PARAMJIT SINGH SANDHU AND ORS. ETC.

RAM RAKHA AND ORS. ETC.

March 22, 1979

[P. N. SH!NGl!AL AND D. A. DESAI, JJ.]

Punjab Police Rule, s, 1959, Ru{, e3 3, 6, 8 and 10 Construction of-U'hen appointnients to a post are from t1ro different sources, one by promotion

and another by direct recruitn1ent according to quota rule, whether the quota rule would operate at both the stages of recruitn1ent and confinnation or at the stage of initial recruitn1ent only.

Deemed confirmation after the expiry of the period of probation and cases when an express order of confirmation is necessary, pointed out.

Under the Punjab Police Service Rules, 1959, recruitment to Punjah Police Service (Deputy Superintendent of Police) is made from tv10 sources, namely 80% by promotion and 20% through direct recruitment. lfnder R.u1e

10, seniority in the cadre of Deputy Superintendent of Pplice is reckoned accofding to the date of confirmation.

Consideration for nomination to Indian Police Service is done according to seniority-cum-merit.

Respondent~ 1 and 2 in C.A. 2903/78 who were promotees to the cadre of Deputy Superintendents of Police in February, 1961 and January, 1961 respectively v.ere not confirmed even though appellan~ and resp:>ndents 5 to 8 who were recruited to the sa1ne cadre by direct appointment con1m1!ncing from May, 1961 to May, 1965 were confirmed.

They, theref.::>re, filed a Writ Pe!ition praying for a direction to con.firm them in the Pun, iab Police Service, adhering to the quota rule at the time of confirmation as wdl. Ttey alleged that a~ eniority in the cadre of Deputy Superintendent of Police is reckoned under rule 10, according to date of confirmation failure to confirm in the post-available to them in breach of the relevant rules, had resulted' in the denial of equality of opportunity in public service enshrined in Art. 15 of the Constitution at the time of consideration of their cases for non1ination to the Indian Police Service which i~ done according to seniority-cutnmerit.

Allov.'ing the Writ Petition and directing the State to confirm them, the learned single judge held that the quota rule would operate not only at the time of initial recruitment but also at the time of confirmatioll, as he was of the opinion that the quota-rule i~ linked with the seniority rule.

Two Letter~ Patent Appeals, one filed by appellant No. 1 and another by the State, were heard along with another Writ Petition filed by one Ram Rakha urging identical contentions.

The Writ Petition was allowed and the appeals were dismissed by a common judgment modifying the directioa given by the learned single judge to the extent that the State should consider B the case of the Writ petitioners for confirmation afresh according to quota rule and then refix their inter-se seniority.

Dismissing the appeals, by special leave the Court

P. S. SANDHU V. RAM RAKHA 585

HELD : 1. When a first appointment or promotion i! made on probation for a specific period and the employee is allowed to continue in the post after the expiry of the period without any specific order of confirmation he should be deemed to continue in his post as a probationer only in the absence of any communication to the contrary in the original order of appointment or promotion or the Service Rules.

In such a case, an express order of confirmation is necessary to give the employee a substantive right to the post.

From the mere fact that he is allowed to continue in the post after the expiry of the specific period of probation he should not be deemed to have been confirmed.

This is so, when the relevant rules permitted extension of the Probationary period for an indefinite time. [592 A-CJ

Sukhbans Singh v. State of Puniab, [1963] 1 SCR 416, G. S. Ramaswamy

v. The Inspector General of Police, Mysore State Bangalore, [1964] 6 S.C.R. 278; State of U.P. v. Akbar Ali, [1966] 3 SCR 821; referred to.

2. Where the rules provide for a fixed period of probation with a power in the' Government to extend it up to a specific period and not any unlimited period, either by express provision or by necessary implication, at the end of such specified period beyond which the Government had no power to extend the probation, the probationer, if he continues beyond that period, 'lhould be deemed to have been confirmed in the post. [592 C-E]

State of Punjab v. Dharam Singh. [1968) 3 SCR I explained.

3. Rule 8 of the Punjab Service Rules, 1959 prescribe!. a period of probation of two years and the proviso confers power to extend the period of probation by not beyond one year meaning thereby that in any case the E Government would not have the power to extend the period of probation beyond a• period of three years.

[593 A-BI

In this situation, (a) the ratio of Dharani Singh's case would muratis 1nurandis apply and the direct recruits who completed the period of probation of tw'O years and in the absence of an extension of probationary period would be deemed to be confirmed by necessary implication. [593 B-C]

(b) If seniority is to be reckoned from the date of confirmation and if promotees are not confirmed for years together in some cases, while direct recruits who came much later got confirmed and .i'pso facto became senior to the pron1otees, if quota rule is only applied at the time of initial rei.:.ruit ment, this undesirable result i!. wholly unavoidable. [593 C-D]

4. Where recruitment to a cadre is from two sources and the Service Rules precribe quota for recruitment for both sources, a question would

alwas anse, whether the quota rule would apply at the initial stage of

recru1rnent or als~ at the stage of confirmation. Ordinarily, if quota is prescnbed for recruitment to a cadre, the quota rule \vill have to be observed at the recruitment stage. The quota would then be c0--related to vacancies to be filled in by recruitment but after recruitment is made from two different .sources they will have to be integrated into a cow.man cadre and while so doing the question of their inter se seniority would surface. [593 F-G]

T '

Seniority is ordinarily determined from the date of entry into cadre on the principle of continuous officiation. Confirmation in a post would ordinari~ ly depend upon such circumstances as satisfactory completion of probationary period, efficiency in the discharge of duty, capacity to discharge functions of the post, availability of permanent vacancy etc. Now, if seniority is to be determined according to the date of confirmation and the quota rule '.s not made relatable to confirmation in various posts falling vacant in the cadre it would directly impinge upon the seniority of members of the service. [593 G- H. 594 Al

S. B. Patwardhan and Ors. etc. v. State of 'A1aharashtra, [1977] 3 SCR 77 5 @ 797; referred to.

5. A harmonious reading of rules 3, 4, 6, 8, and 10 makes it clear that the qllota rule is operative both at the time of initial recruitment and .ot the time of confirmation. The recruitment to Punjab Police Service is from two sources.

Recruits from both the sources have to be on probation.

Adcpting the construction that the proviso to Rule 8(b) permitting a maximum period of probation of three years at the end of which the direct recruit

v;1ould automatically be confirmed unless his services are dispensed with simultaneously enjoying seniority from the date of such automatic confirmation without applying quota rule at the time of confirmation, would put the promotee to an unintended disadvantage who may be continued in an officiating capacity without confirming him and consequently denying or relegating him do\vn in seniority for years as has happened in the case of respondeets 1 and 2.

Such an approach would be wholly unreasonable more so ¥.'hen 1 here was not the slightest suggestion that their services were not satisfactory and that the confirmation was denied on , any such ground, thereby directly affecting their places in the seniority list. [594 C-F, H]

If the other view that the quota rule would apply both at the tim1! of recruitment and at the time of confirmation, is adopted rule 10 which provides for seniority according to the date of confirmation would certainly be saved from the vice of unreasonableness. [594 G]

The quota rule is linked up with the seniority rule.

Quota rule is linked up with seniority rule because, not the date of entry in service determines the seniority but the date of confirmation determines seniority. Quota rule being inextricably intertwined with the seniority rule any delinking \vould render the seniority rule wholly unreasonable. After recduitment, members of the service, though drawn from two different sources-direct recruits and promotees-constitute a single integrated cadre.

They discharge identical functions, bear similar responsibilities and, acquire an equal amount of experience in the respective assignments.

If quota rule were to be applied at the stage of initial recruitment and wholly ignored at the time of confirmation the rule would suffer from the vice of unreasonableness and would offend Art. 16, because, in that event, while direct recruits would get confirmation automatically, the promotees would hang out for years as has happened , in the case of respondents 1 and 2 and if they are not confirmed they would never get seniority and their chances of being considered for promotion to the higher post would be wholly jeopardised. [595 A-B. C, D-E]

• S. G. Jaisinghani v. Union of India and Ors. [1967] 2 SCR 703 @ 717 and 718; S. B. Patwardhan v. State of Maharashtra, [1977] 3 SCR 775 @ 797; followed.

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P. s. SANDHU v. RAM RAKllA (Desai, /.) 587

6. \Vhere recruitment is from two sources and the seniority in the cadre i8 determined according to the date of confirmation to accord utmost fair treatment a rotational system bas to be followed while giving confirmation.

The quota rule would apply to vacancies and recruitment has to be made keeping in view the vacancies available to the two sources according to the quota. If the quota rule is strictly adhered to there will be no difficulty ln giving confirmation keeping in view the quota rule even at the time of confirmation.

A roster is introduced while giving confirmation ascertaining every time which post has fallen vacant and the recruit from that source has to be confirmed in the post available to the source. This system would breakdown the moment recruitment from either source in excess of the quota is made. In fact a strict adherance to the quota rule at the time of recruitment would introduce no difficulty in applying the rule at the time of confirmation because vacancies would be available for confirmation to persons belonging to different sources of recruitment. The difficulty would arise when recruitment in excess of the quota is made and it would further Le accentuated when recruits from one source viz. direct recruits get auton1atic confirn1ation on completion of the probationary period, while the promotees hang out for years together before being confirmed. [596 F-H, 597 A-BJ

Mrvyn Couthzdo and Ors. v.

Collector of Custonis, Bombay and Ors., [1966] 2 SCR 600; A .. K. Subraman and Ors. v. Union of Indian and Ors., D [1975] 2 SCR 979; explained and distinguished .

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2902-2903 of 1977.

Appeals by Special Leave from the Judgment and Order dated E 3-11-1976 of the Punjab and Haryana High Court in Civil Writ Petition No. 6781/74.

Y. S. Chitale, M. N. Phadke and P. C. Bhartari (In CA 2903 /77) for the Appellants .

G. L. Sanghvi, S. K. Bagga and Mrs. S. Bagga for RR 1-2.

R. S. Sodhi for the State of Punjab.

The Judgment of the Court was delivered by

DESAI, J.-These two appeals by special leave arise from a common judgment rendered by the High Court of Punjab & Haryana at Chandigarh in Letters Patent Appeals Nos. 560 and 564 of 1974 and Civil Writ No. 6781/74. The controversy raised in these appeals turns upon the construction of the Punjab Police Service Rules, 1959 ('Service Rules' for short).

A few relevant facts as alleged by respondents 1 and 2 in Civil Appeal No. 2903/78 who moved Civil Writ No. 825 of 1972 in the High Court would highlight the problem posed in these appeals.

