANDRA (J)

CITATION:  1990 AIR  650            1990 SCR  (1) 134  1990 SCC  (2)  61        JT 1990 (1)    86  1990 SCALE  (1)72

ACT:     Andhra  Pradesh  (Andhra Area)  Estates  (Abolition  and Conversion into Ryotwari) Act, 1948: Section  45(3)--Compen- sation  paid  on abolition of Estate--Endowment  created  by Estate  for maintenance of hospital--Government taking  over hospital--Liability  of  Estate to pay the  endowed  amounts from out of compensation--Whether includes interest--Payment of interest----Whether all sharers liable to contribute.

HEADNOTE:     Under the provisions of the Andhra Pradesh (Andhra Area) Estates (Abolitian and Conversion into Ryotwari) Act,  1948, (the Act), the Government took over a hospital which was run by a Zamindar of an impartible estate. After the  take-over, the Government made applications before the Estate Abolition Tribunal  claiming  recovery of certain amounts  which  were endowed to the hospital by the erstwhile ruler, from out  of the compensation paid on the abolition of the estate. Claims for  interest  and priority over other creditors  were  also made.     In the first of such applications, the Tribunal  allowed the  amount claimed without specific reference  to  interest but  rejected  the  claim for priority.  In  the  subsequent proceedings, the Tribunal rejected the claim for interest as also priority and held that in the earlier proceeding  also, it has disallowed the claim for interest.     Aggrieved  against  the  Tribunal’s  orders,  Government preferred appeals before the High Court. The High Court took the view that while allowing the claim the Tribunal had  not only  allowed  the  claim for principal  but  also  interest thereon, and ordered payment of interest as claimed.     These  appeals are against the High Court’s  orders  and the  appellant contended that there was no provision in  the Act  for payment of interest; that the  expression  ’amount’ claimed before the Tribunal should be construed to mean  the principal amount only; that the subsequent claims for inter- est were barred by resjudicata; that it would be 135 inequitable  to claim interest on the amounts endowed  since no interest was paid on compensation; that while the compen-

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sation  was shared by others also, the appellant  cannot  be singled out to pay the interest. Dismissing the appeals, this Court,     HELD:  1.1 The High Court was right in holding that  the Tribunal by its order of 15.12.02 had allowed the claim  for interest.  Under the scheme of the Act itself, the  Tribunal was  required  to  apportion the amounts  according  to  the priorities depending upon the amount of compensation  depos- ited at the time of giving of the direction in question.  It was, therefore, only to be expected that the Tribunal  would first give directions with regard to the payment of  princi- pal  amounts and defer the payment of interest to  a  future date.  That  is exactly what the Tribunal had  done  in  the present  case and, hence, in the second set of  applications made by the Government, the Government had not only  claimed the  balance  of  the principal amounts  but  also  interest thereon. Thus, the issue with regard to the claim for inter- est in the subsequent applications was not barred by  resju- dicata. [141B-C, D].     1.2  All  that the Tribunal had done was to  direct  the Estate  to  pay the amounts in question  to  the  Government together with interest at the admitted rate, which  interest was in any case payable towards the endowment objects. Under the Act, the Tribunal had, among other things, to  determine the liability of the Estate. The endowment amounts  together with  the  interest admittedly accruing thereon  formed  the total  liability of the Estate. The interest, further was  a recurring  one and the objects of the endowment were  to  be financed  from out of the said interest. When  the  Tribunal directed the payment of interest together with the principal amount, it did nothing more than direct the Estate to honour its liability. [141F-G]     2. Whether or not interest was paid on compensation  due to  the Estate, it has nothing to do with the  Estate’s  li- ability towards the endowments. The interest directed to  be paid  by  the Tribunal was not interest over and  above  the endowed  amounts. It is the principal amount  together  with the  interest accruing thereon which constituted  the  total endowed  amounts  at the time of abolition of  the  Estates, [142A-B]     3.  The  direction  of the High Court to  pay  the  said amount will have to be read as a direction to the  appellant to do so in his capacity as the Estate-holder and not in his individual capacity. If the final amounts 136 are  already  distributed among all the sharers  and/or  the creditors,  the  Government has to look for  the  amount  of interest to all the sharers and/or their creditors including of  course the appellant. All the sharers will be liable  to contribute towards the payment of the amount of interest  in proportion  to their share in the compensation. That is  how the order of the High Court and the earlier order passed  by the  Tribunal will have to be read and  construed.  [142E-H; 143A]

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 80405 of 1975.     From  the  Judgment and Order dated  28.12.1973  of  the Andhra Pradesh High Court in S.T.A. Nos. 1 and 3 of 1971. P.R. Seetharaman and T.V.S.N. Chari for the Appellant. M.C. Bhandare, A.V.V. Nair for the Respondent. The Judgment of the Court was delivered by

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   SAWANT, J: The present appeals arise out of the proceed- ings  for the determination of the claims of  the  creditors and  directions to pay them on the abolition of the  Estates of the Vizianagaram and taking over of the same by the State Government  under the Andhra Pradesh (Andhra  Area)  Estates (Abolition and Conversion into Ryotwari) Act, 1948  (herein- after referred to as the Act).     2. Under the provisions of the said Act, on 7-9-1949 the Gosha hospital at Vizianagaram which was till then manned by the  hereditary  landlord  and zamindar  of  the  impartible Estate  of  Vizianagaram  (hereinafter referred  to  as  the Estate)  was  handed over to the State.  The  late  Maharani Appalakondayamba otherwise popularly known as "Rani of Rewa" had  executed  a  Will on 14-12-1911  creating  a  permanent endowment of a sum of Rs.1,00,000 for the maintenance of the said  hospital.  This amount was kept in  deposit  with  the Estate. Since the Government had taken over the hospital  by its  Application  No. TOP 123/58 to  the  Estates  Abolition Tribunal  and Distt. Judge, Vishakhapatnam,  the  Government claimed the recovery of the said amount with interest at the rate  of 6% per annum and also claimed a priority  over  the other  creditors. The Tribunal by its Order  dated  15-12-62 allowed the claim for the amount, but rejected the claim for priority.   The  Tribunal  also  directed  the  payment   of Rs.36,695  to  the  Government out of the  total  amount  of compensation which was then 137 deposited  with it. The Government filed an  appeal  against the said Order being STA No. 1/64 in the High Court, but the same  was dismissed. It appears that  subsequently,  another sum of compensation being Rs.11,78,581.09 was deposited, and hence  the  Government filed another application,  viz.  TOP 5/69  for payment of the balance of Rs.63,305 with  interest thereon  at  the rate of 6% per annum from 1-7-49  till  the date of payment. In this application, the appellant did  not dispute  the Government’s claim for Rs.63,305 but  contended that  no  interest on the sum of Rupees one lakh or  on  any part thereof was payable since according to him the Tribunal had rejected the claim for interest by its earlier Order  of 15-12-62  in  TOP 123/58. The Tribunal accepted  the  appel- lant’s  contention and held that the claim for interest  was rejected  earlier and disallowed the same. Against the  said Order, the Government preferred an appeal to the High  Court being STA 1/71.     3.  The  late  Rani of Rewa by her same  Will  had  also deposited  another  sum of Rupees one lakh with  the  Estate with  the  direction  that the interest  thereon  should  be utilised  in  feeding Telugu Brahmin students  studying  ad- vanced Sanskrit Literature and Shastras at Banaras. The said fund  will hereinafter be referred to as the Banaras  Chari- ties  Fund.  It  appears that sufficient  number  of  Telugu Brahmin  students were not available and hence the  Executor of  the Will had applied for utilisation of the said  amount for  the Gosha hospital, and in that application,  the  High Court  had  directed  that out of  the  accumulated  surplus interest of Rs.47,897 in the said Banaras Charities Fund,  a sum  of  Rs.30,000  be capitalised and  deposited  with  the Estate and the interest thereon at the rate of 3% per  annum be utilised to meet the recurring annual expenditure of  the Gosha  hospital.  After  the abolition of  the  Estate,  the Government  filed  before the Tribunal a  claim  application being  TOP  No.  124/58  for recovery of  the  said  sum  of Rs.30,000  with  interest at the rate of 6% per  annum.  The Government  also claimed priority over the  other  creditors for the said amount as well. The Tribunal by its same  order