Respondents 1 and 2, Gurdip Singh and Dalip Singh, filed a writ petition nnder Article 226 of the Constitution against lhe State of Punjab, Inspector General of Police, Punjab, and six others including the present appellants, praying for a direction to confirm them in Punjab Police Service. Respondents 1 and 2 alleged that they were promotees to !he cadre of Deputy Superintendent of Police of Februaiy, 1961 and January, 1961 respectively having been brought on 'G' List by an order dated 23rd February 1961 of the State of Punjab and the Inspector General of Police, Punjab, respondents 3 and 4 herein.

Appellants and respondents 5 to 8 were recruited to tile same cadre by direct appointment commencing from May, 1961 to May, 1965.

The grievance of respondents 1 and 2 in the petition filed by them

was that recruitment to Punjab Police Service is made from two sources, namely, 80% by promotion and 20% by direct appointment but this quota rule is not adhered to at the time of confirmation in the 'service and, therefore, even though they were members of the service since a period earlier to appellants and respondents 5 to 8, they were not confirmed though the latter were confirmed and as seniority in the cadre of Deputy Superintendent of Police is reckoned under rule 10 according to date of confirmation, the failure to confirm them in the post available to them, in breach of the relevant rules, has denied to them equality of opportunity enshrined in Article 16 of the Constitution to be considered for nomination to Indian Police Service which E is done according to seniority-cum-merit.

The State of Punjab and Inspector General of Police, Punjab, on the one hand and the direct recruits on the other contested the writ petition, inter alia, contending that the quota applies at the stag<' of initial recruitment and not at the time of confirmation and there is no allegation that the quota rule was violated at the time of initial recruitment.

It was further contended that no one can claim to be confirmed as a matter of right and, therefore, the writ petition is misconceived.

Direct recruits to the post of Dy. Superintendent of Police, appellants and respondents 5 to 8 further contended that the petitioners were promoted on officiating basis against temporary posts and as there were no permanent posts available, they could not be confirmed till substantive vacancies in the permanent strength of the cadre were available and till confirmation their seniority having t) be reckoned from the date of confirmation, they cannot claim to be senior to the direct recruits on the principle of continuous officiation.

The writ petition came up before a learned single Judge of the High Court who was of the opinion that the quota rule is linked with the seniority rule and in order to give a reasonable interoretation and

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in order not to make the seniority rule unreasonable, upon a proper

contruction it must be held .1hat the quota rule would operate not only at the time of initial recruitment but also at the time of confirmation.

In reaching this conclusion the learned single Judge relied upon two decisions of this Court in S. G. Jaisinghani v. Union of India &

Ors.,(') and Mervyn Coutindo & Ors. v. Collector of Customs, Bombay & Ors., (2 ) and some other decisions of other High Courts. The learned single Judge accordingly gave a direction that the writ petitioners, respondents 1 and 2 herein, should be confirmed.

Two appeals being Letters Patent Appeal No. 560/74 by the present apgellant 1 and Letters Patent Appeal No. 564/74 by the State of Punjab and the Inspector General of Police, Punjab,, were preferred.

One Rakha Ram filed Civil Writ No. 6781/74 raising identical contentions and

thiS writ petition was referred to the Division Bench before which the aforementioned two Letters Patent Appeals came up for hearing The Court by a common judgment disposed of all the three matters.

Both the Letters Patent Appeals were dismissed and Civil Writ No. 6781/74 by Ram Rakha was allowed, but the direction given by the learned single Judge was modified to the extent that the State of Punjab and Inspector General of Police, Punjab, should consider the cases of writ petitioners 1 and 2 for confirmation and to fix their seniority afresh according to the quota rule.

The present two appeals arise from this common judgment preferred by the direct recrnits. It may be mentioned that neither the State of Punjab nor the Inspector General of Police, Punjab, have questioned the decision of the High Court though at the hearing of these appeals Mr. R. S. Sodhi appeared for the State of Punjab and supported the contentions canvassed on behalf of the appellants .

As the main controversy turns upon the construction of rules 3, 6, 8 and 10 of the Service Rules it would be advantageous to get a clear picture of the relevant rules. The Service Rules provide for constitution, recruitment, qualifications for being members of the service, probation, pay, seniority and discipline of the members of the Service.

Rule 3 provides that the Service shall comprise of the posts specified in Appendix 'A' to the Service Rules.

Designation of the Post in Appendix 'A' is shown to be Deputy Superintendent of Police and the strength of the cadre is shown as 66. The State Government, under rule 5, is the appointing authority to the Service. Rule 6 provides for method of recruitment from two different sources, viz., 80% by promotion from the rank of Inspectors and 20% by direct recruitment. It also prescribes eligibility qualification for promotees.

Sub-

(!) [1967] 2 SCR 703.

~2) [1966] 2 SCR 600.

rule (2) of rule 6 provides that appointment by promotion shall bi' made by he Government from Inspectors brought on List 'G' and the

method of drawing up of List 'G'. Sub-rule (3) provides that direct appointment to the Service shall be made upon the result of a competitive examination conducted by .the Punjab Public Service Commission ('Commission' for short) and further confers power on the Government in consultation with the Commission to frame necessary rules relating to examination. Rule 7 prescribes qualifications of physical fitness.

Rule 8 provides that members of the Service shall be on probation for two years which shall include the period of training at the Police Training School, Phillaur, and in the districts and in the case of members recruited by promotion the Government may by a

special order in each case permit periods of officiating appointment to the Service to count towards the period of probation. There is a provisoto the rule which enables the Government to extend the period of probation by not more than one year. Rnle 9 provides for pay of members of the Service. Rule I 0 provides for seniority of members to be reckoned by the date of confirmation in the Service.

Dr. Chitaley followed by Mr. Phadke, urged that the vires, validity or reasonableness of rule 10 having not been challenged, it was not open to the High Court to put upon rules, 6, 8 and 10 a construction on the supposed unreasonableness of rule 10 if it is interpreted by giving the language therein used its ordinary grammatical meaning.

The High Court applied the quota rule even at the stage of confirmation to avoid the vice of unreasonableness which, in the opinion of the High Court, would be implicit in rule 10 if any other view were taken.

The rules provide for constitution of Service and the Service shall comprise of the posts specified in Appendix 'A' to the rules.

At the relevant time the sanctioned strength of the Service was 66 posts.

There is a proviso to rule 3 which enables the Government to make additions to or reductions in the number of such posts whether permanently or temporarily.

Rule 6 which provides for method of recruitment in terms says that recruitment to the Service shall be made : (i) 80% by promotion from the rank of Inspectors; and (ii) 20% by direct appointment. Thus there is recruitment to the Service from two independent sources, viz., promotion and direct recruitment.

Once recruitment to any given cadre is from two sources oliviouilly after recruitment is ma:de from two sonrces they have to be integrated into one cadre which also necessitates providing for their inter se seniority.

Rule 10 provides that the seniority of the

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members of the Service shall be determined by the date of confirmation in the Service.

There is a proviso to rule 10 which is not material for the present discussion.

On behalf of the promotees it was contended that if seniority is to be reckoned from the date of confirmation in the Service, confirmation must be made available to recruits from both the sources, viz., promotees and direct recruits. It was further contended that if on satisfactory completion of probation a direct recruit is confirmed or is deemed to be confirmed and a promotee who can be continued in an officiating capacity for any length of time without considering his case for confirmation, promotees would be put at a serious disadvantage because for further promotion or what is styled as nomination to Indian Police Service, seniority-cum-merit being the criterian and the basic £adre being the cadre 'of Deputy Superintendent of Police from which nomination is to be made, their case would not come up for consideration as they are not confirmed. They pointed out that in 1971 their names were reconunended by Deparmental Committee set up for the purpo'se but the State Government turned down their names on

the only ground that they were not confirmed. It is clear from Rule 8 that both promotees and direct recruits would be on probation for two ye!lfs and in case of promotees the Government may by special order in each case permit periods of officiating appointments to the Service to count towards the period of probation.

Clause (b) of rule 8 provides that the services of _a member recruited by direct appointment may be dispensed with by the Government on his failing to pass the final examination at the end of bis period of training or on bis being reported on, during or at the end of his period of probation, as unfit for appointment.

There is a proviso at the end of sub-rule (b) which reads as under :

"Provided that the Government may, if it deems fit, extend the period of probation by not more than one year."

There is some controversy between the parties whether the proviso is to operate as proviso to rule S(a) and 8(b) both or only to rule

S(b).

It was contended on behalf of the direct recruits that once a ,,. specific period of probation is fixed and a fetter is put on the power of the Government to extend probation only by a specific period, at the end of such extended period either the service of the direct recruit is to be dispensed with on thr ground that he was unfit for appoint- H • ment or if he is continued thereafter he must be deemed to have been confirmed and the date next after the day of expiry of his ordinary or 18-253SCI j79 _ ·

extended period of probation would be the date of his confirmation.

This Court has consistently held that when a first appointment or promotion is made on probation for a specific period and the employee is allowed to continue in the post after the expiry of the period without any specific order of confirmation he should be deemed to continue in his post as a probationer only in' the absence of any communication to the contrary in the original order of appointment or promotion or the Service Rules.

In such a case an express order of confirmation is necessary to give the employee & substantive right to the post and from the mere fact that he is allowed to continue in the post after the expiry of the specific period of probation it is not possible to hold that he 'should be deemed to have been confirmed.

This view was taken in Sukhbans Singh v. State of Pun; ab('1); G. S.

Ramaswamy v. The Inspector General of Police, Mysore State, Bangalore(2); and State of U. P. v. Akbar Ali( 3). This view was founded upon the relevant rules which permitted extension of the probationary period for an indefinite time.

In fact there was no negative rule in tl1ese cases prohibiting the Government from extending the probationary period beyond a certain maximum period. However, where the rules provide for a fixed period of probation with a power in the Government to extend it up to a specific period and not any unlimited period, either by express provision or by necessary implication, at the end of such specified period beyond which the Government had no power to extend the probation, the probationer if he continues beyond that period, should be deemed to have been confirmed in the post.

This Court in State of Punjab v.

Dharam Singh( 4); after taking into consideration rule 6(3) of the Punjab Educational Service (Provincialised Cadre) Class III Rules, 1961, which provided for either dispensing with the services of the person appointed to the post on probation if his work was found to be unsatisfactory or to extend the period of probation for such period as may be deemed fit or revert him to his former post if he was promoted from some lower post, provided that the total period of probation including the extensions if any, shall not exceed three years, held that the Service

Rules fixed a certain period of time beyond which the probationary period cannot be extended and if an employee appointed or promoted to a post is allowed to continue in that post after completion of the maximum period of probation without an express order of confirmation he cannot be deemed to continue in that post as a probationer by implication.

In such a case the Court held it is permissible to

(1) [1963] I SCR 416.

(2) [1964] 6 SCR 278.

(3) [19661 3 SCR 821.

(4) [1968] 3 SCR !.

draw an inference that the employee allowed to continue in the post on completion of the maximum period of pr<'bation has been confirmed in the post by implication.

Rule 8 of the Service Rules presciibes the period of probation of two years and the proviso confers power to extend the period of probation by not beyoDd one year meaning thereby that fn any case the Government wor Id not have the power to extend the period of probation beyond a period of three years.

In ttJs situation the ratio in Dharam Singh's case (supra) would mutatis mutandis apply and it will have to be held that the direct recruit who completed the period of probation of two years and in the absence of an extension of probationary period, would be deemed to be confirmed by necessary implication.

Respondents 5 to 8 direct recruits have accordingly been confirmed on expiry of the period of probation of two years.

Now if seniority is to be reckoned from the date of confirmation and if promotees are not confirmed for years together in some cases, to wit, respondents 1 and 2 who were promotees of February and January, 1961 respectively, were not confirmed till they filed the writ petition in 1972 while direct recruits who came much later got confirmed and ipso facto became senior to the promotees, if q11'1ta rule is only applied, as is contended on behalf of the appellants and the State of Punjab, at the time of initial recruitment, this undesirable result is wholly unavoidable.

Mr. G. L. Sanghi learned counsel for the interveners and the pro- E motees contended that the framers of the rule could not have intended to accord such a discriminatory treatment to the promotees in whose favour the quota is as big as 80 % of the total strength.

Where recruitment to a cadre is from two sources and the Service Rules prescribe quota for recruitment for both sources a question would always arise whether the quota rule would apply at the initial stage of recruitment or also at the stage of confirmation.

Ordinarily, if quota is prescribed for recruitment to a cadre, the quota rule will have to be observed at the recruitment stage.

The quota would then be co-related to vacancies to be filled in by recruitment but after recruitment is made from two different sources they will have to be integrated into a common cadre and while so doing, the question of their inter se seniority would surface.

Seniority is ordinarily determined from the date of entry into cadre on the principle of continuous officiation.

Confirmation in a post would ordinarily depend upon such circumstances as satisfactory completion of probationary period, efficiency in the discharge of duty, capacity to discharge functions of the pos', availability of pel1llanent vacancy, etc.

Now, if seniority is to be determined ccording to the date of confirmation and the quota rule

is not made relatable to confirmation in various posts falling vacant in the cadre it would directly impinge upon the seniority of members of the service. In a slightly different form this question came before this Court in S. B. Patwardhan & Ors. etc. v. State of Maharashtra & Ors.,,(') in which vires of rule 8(iii) of 1960 Rules were questioned.

Rule 8 (iii) of the 1960 Rules provided that probationers recruited directly to the Bombay Service of Engineers Class II Cadre m any year shall, in a bunch, be placed senior to promotees confirmed during ihat year.

Striking down this rule as violative of Article 16 this Court held that the rule leaves the valuable right of seniority to depend upon the mere accident of confirmation.

The recruitment to Punjab Police Service is from two sources.

Recruits from both the sources have to be on probation.

Adopting the construction as canvassed for and on behalf of direct recruits that the proviso to rule 8 (b) permitting a maximnm period of probation of three years at the end of which the direct recruit automalically be confirmed unless his services are dispensed with simultaneously enjoying seniority from the date of such automatic confirmation without applying quota rule at the time of confirmation, would put the promotee

to an unintended disadvantage who may be continued in an officiating capacity without confirming him and consequently denying or relegating him down in seniority for years as has happened in the case of respondents 1 and 2.

Appellants who were recruited to the Service after respondents 1 and 2, came to be confirmed at the end of two years' period of probation while respondents 1 and 2 were not confirmed after more than 11 years of officiating service and there it not the slightest suggestion that the services of respondents 1 and 2 were not satisfactory and that the confirmation was denied on any snch ground thereby directly affecting their place in the seniority list. Such an approach would be wholly unreasonable.

Now, if the other view is taken that the quota rule would apply both at the time of recruitment and at the time of confirmation, rule to which provides for seniority according to the date of confirmation would certainly be save from the vice of unreasonableness.

Is such a construction possible? One need not stretch the language to bring about the desired result but in this case upon a harmonious reading of rules 3, 6, 8 and 10, the conclusion is inescapable that quota rule is operative both at the time of initial recruilinent and at the time of confirmlltion. If the rule of seniority were one otherwise than according to date of confirmation it would not have become necessary to

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ap, rly the quota rule at the stage of confirmation but in this ca5c the quota rule is linked up with the seniority rule and unless the quota rule is strictly observed in practice it will be difficult to hold that the seniority rule is not unreasonable and does not offend Article 16 (see S. G. Jaisinghani's case (supra) at pp. 7.17 and 718).

Quota rule is linked up with seniority rule because, not the date of entry in service determines the seniority but the date of confirmation determines seniority and, therefore, quota rule is inextricably intertwined with the seniority rule and any delinking would render the seniority rule wholly unreasonable.

Any other view would lead to the most_ undesirable result wholly unintended by the framers of the rule.

It must be re membered. that after recruitment, members of the service, though drawn from two different sources-direct recruits and promotees-constitute a single integrated cadre.

They discharge identical functions, bear similar responsibilities and acquire an equal amount of experience in the respective assignments. In this background in S. B. Patwardhan's case (supra) tliis Court held that if the promotees are treated with an evil eye and an unequal hand in the matter of seniority as was done under rule 8(iii), the rule would suffer from the vice of unreasonable.. ness and would offend Article 16 and it was actually struck down. Ari exactly identical situation would follow here if quota rule is applied at the stage of initial recruitment and wholly ignored at the time of confirmation because in that event while direct recruits will get confirmation antomatically, the promotees would hang out for years as has happened in the case of respondents 1 and 2 and if they are not confirmed they would never get seniority and their chances of being considered for promotion to the higher post would be wholly jeopardised. To avoid this utterly unconsciounable outcome the construction we have put on rule 8 would be in consonance with justice and reason.

It may be pointed out that where recruitment is from two sources and the seniority in the cadre is determined according to the date of confirmation, to accord utmost fair treatment a rotational system has to be followed while giving confirmation.

The quota rule would apply to vacancies and recruitment ha' to be made keeping in view the vacancies available to the two sources according to the quota. If the quota rule is strictly adhered to there will be no difficulty in giving confirmation keeping in view the quota rule even at the time of confirmation.

A roster is introduced while giving confirmation ascertaining every time which post has fallen vacant and the recrnit from that source has to be confirmed in the post available to the source.

This system would breakdown the moment recrnitment from either source in excess of the quota is made. In fact a strict adherence to the quota

rule at the time of recruitment would introduce no difficulty in applying the rule at. the time of confirmation because vacancies would be available for confirmation to persons belonging to different sources of recruitment.

The difficulty arises when recruitment in excess of the quota is made and it is further accentuated when recruits from one source, to wit, in this case direct recruits get automatic confirmation on completion of the probationary period while the promotees hang out for years together before being confirmed.

In Mervyn Coutindo's case (supra) this Court in terms said that rotational system of fixing seniority meaning thereby confirmation followed by seniority does not

offend equality of opportunity in Government service and recruitment not following the fixed quota rule need not be a ground for doing away with rotational system.

It was, however, contended that in A. K. Subral'nan & Ors. etc. v.

Union of India & Ors.,.(') this Court in terms has held that when recruitment is from two sources and the quota rule is enforced, the same will have. to be enforced at the time of initial recruitment in officiating capacity and not at the time of confirmation. It was, therefore, said that it would be contrary to settled law to hold that quota rule will also operate at the time of confirmation. Now, the observation of the Court is in the context of Central Engineering Service (Class I) Recruitment Rules, 1954, which came up for interpretation before the Court in that case.

The recruitment was from three different sources, viz., by competitive examination, by promotion and .by transfer.

Rule 4 provided that 75 % of the vacancies in the grade of Executive Engineer Class I shall be filled by promotion of Assistant Executive Engineers Cla.ss I, the rest of the vacancies being filled by promotion and/ or by transfer in accordance with Parts IV and V of the Rules respfctively.

The general seniority rule which was held applicable in that case was that seniority should be determined on the basis of length of service in that grade or a service in an equivalent grade irrespective of whether the latter was under Central or Provincial Government in India or Pakistan. It is in the context of these rules the question whether the quota rule should be applied at the stage of initial recruitment or confirmation came up for consideration. Unlike the rule in the present case seniority was not dependent on confirmation but seniority was dependent upon continuous officiation in the cadre.

In this background this Court held that the quota has to be enforced at the time of initial recruitment in officiating capacity and not at the time of confirmation. The situation in the case nnder discussion is materially different.

Therefore, it cannot be said that ignoring the

(!) [1975) 2 S.C.R. 1975.

• cl (

rule a proposition of universal application has been laid down that whenever there is a quota prescribed for recruitment to a cadre it can only apply at the time of initial recruitment and not at the time of confirmation.

Everything will depend upon the whole body of rules and harmonious construction has to be put upon the rules so as to avoid the possibility of a ru)e becoming unreasonable.

This Court while saying in Subraman's case (supra) that quota rule has to be adhered to and enforced at the time of initial recruitment re-affirmed the observation in Mervyn Coutindo's case (supra) that there is no inherent invalidity in introduction of quota system and to work it out by rule of rotation.

When it is said that the confirmation shall follow the quota rule it is in terms being stated that the rotational system should be followed at the time of confirmation so as to make quota rule effective and seniority rule reasonable because all the three are interlinked.

Undoubtedly, the decision in Subraman's case was in terms affirmed in Patwardhan's case (supra) but the scheme of rules in Patwardhan's case (supra) was more or less similar to the one that was examined by this Court in Subraman' s case. ~

Mr. Sanghi also urged that the language of Rule 8(a) would unmistakably show that members of Service recruited from eitlier source would be on probation for a period of two years and this would imply that promotees would also be on probation for a period of two years.

Approaching the matter from this angle he further urged that proviso to rule 8 (b) which permits extension of probation only by one year without expressly referring to direct recruits would govern both promotees and direct recruits and in that view of the matter promotees would also be deemed to be confirmed on the expiry of period of probation.

This contention overlooks the latter Part of rule 8(a) which provides that in case of promotees the Government may by special order in each case permit periods of officiating appointments to the Service to count towards the period of probation. It appears that both promotees and direct recruits to Service would be on probation.