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of  15-12-62 allowed the Government’s claim for the  amount, but  rejected  the  claim for priority.  The  Tribunal  also directed  that a sum of Rs.11,008.50 be paid to the  Govern- ment  from out of the amount of compensation which was  then deposited. Against the said order, the Government  preferred an  appeal  to the High Court being STA No. 2/64  which  was dismissed.  On the subsequent deposit of  further  compensa- tion, the Government preferred another application being TOP 6/69,  for  the  balance of Rs.18,991.50  and  for  interest thereon  at  the rate of 6% per annum from 1-7-49  till  the date of payment. The appellant did not dispute the 138 claim for the payment of the balance amount of Rs.10,991.50, but  resisted the claim for interest, firstly on the  ground that  there was no provision for payment of interest in  the Act and secondly on the ground which was urged in the  other appeal,  viz.  that  in TOP 124/58 it was  rejected  by  the Tribunal  earlier.  The Tribunal  accepted  the  appellant’s contention  and disallowed the claim for  interest.  Against the  said order, the Government preferred an appeal  to  the High Court being STA No. 3/71.     4. Thus before the High Court the only question in  both the appeals was whether the Tribunal by its earlier order of 15-12-62  in TOP 123 and 124/58 had allowed or rejected  the claim for interest? The High Court by its common order dated 28-12-73 held that the Tribunal by its earlier order of  15- 12-62  had  not  only allowed the claim  for  the  principal endowed amounts of Rupees one lakh and Rs.30,000 respective- ly,  but also interest thereon, and directed the payment  of interest  thereon from 1-7-49 as claimed. It is  this  order which  is challenged by the appellant by these two  separate appeals.     5. Civil Appeal No. 804 is against the order of the High Court in STA No. 1/71 arising out of TOP 5/69 (corresponding to  earlier TOP 123/58) and Civil Appeal No. 805 is  against the  order in STA No. 3/71 arising out of TOP  6/69  (corre- sponding to earlier TOP 124/58).     6.  Mr.  Bhandare,  learned counsel  appearing  for  the appellant  in both the appeals contended firstly,  that  the Tribunal  while disposing of TOPs Nos. 123 and 124  of  1958 should  be  deemed to have rejected the claim  for  interest because in the operative part of the order, the Tribunal did not state that it was granting interest, but only  mentioned that  it was granting the amounts which were claimed in  the applications. The expression ’amount’ claimed in the  appli- cation should be construed to mean the principal amount only and  not interest. He also tried to derive support  to  this submission from the fact that while directing the payment of specific  amounts,  the  Tribunal had  considered  only  the principal  amounts  in  both cases as is  evident  from  the orders  of the Tribunal in that behalf. Hence  he  submitted that  the  issue with regard to the interest was  barred  by resjudicata and the interest could not have been claimed  by the  Government in its subsequent applications.  His  second contention  was that assuming without admitting  that  there was  a direction given by the Tribunal to pay the  interest, such direction was without jurisdiction because there was no provision  in the Act for payment of interest.  Thirdly,  he submitted  that in any case it would be inequitable  to  ask the Estate to pay interest 139 when  the compensation which was paid to the Estate did  not bear any interest. Fourthly, he contended that in any event, the  appellant personally cannot be held liable to  pay  the interest since the endowed amounts were always a part of the