But the latter part of rule 8-(a) comprehends Inspectors being promoted on officiating basis.

Unless there is a temporary addition to the strength of the cadre such officiating appointment by promotion would not make the promotee a member of the service in view of Rule 3.

In order to avoid any injustice to such promotees the Government may make an order to treat officiating service to count towards probation.

In the absence of such order the officiating service would not count towards probation and such appointment would not make the promotcc

a member of the service.

In that event his case would not be covered

A by the proviso to rule 8(a). Therefore, the contention cannot be accepted.

The High Court was, therefore, right in concluding that the quota rule would operate at both the stages.

Accordingly both these appea:'s fail and are dismissed but in the circumstances of the case with no B order as to costs.

S. R.

Appeals dismissed.

. \. - ' \

PARAMJIT SINGH SANDHU AND ORS. ETC

RAM RAKHA AND ORS. ETC

March 22, 1979

D. A. DESAI, JJ.

Punjab Police Rule

Punjab Police Service Rules, 1959

Punjah Police Service

Art. 15

Ram Rakha

P. S. SANDHU V. RAM RAKHA 585

[1963] 1 SCR 416

G. S. Ramaswamy

[1964] 6 S.C.R. 278

[1966] 3 SCR 821

Punjab Service Rules, 1959

Dharani Singh

[1977] 3 SCR 77

Punjab Police Service

Art. 16

[1967] 2 SCR 703

[1977] 3 SCR 775

[1966] 2 SCR 600

[1975] 2 SCR 979

Y. S. Chitale

M. N. Phadke

P. C. Bhartari

G. L. Sanghvi

S. K. Bagga

S. Bagga

R. S. Sodhi

DESAI

Gurdip Singh

Dalip Singh

Article 226

State of Punjab

State of Punjab

Inspector General of Police, Punjab

Article 16

Indian Police Service

Punjab

Rakha Ram

R. S. Sodhi

[1967] 2 SCR 703

[1966] 2 SCR 600

Punjab Public Service Commission

Phillaur

Chitaley

Phadke

Class III Rules, 1961

[1964] 6 SCR 278

Dharam Singh

G. L. Sanghi

Article 16

Article 16

S. G. Jaisinghani

If the rule of seniority were one otherwise than according to date of confirmation it would not have become necessary to
' t

ap, rly the quota rule at the stage of confirmation but in this ca5c the quota rule is linked up with the seniority rule and unless the quota rule is strictly observed in practice it will be difficult to hold that the seniority rule is not unreasonable and does not offend Article 16 (see S. G. Jaisinghani's case (supra) at pp.

S. B. Patwardhan

Article 16

Mervyn Coutindo

Recruitment Rules, 1954

Parts IV and V of the Rules

India

Pakistan

[1975) 2 S.C.R. 1975

Subraman

Patwardhan

Sanghi


L. KOCHIVAREED v.

P. MERIAPPA GOUNDER AND ORS.

February 7, 1979

[R. S. SARKARIA, V. D. TULZAPURKAR AND A. P. SEN, JJ.]

Mesne Profits-Liability for mesnt profits, principle of-Section 2(12) of the Code of Civil Procedure 1908 (A.ct V of 1908).

Civil Procedure Code, 1908, Order XX Rule 12-Construction of decree explained-Nature of the decree of the Court dated April 22, 1958 clarified.

Words and Phrases-"Whichever event first occurs" in Rule 12(1)(c)(iii} of order XX C.P.C.-Meaning of.

Civil Procedure Codt~. S. 144-Scope of.

Meriappa Gounder respondent No. 1 in C.A. 466 /69 and appellant I in C.A. 2375/69 filed e suit on August 23, 1950 in the District Court, Trichur, for specific performance of an agreement dated May 22, 1950 made by one Soliappa Chettiar. The said Soliappa Chettiar pleaded inability to perform the contract in view of the refusal of one Neelakanta Iy'er a lessee of the factory to give up possession.

Pending the suit Late Kochiyareed, husband of the appellant in C.A. 466 /69 obtained an assignment of the lease from Neelakanta Iyer on March 5, 1951. On March 8, 1951 Soliappa Chettiar executed a sale deed of the suit property in favour of one George Thatil, a nephew of Kochivareed.

In the course of the proceedings the trial court appointed a Receiver to manage the suit property. On March 21, 1951, Late Kochivarced obtaffied a lease of the suit property at a rent of Rs. 15,000/- for a period of one year which was renewed for anqtber year fron1 the Receiver and a sum of Rs. 30,000 /- so collected as rent for t\VO years was deposited in the Court by the Receiver.

The District Court on August 28, 1952 decreed the suit for specific performance and mesne profits at a reduced rate of Rs. 15,000/- per annum, instead of at Rs. 30,000/- per annum as claimed. Against the decree two appeals were filed in the High Court by Kochivareed and George Thatil. The High Court allowed the appeals and dismissed the suit by its judgment dated March 21,

1953. The appeal filed by Meriappa Gounder (CA 129 /56) was allowed by this Court as per its judgment and decree dated April 22, 1958.

On tlte question of the liability of the mesne profits, the present appeals aro6e out of interpretation of the direction ( e) of this Court's decree dated April 22, 1958.

Allowing the appeals by certificate in part the Court,

HELD : 1. Mesne profits being in the nature of damages. no invari&tte role governing their award and assessment in every case can be laid do\vn and the "Court may mould it according to the jutice of the case''.

Even so one broad basic principle 2oveming the liability for mesne profits is discernible

\..

' .... ,.

~ ....

t• Ii

...

" ... \

L. KOCHIVAREED V. P. M. GOUNDER 59

from section 2 ( 12) of the Code of Civil Procedure which defines 'mesne A profits' to mean 'those profi~ which the person in wrongful pos.Jes:Jion of property (lctually received or might with ordinary deligence havo received therefrom together with interest on such profits, but shall not include profits due to improvements made by the person in wrongful possession." [680-H, 69A]

Wrongful pos.session of the defendant is the very essence of a claim for n1esne profits and the very foundation of the defandant's liability therefor, Generally, the person in wrongful possession and enjoyment of the immovable property is liable for mesne profits.

But, where the plaintiff'~ dispOiiesaion, or his being kept out of possession can be regarded as a joint or concreted act of several persons, each of them who participates in the Commission of that act would be liable for mesne profits even though he was not in actual possession and the profits were received not by him but by some of hii confederates. Possession through another, such as a tenant may be sufficient to create liability for mesne profits, if such possession is wrongful. [69A-C and GJ

2. In such a case, where the claim for mesne profits is against several trespassers 'vho hnd combined to keep the plaintiff out of possession, it IS

open to th~ Court to adopt either of the two courses. It may by itli decree hold all such trespas!l!ers jointly and severally liable for mesne profits leaving them to have the.ir respective rights adjusted in n separate suit for contribution; or it may, if there is proper material before it ascertain and apportion the liability of each of them on a proper application made by the defendant _during the same proceedings. [69C-Dl

3. A decree under Order XX Rule 12 of C.P.C., directing enquiry into mesne profit~, howsoever expressed must be construed to be a decree directing the enquiry in conformity with the requirements of Rule 12(1)(c), eo that the decree holder is not entit1ed to mesne profits for a period (commencing from the date of the institution of the suit) extending beyond three years from the date of the preliminary decree.

[69E-F]

Chitturi Sub.hanna v. Kudappa Subbanna, [1965] 2 SCR 661; referred to.

4. The words "whichever event first occurs" in sub clause (c)(iii) of clause 1 of Rule 12 of Order XX Civil Procedure Code imply th•t the maximum period for which future mesne profits can be awarded is three ye\\rs from the date of the decree for posl!Cssion and mesne profits, finally passed.

The period of three years is to be computed from the date of decree of this Court i.e. from April 22, 1958 and it wiiJ expire on the date on which possession 1"B! delivered or relinquished by the defendant in favour of the decreeholder punn1ant to that decree. In other words, the decree mentioned in sub clause (iii) of clause (c) would be the appellate decree dated April 22, 1958 of this Court. The period of three years mentioned in the said 11ubclause is, therefore, to be reckoned from April 22, 1958. [73G-H, 74A-B]

5. Section 144 of tI:e C.ode of Civil Procedure, in termc;, says that for the purpose of the restitution, the Court may make any orders, including orders for the payment of interes-t, damages compensation and mesne profits which are JYOperly consequential on variation or reversal of the decree.

[77A-B]

There is nothing in the decree, dated April 22, 1958 of this Court which expresSly or by implication, prohibits the payment of interest on the sum of

A Rs. 30,000/- withdrawn by defendant 3 by way of restitution. l"he trial court had rightly allowed interest.

[77B-C]

6. The decree dated April 22, 1958 of this Court was a compoiite decree, partly fin&l, and partly preliminary. It was final in so far as it granted tho

reliefs of specific performance and possession on deposit of the price by the Plaintiff.

It was preliminary in as much as it directed an inquiry with regard to the assessment of mesne profits and as to who out of the defendants ViiU6 / were liable for payment of thos~ mesne profits.

But, it laid down in no uncertain terms that only such of the defendants would be liable for mesne profits "as may have been in possession of the property"'.

This direction in the decree n1eans that only the defendant or defendants found in actual posession and enjoyment of the property would be liable for mesne profits.

{70A-CJ ~

c In the instant case : --4

(a) The third defendant \Vas in sole, actual possession and control of the suit property from March 3, 1951, when he obtained the alleged assignment of lease in his favour from Neclakanta Iyer.

In tern1s of the decree of thi~ Court, therefore defendant 3 alone is liable for mesne profits in respect of the period he was in possession (excepting the peroid during which the property wa<; under the management of the Court Receiver).

[71E-F]

(b) The contention that the possession of defendant 2 was the legal possession of an owner while that of defendant 3 V.'as derivative possession of a lessee or licensee under the former is not correct, since at no stage, in the Courts below defendant 3 took up the position that he was in derivative possession of the property under defendant 2.

Nor was there even a whisper in the pleadings that defendant 2 and defendant 3 v.1ere joint-tortfeasors and therefore jointly and severally lia-ble for mesne profits.

[69H, 70C, GJ

(c) There is nothing in the decree of this Court dated April 22, 1958, indicating that the amount deposited by the plaintiff to\.vards the price should have been set off against the liability of defendant 3 for mesne profits.

On the contrary. it a1lowed deduction of the an1ounts found due against defendant 1 and defendant 2 from the deposit of Rs. 85,000/~ to be made by the plaintiff t0\1/ards the price, and further directed that after such deduction, the balance of such deposit made by the plaintiff, if any, shall be paid to the third respondent (defendant 2) who is the assignee of the second respondent (defendant I) pendente lite.

[71F-H]

(d) The plaintiff was not bound to suffer a set off in favour of defendant 3, merely because defendant 2 or his assignee withdrew the price deposited by the plaintiff without furnishing any security for its refund or adjustment G towards the liability of defendant 3, there being no evidence whatever, on record to show that such withdrawal was the result of any collusion or conspiracy between the plaintiff and defendant 2 and defendant 3.

Even assuming that both defendants 2 and 3 were liable for mesne profits jointly and

'--< '"

....

severally, then also, the plaintiff could, at his option, recover the whole of the f " amount of mesne profits from either of them; and how such inter se liability of the defendants was. to be adjusted or apportioned was a matter between the 11 defendanls only.

[72A-C]

(e) Defendant 3 entered into possession of suit property under an assianment of sham lease from NeelkantQ Iyer on March 5, 1951 during the

L. KOCllIVAREED v. P. M. GOUNDER (Sarkaria, J.) 61

pendency of the plaintiffs suit, which was instituted on August 25, 1950. The plaintiff had deposited Rs. 50,000/- sometimes after the presmtation of th<

plaint. Under the agreement of salei dated May 22, 195() made by defendant 1 in favour of the plaintiff, the total sale considerations was fixed @ Rs. 90,003/-.

Out of it Rs. 5,003/- had been paid to defendant I on the very date of the agreement. It was further stipulated that out of the balance, Rs. 50,000/- would be paid by the plaintiff-purchaser at the time of the reJ:istration of the sale deed which wa~ to be executed l\nd registered on or before July 15, 1950.

It was further stipulated that on :i:byment of the further sum of Rs. 50,000/- the plaintiff would be entitled to be put in possession of the suit property. ,.

Thus when defendant 3 entered into possession, first under the garb of an t\. assignee of sham lease from Neelkanta Iyer, and then further purchased the fproperty with his own funds in fa.vour of defendant 2 pe11dente lite, he v, ras f - fully conscious that he was purchasing a litigation. His posSessioll was, therefore V.Tongful qua the plaintiff from its. inception. [72E-ll]

(f) Disallowance of the claim for deduction for interest on the depo1it of Rs. 50,000 which the plaintiff had withdrawn on August 19, 1953 and had redeposited on 9-2-1959 is incorrect. The defendant is entitled to interest @ 6% per tinnum for the said period, after deducting the interest for the period during which the property was under the management of the Receiver.

[740-E]

(g) The plaintiff's claim for rnesne profits @ the rate of Rs. 25,000/- has correctly been negatived. Since .the plaintiff did not object to the lease granted by the Receiver to defendant 3 on an annual rental of Rs. 15,000/- and since he di<l not produce any other reliable evidence, the High Court 'Ml• not wrong in holding that the mesne profits should be on the basis of this rental value of Rs. 15,000/- [76A-C]

(h) The plaintiff, in view of the long drawn out litigation is entitled to interest @ 6% per annum upto March 29, 1959.

[76E-F]

Crv1L APPELLATE JURISDICTION : Civil Appeal Nos. 466 and 2375 of 1969.

From the Judgment and Order dated 6-8-78 of the Kerala High y'Court in Appeal Suit Nos. 27 /63 and 245/63. ""' K. S. Ramamurthy, Miss Pushpd[Nambiar and A. S. Nambiar for the

- ..

Appellant in C.A. 466/69 and R. 1 in C.A. 2375/69.

P. Govindan Nair, S. Balakrishnan and K. L. Rathi for R. 1 in C.A. 466/69 and Appellant in CA 2375/69.

N. Sudhakaran, S. L. Aneja and K. L. Aneja for RR 2-3, in C.A. 466/69 and For RR 3-4-in C.A. 2375/69.

The Judgment of the Court was delivered by

SARKARTA, J.-These two appeals on certificate arise out of execu- ·

tion petition No. 118 of 1962 on the file of the Subordinate Judge, Tri- H chur, filed by P. Meriappa Gounder (hereinafter referred to as the plaintiff) to execute the decree of the Supreme Court in C.A. 129/56

A passed on April 22, 1958.

The common facts, out of. which these appeals arise, are as follows

The plaintiff filed a suit on August 23, 1950 in the District Court, Trichur, for :Specific. performance of an acement, dated May 22, 1950, made by Soliappa Che.ttiar (hereinafter referred to as defendant 1) to sell a factory known as "Sivakami Tiles Works", for a consideration of Rs. 90,003/-.

The plaintiff made an advance payment on that very date of a sum.of Rs. 5,003/- to defendant!.

It was stipulated in the agreement that the sale deed must be executed and registered on or before July ~5, 1950.

It was further provided that out of the balance of sale consideration, Rs. 50,000/- would be paid by the plaintiff at the time of the registration and for the'remaining Rs. 35,000/-, the plaintiff was to execute a mortgage of the suit property to be redeemed on or before May 31,, 1951.

It was further agreed that on payment of Rs. 50,000/- at the time of registration, the plaintiff would be put i; i possession of the suit property.

The plaintiff pleaded that he was ready and willing to perform his part of the agreement, but came to know that defendant 1 was trying to evade his obligation under the agreement. AccordinJ:ly, the plaintiff sent a registered notice, dated July 7, 1950, through his lawyer to defendant I, to which the latter replied the. same day, that the factory was in possession of one NeeAakanta Iyer as lessee, who had refused to give up possession and therefore, it had become impossib'e to give effect to the agreement to sell the factory, as giving possession to the plaintiff was a condition precedent to the execution of the sale deed. _ The plaintiff further pleaded that the suit property was really in possession of defendant 1 and the alleged lease in fav, our of Neelakanta Iyer was a sham transaction and a device to evade payment of income tax. and hence defendant 1 was bound to carry out the terms of the agreement to sell.

- -f

The suit was contested by defendant 1 (who originally was the sole defendant).

His case was that, aQthough there was an agreement to sell the suit property, it had been made clear at the time when negotiation for sale was going on, that the factory was in the possession of Neelakanta Iyer as lessee and that it was a condition precedent to the sale that Neelakanta Iyer would 'surrender his right under the lease and give up possession and that if he refused to do so, the agreement to sell would not be given effect to.

The defendant urged Neelakanta Iyer to surrender the possession, but he refused to do so.

In the circumstances,, tho contract for sale had become incapable of performance.

He denied that the lease in favour of Neelakanta was a sham transaction.

~ ---- •

• •

L. J(OCHIVAREED v. P. M. GOUNDER (Sarkaria, J.) 63

Pending the suit, T. V. Kochivareed (the deceased husband of the appellant, Lucy Kochivareed in C.A. 466/69) obtained an assignment of the lease (Ex. D-3) from Neelakanta Iyer on March 5, 1951. Since Kochivareed was later on, when the suit was pending in the Supreme Court impleaded as defendant 3, for the sake of convenience the appellant in C.A. 466/69, will hereinafter be referred to as defendant 3.

On March 8, 1951, defendant 1 executed a sale deed of the suit property in favour of George Thatil, who is the nephew of defendant 3, and will hereinafter be referred to as defendant 2. Like defendant 3, he also joined as defendant 2 at his own reqnest, when the appeal was pending in this Court.

' On December 23,. 1950, the Court appointed a Receiver to manage

. - ..

• ..

• •

•.A

the suit property.

On March 21, 1951, defendant 3 obtained a lease of the suit property at a rent or Rs. 15,000/- for a period of one year from the Receiver.

The term of the lease was extended for one more year and two years' rent, amounting to Rs. 30,000/- was collected and deposited in the Court by the Receiver.

The District Court, Trichur, on August 28, 1952, decreed the suit for specific performance and mcsne profits at a reduced rate of Rs. 15,000/- per annum, instead of Rs. 30,000/- per annum claimed by the plaintiff.

Against the decree of the, Trial Court, two appeals were filed in the High Court-one by defendant 3 and the other by defendant 2.

The High Court allowed the appeals and dismissed the plaintiff's suit by a judgment dated March 31, 1953.

Aggrieved, the plaintiff filed C.A. 129/56 in this Court.

The plaintiff's appeal was allowed by this Court as per its judgment and decree, dated April 22, 1958.

Since a good deal of argument centers round the construction of this Court's decree, dated April 22, 1958, it will be pertinent to extract ' here the material part of that decree .

"(a) That the appellant herein do deposit within thirty days of the receipt in the decree of this Court the sum of Rs. 85,000/- in the District Court of Trichur and that on the aforesaid amount being deposited the said District Court of Trichur do forthwith give notice, thereof to the respondents abovenamed and that on the aforesaid amount of Rs. 85,000/- being deposited respondents Nos. 2 and 3 herein,, namely S. M. R. Solaiyappa Chettiar and George Thatil do within 30

SUPREMI! COURT REPORTS

[1919J 3 S.C.R.

days frbm the date of receipt of the notice of the said deposit e<Kecute and register a sale deed iri favo1lr of the plaintiff (Appellant) in respect of the suit property. ·

(b) ................... .

( c)) That the respondents above-named do pay to the appellant the cost incurred by him in the Court of the District Judge, Trichur, in Suit No. 183 of 1950 and the costs incurred by him in the former High Court of ............. .

(Kl) . . . . . . . . . . • . . . . • . . • . . •

(e) .... AND 1HIS COURT DOTH FURTHER DE- CLARE that appellant shall be entitled to :

(a) mesne profits against such of the respondents 11~ may have been in possession of the rproperty except during the period that the property was in the custody and management of the receiver appointed by the tri~I court;

(b) the net sum collected by the Receiver during his

' management; and

(c) credit for all such sums as he may have advanced to the receiver under the direction of the Court for the management of property;

AND THIS COURT DOTH ACCORDINGLY DIRECT that the trial Court do bold an enquiry about the mesne profits and such snms as may be found to be due on inquiry against the second and third respondents in respect of the mesne profits be deducted from the amount to be deposited in cash in the Court by the appellant aforesaid in accordance with clause (a) supra, and do direct the payment of the remaining amount, if any, to the third respondent (defendant

2) who is the assignee of the second respondent (defendant

1) pendente lite;"

(Emphasis supplied)

On September 12, 1958, the plaintiff filed an application in the District Court for execution of the said decree, dated April 22, 1958,, in respect of all the reliefs allowed thereunder. After the decree-holder had deposited a sum of Rs. 85,000/-, as directed in the decree, the execution application was eventually made over to the Subordinate Judge, Trichur.