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Estate  which was abolished, and the compensation which  was paid  and  later  on distributed among the  sharers  of  the Estate,  covered  the said endowed  amounts.  The  interest, according  to him, therefore, has to come out of the  shares of all the sharers and the appellant alone cannot be direct- ed to pay the same. Fifthly, his contention was that  assum- ing without admitting that the appellant as an executor  had retained the said amounts and applied them to purposes other than  the objects of the endowment, he cannot  be  penalised for the same under the Act by making him pay the interest on them.  At  the most he may be liable for  misfeasance  as  a trustee under the appropriate law. Lastly, he submitted that in any case since other sharers are not made parties to  the present  proceedings,  no  direction can  be  given  in  the present  proceedings  for payment of interest which  has  to come out of the compensation received by all the sharers.     7.  As  regards the first contention, namely,  that  the Tribunal  had not directed the payment of interest  in  TOPs 123  and 124/58, it may be pointed out that in the  applica- tions  made by the State Government to the Tribunal for  the recovery  of the two endowed amounts, the Government had  in clear terms claimed that they were entitled to the said sums with  interest @ 6% per annum from 1-7-49 till the  date  of payment, and that the Government was entitled to this amount after  the  compensation was deposited. The  Government  had also  made a further claim that it was entitled to the  pay- ment  of the said amount in priority over the claims of  all other persons. Pursuant to these averments, the Tribunal had framed  Issue  No. 2 in TOP 123/58 and Issue No.  3  in  TOP 124/58 in identical terms as follows: "Whether the Government is entitled to claim the said amount with interest from the date of abolition  .......  ?" While recording its findings in both the TOPs, the  Tribunal had in paragraph 21 state as follows: "Under  these circumstances, I hold under point 3  that  the Government is entitled to get payment of the amounts claimed in TOPs Nos. 123-24/58." The  Tribunal further reiterated the said finding  in  para- graph 29 as follows: 140 "It is not in dispute that the amount of these two lakhs  of rupees continued to be with the Samsthanam and the  Samstha- nam was paying interest on those amounts for the purposes of the endowments  .........  From that time onwards all  along these two amounts have been treated as debts payable by  the Samsthanam.  The  amounts  claimed under  TOP  Nos   ....... 123-24/58  relate  to this amount of Rupees  two  lakhs  and interest  accrued thereon. Under these circumstances I  hold that the amounts claimed under the said petitions are  debts payable  from  and  out  of the  assets  of  the  Impartible Estate." Again later in the same paragraph, it is stated as follows: "Under these circumstances I hold under point 15 that the      amounts claimed in TOP Nos  ....................123-24/      58   ....................are debts to be paid from  and out        the  assets of the Impartible Estate of  Vizianagaram and therefore  they are debts which come under the  category  of debts contemplated under Section 45(3) of the Abolition  Act and  those debts are liable to be paid from out of the  com- pensation  amount  before  any division of it  can  be  made between the sharers and maintenance holders." In paragraph 32 the Tribunal has observed as follows: "From  the  above  discussion it is clear that  out  of  the

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amount  of  Rs.3,63,007 in dispute concerned  in  the  first instance the State Government is entitled to payment of  the amount due to it under TOP No. 122/58 and out of the balance remaining  the  amounts  payable under  TOP  Nos.  ...  123- 24/58  .........  should be paid." It  is, therefore, more than clear that the Tribunal had  by its  order in question given a finding that  the  Government was entitled to the entire amount claimed by it, namely, the principal endowed amount and also interest claimed thereon.     8.  The  contention that because the  Tribunal  had  not reiterated  the word ’interest’ in the next sentence of  its direction and had only mentioned "the amount" payable  under the TOPs and, therefore, it should be held that the Tribunal had  rejected  the claim for interest is too  facile  to  be accepted. For the same. reason, we are also not impres- 141 sed  by the argument that since the Tribunal had  while  di- recting the payment of specific amounts had only referred to a  part of the principal amounts it should be held that  the Tribunal  had  rejected the claim for  interest.  Under  the scheme  of  the  Act itself, the Tribunal  was  required  to apportion the amounts according to the priorities  depending upon the amount of compensation deposited at the time of the giving of the direction in question. It was, therefore, only to be expected that the Tribunal would first give directions with  regard  to the payment of the  principal  amounts  and defer  the  payment of interest to a future  date.  That  is exactly what the Tribunal had done in the present case  and, hence, in the second set of applications made by the Govern- ment, the Government had not only claimed the balance of the principal  amounts  but also interest on the entire  of  the said  amounts  from 1-7-49. The High Court  was,  therefore, right in holding that the Tribunal by its order of  15-12-62 had  allowed the claim for interest. In  the  circumstances, the  issue  with  regard to the claim for  interest  in  the subsequent applications, namely, applications TOPs 5/69  and 6/69  was  not barred by resjudicata, as contended  by  Shri Bhandare.     9.  The  second contention that the Tribunal  could  not have  directed the payment of interest because there was  no jurisdiction  to do so is also misconceived, for the  simple reason  that in the Will in question, both the said  amounts were  deposited  by the testator with the  Estate,  and  the beneficiaries  of the endowment, namely, Gosha hospital  and the  Banaras  Charities Fund were to be  financed  from  the interest  accruing on the said two amounts respectively.  It was not in dispute that these two amounts were lying  depos- ited with the Estate and the Estate was paying interest @ 6% per  annum on the amount of Rupees one lakh which was  meant for  Gosha hospital and @ 5% per annum on the  amount  meant for the Banaras Charities Fund. Hence, all that the Tribunal had  done  was to direct the Estate to pay  the  amounts  in question  to  the Government together with interest  at  the admitted  rate, which interest was in any case  payable  to- wards the endowment objects. Under the Act the Tribunal had, among  other things, to determine the liability of  the  Es- tate.  The  endowment  amounts together  with  the  interest admittedly  accruing thereon together formed the  total  li- ability of the Estate. The interest, further was a recurring one  and  the objects of the endowment were to  be  financed from out of the said interest. When, therefore, the Tribunal directed the payment of interest together with the principal amount it did nothing more than direct the Estate to  honour its liability. 10. As regards the third contention that it was  inequitable