As per the decree, the sale deed was executed on March 16,. 1959, by the Court on behalf of defendants 1 and 2 in favour of

\.. •

L. KOCHIVAREED v. P. M. GOUNDER (Sarkatia, J.) 6 s

the plaintiff and the possession of the property in consequence, thereof, was de1iveted to him oh March 29, 1959.

Thereafter, the plaintiff filed Miscellaneous Petition No. 229 /60 in the Trial Court.

Before the Court, defendant 3 on November 11, 1958, filed objections that he was not >liable for mesne profits, as he was never in possession and occupation of the suit property.

He further :a

contended that his liability for mesne profits. if any, was limited to the period commencing from the date of notice of the deposit in Court of the amount of Rs. 85,000/- till the date of dellivery of possession and that the plaintiff was not entitled to interest on mesne profits, or on costs by way of restitution.

Defendant 2-contended that he was not liable for mesne profits as he had never been in possession and management of the suit property, and that the entire liability, if at all any, for mesne profits was that of defendant 3, who had been in exclusive po%ession of the property.

On December 22, 1962, the court of first instance passed orders in respect of mesne profifs, costs etc.

It found that defendants 1, 2 and 3 were jointly and severally liable to the plaintiff for a sum of Rs. 10, 162.67 on account of costs of the Trial Court and the Supreme Court. The Court further found that defendant 2 was separately liable to pay to the plaintiff, a sum of Rs. 11,941.63 consisting of three items, namely, Rs. 1, 239.02 on account of costs recovered by defendant 2 from decree-holder and payable by former with interest by way of re'stitution, Rs. 2,577.01 on account of costs in the High Court, and Rs. 81251on account of mesne profits from the factory from the date of suit till date of Ex. D-3.

The aggregatti amaunt under these two heads came to Rs. 23,103.70, which was allowed to be set off against Rs. 85,000/- deposited in Court by the plaintiff and the balance was directed to be paid to the second defendant's mother, his assignee.

Apart from the sum of Rs. 10,162.67 jointly and severally payable by the third and second respondents, the District Court found that the third defendant was separately liable to pay the plaintiff a sum of Rs. 1,57,086.81 consisting of these items :

la) Rs. 7,298.10, by way of restitution on account of costs reco- • ' vered from the decree-holder including interest thereon;

(b) Rs. 39,975.00-Rent deposited and withdrawn by him together with interest thereon;

(c) Rs. 1,177.00, costs payable by him for the appeal in the High Court; a11d

(d) Rs. 1,08,636.71 net mesne profits payable by him from April 1, 1963 to the date of delivery of possession, during which period, he was found to be in possession and management.

After giving credit of a sum of Rs. 48,321 deposited by the third defendant in Court on March 9, 1959, a net sum of Rs. 1,08,765.81 was directed to be realised by the plaintiff from the estate of defendant 3 in the hands of his legal repre•entative (appellant in C.A. 466/69). By the same order, the Court dismissed Misc. Petition No. 229/60 that had been filed by the plaintiff for determination of the extent of waste committed upon the property by defendant 3.

Aggrieved by that Judgment and Order, Lucy Kochivareed, wife of defendant 3, a• well as the plaintiff and the second defendant, preferred

appeafa in the High Court of Kerala.

By a common judgment, dated August 6, 1968, the High Court partly allowed the appeals filed respectively, by the plaintiff and the legal representatives of defendant 3; but dismissed the appeal (AS. 248/63) file'd by defendant 2.

The High Court,, inter alia, affirmed the finding of the Trial Court that the

third defendant was in sole and exclusive possession of the suit propeny during the period in question.

The Trir1l Court's findings with regard to the quantum of rnesne profits per year, were not found satisfactory.

The High Court assessed the mesne profifs at a flat rate of Rs. 15,000/- per year and determined the obligations of the parties accordingly.

The High Court further found that the second and third defendants were jointly and severally liable to pay Rs. 10,200/- by way of costs, and the second defendant alone was liable to pay Rs. 11,000/- by way of restitution, costs in the High Court and mesne profits to the plaintiff, and that the aggregate of Rs. 21,200/- be set off against the sum of R~. 85,0001deposited by the plaintiff and the balance be paid to the mother of defendant 2.

Aggrieved by the judgment, dated August 8, 1968, of the High Court, Lucy Kochivareed, wife of the deceased defendant 3, has filed Civil Appeal 466 of 1969; while the plaintiff has preferred Civil Appeal No. 2375 of 1969.

Both the appeals will be disposed of by this common judgment.

' , l

---- •

We will first take up CM! Appeal 466 of 1969 filed by the widow of r • defendant 3.

ff The main contention of Mr. K. S. Ramamurthy, learned counsel for the appellant (\Luci Kochivareed), is that if the' decree, dated April 22, 1958, passed by this Court in C.A. 129/56 is properly construed in the

_..,

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. _,

L. KOCHJVAREED v. P. M. GOUNDER (Sarkaria, J.) 67

light of the material on record and the law on the subject, then three comequences inevitably follow :

(i) Both defendant 2 and defendant 3 would be deemed to be in pos5ession of the suit property during the period in question, The posgession of defendant 2 was juridical or legal possession of an owner, he being the purchaser of the property from defendant 1; while that of B defendant 3 was on actual permissive possession with the consent of defendant 2. Defendant 2 and defendant 3 being in the position of joint-tort-feasors would he jointly and severally liable for mesne profits or compensation.

This being the case, the plaintiff was bound to suffer a set off to the c purchase price (Rs. 85,000/-) deposited by him, against his claim fot mesne profits against defendant 3.

But after the decree ol this Court, the plaintiff in pursuance of a collusion between him and defendant 2, allowed the High Court to cancel the security given by defendant 2 for withdrawal of Rs. 62,900/- out of the purchase price deposited by the plaintiff.

The plaintiff was thus precluded by his conduct from cl aim- D ing tbat much amount from defendant 3.

After setting off the entire deposit of Rs. 85,000/-, defendant 3 will be liable only, for the balance of the mesne profit, jointly with defendant 2.

(ii) The plaintiff's right to possession of the property under the decree accrued when he deposited the price in Court and thereafter ob- E tained the conveyance in his favour on March 16, 1959.

The possession of defendants 2 and 3 as against the phintiff became wrongful only from the date on which the conveyance was executed in his favour, at any rate on the date (September 12, 1958) on which he fully deposited the price in Court.

(iii) The period for which the mesne. profits have been awarded., is to be restricted to the one permissible nuder Order XX Rule 12( 1) ( c) of the Code of Civil Procedure.

Such period in the light of this provision would be the one commencing from the date the institution ol the suit and ending on the expiration of three years from the date of the decree of the Trial Court.

The expression "the decree,", occurring in the aforesaid clause (according to the counsel) means the decree of the Trial Court.

In other words, the maximum period for which mcsne profits can be awarded-and would be deemed to have been awarded-is three years from the date of the decree of the Trial Court; and the Courts below were wrong in awarding mesne profits for a period of more than six years, commencing from the date of the institution of the suit till the delivery of possession in accordance with the decree of this Court to the plaintiff.

Upon the above premises, Mr. Ramamurthy maintains that the plaintiff will not be entitled to any mesne profits because his right to possession did not accrue within three years of the date of the decree of the Trial Court.

Such a right, according to the counsel, accrued to the plaintiff only on April 22, 1958 when his amended suit for specific performance and possession and future mesne profits was decreed.

In the alternative, as already noticed, counsel submits that mesne profits could not be awarded for any period prior to the date (September 12, 1958) on which the plaintiff deposited the price, because his right to possession accrued on that date and not earlier.

In support of his contentions, Shri Ramamurthy has cited a decis'on of this Court in Chitturi Subbanna v. Kudapa Subbanna & Ors.(') He has also referred to some other rulings, wherein some general principles have been enunciated as to who can be made liable for mesne profits.

On the other hand, Mr. Govindan Nair, learned counsel for the plaintiff, submits that the decree,, dated April 22, 1958 of this Court is crystal-clear.

There is no ambiguity in it.

Read in the light of this Court's judgment, it unmistakably shows that whosoever, out of the de- • fendants was/were in actual possession, would be liable for the mesne profits from the date of the suit tlll the delivery of possession.

It is pointed out that in the courts below, the positive stand taken by defendant 3 was that he was never in possession of the suit property and therefore, was not liable for mesne profits. It was never the case of defendant 3 that he was in derivative possession under defendant 2.

Counsel submits that defendant 3 should not be allowed to take a stand diametrically opposed to the one taken by him in the courts below.

It is further submitted that the decree of this Court was final decree so far as it laid down that the liability for the mesne profits shall be fixed on the basis of the defendant found in actual possession of the suit property.

Before dealing with the contentions canvassed on both sides, it wi11 be profitable to notice the general principles relating to the liability for mesne profits.

Mesne profits being in the nature of damages, no invariable rule governing their award and assessment in every case, can be laid down and "the Court may monld it according to the justice of the case". Even so, one broad basic principle governing the liability for mesne profits is discernible from Section 2(12) of the Code of Civil Procedure which defines 'mesne profits' to mean "those profits which the person in wrongful possession of property actually Jeeceived or might with ordinary

(I) [196512 S.C.R. 661.

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L. KOCHJVAREED v. P. M. GOUNDER (Sarkaria, !.) 6 9

diligence have received therefrom together with interest on such profits, but shall not include profits due to improvements made by the person in wrongful possession".

From a plain reading of this definition, it is dear that wrongful possession of the defendant is the very essence of a claim for mesne profits and the, very foundation of the defendant"'s liability therefor.

As a rule, therefore, liability to, pay mesne profits , goes with actual possession of the land.

That is to 'say, generally, the person in wrongful possession am] enjoyment of the immovable property is liable for mesne profits, But, where the plaintiff's disposscsion, or his being kept out of possession can be regarded as a joint or .concerted act of several persons, each of them who participates in the , commission of that act would be liable for mesne profits even though he was , not in actual pos'scssion and the profits were received not by him but by some of his confederate, s,

In such a case where the claim for mesne profits is against several trespassers who combined tn keep the plaintiff out of possession; it is

Open to the Court to adopt either of the two courses.

It may by its , decree hold all such trespassers jointly and severally liable for mesne vrofits, leaving them to have their respective rights adjusted in a separate suit for contribution; or, it may, if there is proper material before 'it, ascertain and apportion the liability of each of them on a proper , application made by the defendant during the same proceedings.

Another principle, recognised by this Court in Chitturi Subba11na v.

Kudapa Subbanna (ibid) is that a decree under Order XX Rule 12 .of the Code, directing enquiry intn mesne profits, howsoever expressed, must be construed to be a decree directing the enquiry in conformity with the requirements of Rule 12(1) ( c), so that the decree-holder is not entitled to mesnc profits for a period (commencing from the date .of the institution of the suit) extending beyond three years from the date of the preliminary decree.

Again, possession through another, such as a tenant, may be suffi- , cient to create liability for mcsne profits if 'such possession is wrongful.

We will now deal with the contentions advanced by Mr. Rama- :murthy, in the light of these principles.

The first argument, as already noticed, is that both defendants 2 and 3 were in possession of the suit property during the period in ques"

tion. It is contended that the possession of defendant 2 was the !gal H possession of an owner while that of defendant 3 derivative possession .of a lessee or licensee under the former.

A perusal of the decree dated April 22, 1958, of this Court, extracted in a foregoing part of this judgment, show's that it was a composi'e decree, partly final, partly preliminary.

It was final in so far as it granted the reliefs of specific performance and possession on deposit of the price by the plaintiff. It wa' preliminary inasmuch it directed an inquiry with regard to the assessment of mesne profits, and as to who out of the defendants was/were liable for payment of those mesne profi's.

But, it laid down in no uncertain terms that only such of the defendants would be liable for mesne profits "as may have been in possession of the property". Construed in conformity with the legal principles enun

ciated above, this direction in the decree, means that only the defendant or defendants found in actual possession and enjoyment of the property would be liable for mesne profits.

In the courts below, at no stage, defendant 3 took up the position that he was in derivative possession of the property under defendant 2.

On the contrary, in his objection-petition filed before the District Court on November 11, 1958, defendant 3 emphatically asserted that he "is not liable for mesne profits for the suit property as he was never in possession and occupation of the same".

Defendant 3 further vehemently pleaded that it was. never intended at any •ime that he (defendant 3) "should be a lessee of the property nor was he a lessee at any time". In para 3 of his petition, defendant 3 further pleaded that the purchase of the factory was made. in favour of defendant 2, with money advanced by him (defendant 3), and the intention then was that the snit property should be worked by defendant .2 with funds advanced by defendant 3 who should be "recouped from the profits accrued from the proper•y or otherwise in respect of the purchase money advanced by him as also the advances for the working expenses''.

In paragraph 5, he further pleaded that "in any event he cannot be held liable for any amount more than what is stipulated in the lease deed (Ex. I) in favour of Neelakantha Iyer".

There is not even a whisper in the pleadings that defendant 2 and defendant 3 were joint-tort-feasors and therefore, jointly and severally liable for mesne• profits.

The plea now pressed into argument by Mr. Ramamurthy is thus a complete somersault of the position that had been taken in the courts below.

H The Court of first instance after an exhaustive. consideration of the overwhelming evidence, oral and documentary, on record reached the finding that ever since March 5, 1951, defendant 3 was, while defendant

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L. KOCH!VAREED v. P. M. GOUNDER (Sarkaria, J.) 71

2 was not,, in actual control, management and possession of ihe suit property, and therefore, in terms of the decree dated April 22, 1958 of this Court, defendant 3 alone would be liable for mesne profits of the property.

In appeal, the High Court found that "the Court below was perfectly right in holding that the 3rd defendant was in sole and exclusive possession during the period in question and it i's idle for him to pretend otherwise".

Indeed, the third defendant himself had re- • peatedly admitted in various documents that he was in possession.

In , his application, Ex. D-77(a), made in the Court of first instance, on l.

March 7, 1951, the defendant admitted that he was in possession in pur

\..~- suance of assignment of lease made, in his favour by Neelakantha Iyer on IF March 5, 1951.

This lease has been found by this Court to be a sham

1 transaction.

Further, defendant 3 on March 21, 1951, executed a lease in favour of the Receiver appointed by the Court.

In this Qease also, he admitted tpat he had been in posses'sion of the property since March 5, 1951.

The lease executed by defendant 3 in favour of the Receiver ensured for a period of two years on a yearly rental of Rs. 15,000/- and he deposited Rs. 30,000/- therefor as rental in Court.

Then, the Bank accounts of the factory (except for a short period from March 25, 1953 to November 11, 1954) were throughout in the name of the third defendant as lessee thereof.

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We have absolutely no reason to differ from this concurrent finding of the courts below that the third defendant was in sole, actual po•scssion and control of the suit property from March 3, 1951, when he ob. tained the alleged assignment of the lease in his favour from Neelakantha Iyer.

In terms of the aforesaid decree of this Court, therefore, defendant 3 alone is liable for mesne profits in respect of the period he was in pMsession (excepting the period during which the property was under the management of the Court Receiver).

As regards the appellant's contention that the amount deposited by the plaintiff towards the price should have been set off against the liability of defendant 3 for mesne profits, it may be observed that, there is nothing in the decree, dated April 22, 1'958, of this Court which say's that such a set off should be allowed.

On the contrary, it allowed deduction of the amouuts found due against defendant 1 and defendant 2 from the deposit of Rs. 85,000/- to be made by the plaintiff towards the price, and further directed that after such deduction, the balance of such deposit made by the plaintiff" if any, shall be paid "to the third respondent (defendant 2) who is the assignee of the second respondent (defendant l) pendente lite."

SUpREME COURT REPORTS (1979] 3 s.c.R.

Assuming arguendo, that both defendants 2 and 3 wern liable for mesne profits jointly and severally, then also, the plaintiff could, at his option, recover the whole of the amount of mesne profits from either of them; and how such inter se liability of the defendants was to be adjusted or apportioned, was a matter between the defendants only.

The plaintiff was not bound to suffer a set off in favour of defendant 3, merely because defendant 2 or his assignee withdrew the price deposited by the plaintiff without furnishing any security for its refund or adjustment towards the liability of defendant 3, there being no evidence, whatever, on record to show that such withdrawal was the result of any collusion or conspiracy between the plaintiff and defendant 2 against defendant 3.

Assuming further, for the sake of argument, that defendant 2 and defendant 3 were both acting in concert to keep the plaintiff out of possession, it was not necessary for the courts below to decide the i'ssue with regard to apportionment of liability and its adjustment between defendants 2 and 3.

Indeed, the adoption of such a course would have militated against the finding that defendant 3 alone was in exclusive possession and control of the suit property ever since March 5, 1951.

We therefore, negative the first contention of the appellant.

This takes us to the second and third points pressed into argument by Mr. Ramamurthy.

It is to be noted that defendant 3 entered into possession of the suit property under an as'signment of sham lease from Neelakantha Iyer on March 5, 1951 during the pendency of the plaintiff's suit which was instituted on August 25, 1950.

The plaintiff had deposited Rs. 50,,000/- sometime after the presentation of the plaint.

Under the agreement for sa!le, dated May 22, 1950, made by defendant 1 in favour of the plaintiff, the total sale consideration was fixed at Rs. 90,003 /-. Out of it, Rs. 5 ,003 /- had been paid to defendants on the very date of the agreement. It was further stipulated that out of the balance, Rs. 50,000/C would be paid by the plaintiff-purchaser at the time of the registration of the sale deed which was to be executed and registered on or before July 15, 1950.

It was further stipulated that on payment of the further sum of Rs. 50,000/-, the plaintiff would be entitled to be put in possession of the suit property. Thus, when defendant 3 entere<l into possession, first, under the garb of an assignee of a sham lease from Neelakantha Iyer, and then further purchased the property with his own fu.nds in favour of defendant 2, pendente lite, he was fully conscious that he was purchasing a litigation.

His possession was,. therefore, wrongful qua the plaintiff from its very inception.

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L. KOCHIVAREED v. P. M. GOUNDER (Sarkaria, !.) 73

Thei material part of Rule 12(1) of Order XX of the Code of Civil P; ocedure, provides : .

"Where a suit is for the recovery of possession of immoveable property and for rent or mesne profits, the Court may pass a decree-

(a) for the possession of the property;

(b) ........................... .

(ba) ....................... .

< c) directing an inquiry as to rent or mesne profits from the institntion of the suit until-

(i) the delive.ry of possession to the decree-holder,

(ii) the relinqui'shment of possession by the jndgmentdebtor with notice to the decree-holder through the Ccinrt, or

(iii) the expiration of three years from the date of the decree, whichever event firstoccnrs." Mr. Ramamurthy argned, if we may say so with respect, somewhat inconsistently, that the word "decree" in snb-clanse {iii) of clause (c) of the aforesaid rnle 12 ( 1), means the decree for possession and mesne profits which the trial conrt ought to have passed, and that in this view of the matter, the period of three yearn mentioned in sub-· clause (iii) will be connted from Augnst 28, 1952, tl1e date of the trial conrt's decree, whereby mesne profits at the reduced rate of Rs. 15,000/- instead of Rs. 30,000/- per annum claimed by the plaintiff, were awarded.

In that view of the matter; acc; o'rding to the coun- :sel, the plaintiff was not entitled under the law to ger a decree for mesne profits beyond August 27, 1955. It is pointed out that since the paintiff had, as a result of the acceptance of the defendants' appeal and dismissal of his suit by the High Court, withdrawn the deposit of Rs. 50,000/- on Augnst 19, 1953 and he had not redeposited the amount until February 9, 1959, he was not then entitled to possession and, i.n consequence, to any. mesne profits during this period.

The argnme11t is certainly ingenious, but untenable, being found- -ed on fallacious premises.

The period of three years mentioned in sub-clause (iii) of clause (c) of Rule 12(1) is to be computed from the date of the decre~ of this Court, i.e. from April 22, 1958 and it will expire on the date on which possession was delivered or reline -quished by .the defendant in favour of the decree-holder pursuant to ·

that decree. In other words, the decree mentioned in sub-clause 6-196SCij79

(iii) of the aforesaid clause ( c), would be the appellate decree, dated April 22, 1958, of this Court.

The period of three years mentioned in the said sub-clause is, therefore, to be reckoned from April 22,

1958. The words "whichever event first occurs" in sub-clause (iii) imply that the maximum period for which future mesne profits can be awarded, is three years from the date of the decree for possession and mesne profits, finally passed.

T!Je courts below, therefore, whil• holding that defendant 3 was liable to pay mesne , profits for a period of about 6 years commencing from Match 5, 1951/March 21, 1951 till the delivery of possession in September, 1958 (less the period during which the property was under the management of the Receiver), were acting in conformity with the law and the terms ol the decree, dated April 22, 1958, of this Court.

We, therefore, reject these contentions, ao.