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for 142              SUPREME COURT REPORTS   [1990] 1 S.C.R. the Tribunal to ask the Estate to pay the interest since the compensation  paid to the Estate did not bear any  interest, we  are afraid that the submission is beside the  point.  In the  first instance, under the scheme of the Act the  amount of  compensation  was to be paid in stages as and  when  the compensation was deposited. Secondly, whether the Estate was paid or not paid the interest on compensation due to it, has nothing to do with the Estate’s liability towards the endow- ments. The interest directed to be paid by the Tribunal  was not  interest over and above the endowed amounts. It is  the principal amount together with the interest accruing thereon which  constituted the total endowed amounts at the time  of the abolition of the Estates.     11. The next three contentions can be dealt with togeth- er.  There is no doubt that the amounts were deposited  with the Estate, and it was the Estate which was paying  interest to  the beneficiary or beneficiaries under  the  endowments. Hence,  as observed by the Tribunal, in the first  instance, the  endowment amounts together with the  interest  accruing thereon  had to be set apart, from out of  the  compensation payable to the Estate, and it is the balance which had to be distributed among the sharers or the creditors of the  shar- ers  as the case may be. As we read the Tribunal’s order  of 15-12-62 as well as the impugned order of the High Court, we see  no  direction to the appellant to pay the  said  amount personally,  as  indeed on such direction  could  have  been given,  since  the facts show, that both  the  amounts  were lying  with  the Estate and not with the  appellant  in  his individual  capacity.  What is recorded  in  the  Tribunal’s order is that it is the Estate-holder who had not made  over the two amounts to the Government on the date of its  taking over. Hence, the direction of the High Court to pay the said amount will have to be read as a direction to the  appellant to do so in his capacity as the Estate-holder and not in his individual  capacity. If the final amounts are already  dis- tributed  among  all the sharers and/or the  creditors,  the Government has to look for the amount of interest to all the sharers  and/or  their  creditors including  of  course  the appellant.  All  the sharers will be  liable  to  contribute towards the payment of the amount of interest in  proportion to their share in the compensation. That is how the impugned order  of the High Court and the earlier order  of  15-12-62 passed  by the Tribunal will have to be read and  construed. In the circumstances, it matters not whether all the sharers were parties to the proceedings. The proceedings were essen- tially against the Estate, and the present appellant in  his capacity as an Estate-holder represented the Estate and  all the sharers. The order passed in the proceedings is,  there- fore, binding on all the sharers in the Estate notwithstand- ing the fact that all the sharers  143 were not parties to the proceedings. We, therefore, find  no substance  in  the contention that the  present  proceedings were  bad in law because all the sharers were not made  par- ties to the same.     12. In the result, both the appeals fail. In the circum- stances, however, there will be no order as to costs. G.N.                                          Appeals   dis- missed. 144