Another contention canvassed by Mr. Ramanii.trthy was thal the courts below have wrongly disallowed deduction for interest on tb D deposit of Rs. 50,000/-, which the plaintiff had withdrawn on August 19, 1953 and had redeposited on February 9, 1959. It appears to us that in all fairness, the defendant is entitled to deduction for interest for the period from August 19, 1953 to February 9, 1959 on the sum of Rs. 50,000/-, which, at 6 per cent per annum, after deducting the interest for the period during which the property was under the manage- E ment of the Receiver. (According to the agreed calculations mad• by the counsel for the parties it works out to Rs. 14,000/- approxi- , mately.

We see no reason why deduction of this amount be not allowed from the mesne profits assessed againsi defendant 3.

We will now take up Civil Appeal No. 2375 of 1969 filed by di• F plaintiff.

Mr. Govindan Nair, learned counsel for the plaintiff-appellant, has , ' contended-

(i) that mesne profits ought to have been awllrded at the xate of Rs. 25,000/- per annum.

The High Court was in error in awardinr the ame at the rate of Rs. 15,000/-;

(ii) that the High Cpurt was not justified in reduc; ing th• rate of interest from 6 per cent per annum awarded by the Trial Court to 4 per cent per annum;

(iii) that interest at 6 per cent per annum was rightly awarded by the court of first instance on the sum of Rs. 30,000/-, which was two years rental paid by defendant 3, under the lease taken from the Receiver for the period from August 19, 1953 to March 9, 1959, and

the High Court was in error in disallowing that interest; and

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'L. JCOCHIVAREED v, P. M. GOUNDER (Sarkaria, !.) 75

(iv) that the Courts below were not justified in denying costs to A the plaintiff in the inquiry as to mesne profits or in appeal arising therefrom_

We will deal with these contentions ad seriatim .

Comention (i) : In this connection, Mr. Nair drew p'lrr attention to Exhibits D-8 to D-15, which are Balance Sheets and Profit & Loss Accounts of the Sivakami Tile Works, relating to the period from March 31, 1953 to November 5, 1958. These documents were prepared at the instance of the third defendant for the purposes of his Income-tax returns.

The High qaurt found that these Balance Sheets and Profit & Loss Accounts prepared for Income-tax puropses were suspicious documents and by themselves were not proof of the profits derived.

Mr. Nair has no quarrel with this finding.

He, however, contended that the High Court ought to have worked Pl!t the real profits by taking into account the quantity of clay purchased according to these documents. In this connection, it is submitted that according to the evidence produced on the side of the plaintiff about five candies of clay are reqnired (o'r producing 1000 small tiles and even according to the evidence of the second defenc, Jant as C.P.W. 2, St to 6 candies are required for 1000 small tiles .

We are not. impressed by this argument. The High Court has fully considered the evidence produced on the side of the plaintiff.

It noted that the plaintiff, also, had not produced any cogent evidence to show what were the profits earned by him by working the factory in dispute for the period of one year preceding the date of his examination. By the time plaintiff appeared in the witness-box, he had been working this factory for about one year.

In the alternative, Mr. Nair submitted that even during the period of two years when the Receiver was there and d, efendant 3 worked the factory as a lessee under the former, he had made a profit of Rs. 22,000/-. Our attention has, also been drawn to the document (Ex.

D-8), that the income for the first year ending 1952 was Rs. 20,000/-.

The point pressed into argument is that the highest profit made by him according to these Balance Sheets and Profit & Loss Accounts . during any year by defendant 3, should be taken as the rate for calculating the mesne profits.

The contention does not appear to tenable.

Once it was found that these Balance Sheets and Profit & Loss Accounts were not reliable, nor the evidence produced by the plaintiff,, the only reliohle evidence left on the file W!ll the rate at' which the factory was leased out

by the Receiver to defendant S. When the lease for the seeond year was granted to defendant 2 by the Receiver on a rental of Rs. 15,000/-, the plaintiff should have objected that the rent was less or Jte could himself take the lease on paying higher rent. The High Court was, therefore, not wrong in holding that this rent fixed under the lease granted by the Receiver represented the real rental value of the factory during the year in question and in the absence of any other reliable evidence for assessing the profits actnally earned or which, with due diligence, could have been earned the mesne pro'fits may reasonably be fixed at Rs. 15,000/- per annum.

We, therefore, negative the first contention of Mr. Nair.

Contention (ii) :

The . Trial Court had awarded interest at the rate of 6 per cent per annum on the mesne profits assessed by it. The High Court reduced that rate to 4 per cent, with the observation that having regard to all the circumstances of the case, including that the plaintiff had D the use of the sum of Rs. 85,000/- which he was to pay towards the price of the property a rate of 4 per cent per annum would be reasonable d just.

Even Mr. Ramamurthy has not been able to support this reduction in the rate of interest. It was after a long drawn out litigation that the plaintiff got possession of the property. The Trial Court, therefore rightly awarded the intere§t at the rate of 6 per cent per annum.

We, therefore, accept this contention and direct that interest as part of the mesne profits assessed in this case, shall be payable at the rate of 6 per cent per annum upto March 29, 1959 when possession was delivered in pursuance of the decree of this Court, to the plain- F tiff and further interest at 6 per cent per annum oo the outstanding amount shall be payable till the date of payment.

Co, ntention (iii) : A sum of Rs. 30,000/-, being the rent collected \>y the Receiver from the third defendant, was deposited in Court. This amount was G withdrawn by the third defendant on August 19, 1953 following the dismissal of the plaintiff's suit, by the High Court. When the plaintiff's appeal succeeded in this Court and a decree was passed in his favour by this Court, then defendant 3 redeposited the sum of Rs. 30,000/-, only on March 9, 1959. The Trial Court had awarded in-· terest at 6 per cent per annum on this arnO'Ullt of Rs. 30,000/- for II the period from August 19, 1953, the date on which the defendant withdrew that deposit, until March 9, 1959, the date when he redeposited the sum.

The Hiiih Court has disallowed interest on this account

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L. KOCHNAREED v. P. M. GOUNDER (Sarkaria, J.) 77

for the aforesaid period on. the ground ."that the Supreme Court does A not award that".

We are unable to agree wijh this reasoning.

It overlooked the fact that interest on the sum of Rs. 30,000/- was. being claimed under Section 144 of the Code of Civil Procedure, by way of restitution.

Section 144 in terms says that for the purpose of the restitution, the B Court may make any orders, including orders for the payment of interest, tlamages, compensation and mesne profits which are properly consequential on variation or reversal of the decree. There is nothing in the decree, dated April 22, 1958, Qf this Court which expressly or by inlplication prohibited the payment of interest on this sum, by way of restitution.

The Trial Court had rightly allowed interest on amount C for this period at 6 per ce_nt per annum, and we restore the same directfoc..

Contention (iv) :

The argument is that costs have been unfairly denied to the plain-

~··) '

tiff by the Courts below.

We do not agree.

The Courts below could D not have been oblivious of the fact that defendant 3 has since dietl and the respondent is his widow.

We, therefore, d(> not want to interfere with the discretion of the Courts below in the matter of costs.

For the foregoing reasons, we partly allow the plaintiff's appeal (Civil Appeal No. 2375 of 1969) to the extent indkated above, with proportionate costs. We will dismiss the defedant's appeal (Civil Appeal No. 466 of 1969) except to the extent that the defendant shall be allowed a set off in the sum of Rs. 14,000/-, being the interest , on the sum of Rs. 50,000/- for the period frarn August 19, 1953 (the 'date of the withdrawal of the deposit by the plaintiff) to the date when he redeposited it.

Interest on the outstanding amount at 6 per cent per annum shall be payable till the date of payment. In Civil Appeal 466 of 1969, however, the parties will bear their own costs in this Court .

S.R.

CA 2375/69 allowed in part. CA 466/69 dismissed with modifications.

L. KOCHIVAREED

P. MERIAPPA GOUNDER AND ORS

February 7, 1979

R. S. SARKARIA

V. D. TULZAPURKAR

A. P. SEN, JJ.

Section 2(12)

Code of Civil Procedure 1908

Civil Procedure Code, 1908

Order XX Rule

C.P.C

S. 144

Soliappa Chettiar

Neelakanta Iy'er

Kochiyareed

Neelakanta Iyer

March 8, 1951

George Thatil

Kochivareed

March 21, 1951

August 28, 1952

March 21,

1953

Meriappa Gounder

L. KOCHIVAREED

section 2

the Code of Civil Procedure

Order XX Rule

C.P.C

[1965] 2 SCR 661

clause 1

Order XX Civil Procedure Code

April 22, 1958

Section 144

Neclakanta Iyer

May 22, 195

July 15, 1950

Neelkanta Iyer

K. S. Ramamurthy

K. S. Ramamurthy, Miss Pushpd[Nambiar and A. S. Nambiar for the
..

Appellant in C.A. 466/69 and R. 1 in C.A. 2375/69.

Pushpd[Nambiar

A. S. Nambiar

P. Govindan Nair

S. Balakrishnan

K. L. Rathi

N. Sudhakaran

S. L. Aneja

K. L. Aneja

SARKARTA

P. Meriappa Gounder

Supreme Court

August 23, 1950

District Court, Trichur

Soliappa Che.ttiar

Sivakami Tiles Works

May 31,, 1951

July 7, 1950

NeeAakanta Iyer

Neelakanta

T. V. Kochivareed

Lucy Kochivareed

March 5, 1951

December 23,. 1950

March 31, 1953

S. M. R. Solaiyappa Chettiar

George Thatil

September 12, 1958

Subordinate Judge, Trichur

March 16,. 1959

December 22, 1962

March 9, 1959

High Court of Kerala

August 6, 1968

August 8, 1968

\Luci Kochivareed

ff The main contention of Mr. K. S. Ramamurthy, learned counsel for the appellant (\Luci Kochivareed), is that if the' decree, dated April 22, 1958, passed by this Court in C.A. 129/56 is properly construed in the

_..,
--.

March 16, 1959

Order XX Rule

the Code of Civil Procedure

Ramamurthy

Govindan Nair

Section 2(12)

the Code of Civil Procedure

Order XX Rule

Rama- :murthy

November 11, 1958

Neelakantha Iyer

March 25, 1953

April 22, 1'958

Order XX of the Code

Augnst 28, 1952

August 27, 1955

Augnst 19, 1953

February 9, 1959

clause 6

August 19, 1953

30,000/-, which was two years rental paid by defendant 3, under the lease taken from the Receiver for the period from August 19, 1953 to March 9, 1959, and

the High Court was in error in disallowing that interest; and
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JI.

Nair

Sivakami Tile Works

November 5, 1958

March 29, 1959

Section 144

the Code of Civil Procedure

Section 144