Raja Bhupendra Narain Singha Bahadur vs Maharaj Bahadur Singh and Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 2 April 1952

Coram: Mehr Chand Mahajan, N. Chandrasekhara Aiyar, Vivian Bose

On 2 April 1952 the Supreme Court of India delivered its judgment in the case titled Raja Bhupendra Narain Singha Bahadur versus Maharaj Bahadur Singh and others. The judgment was authored by Justice Mehr Chand Mahajan, and the bench consisted of Justice Mehr Chand Mahajan, Justice N. Chandrasekhara Aiyar and Justice Vivian Bose. The petitioner, Raja Bhupendra Narain Singha Bahadur, appealed against the respondents, Maharaj Bahadur Singh and others. The civil appeals were numbered 68 to 9 and the judgment date was recorded as 02 April 1952.

The case involved a dispute concerning the principle of equitable set-off. The petitioner, as patnidar, had obtained a decree against the zamindar for possession of certain resumed chaukidari chakran lands together with mesne profits calculated from the date on which the zamindar had allegedly taken wrongful possession of the lands. The respondent zamindar sought to deduct from the mesne profits that the decree required him to pay, amounts that were due to him in the form of rent, revenue and cesses that had accrued after the delivery of possession of the lands. The central question before the Court was whether such deduction could be allowed as an equitable set-off.

The headnote of the reported judgment summarized the Court’s finding. It held that when a patnidar secures a decree for possession of resumed chaukidari chakran lands with mesne profits measured from the date of the zamindar’s wrongful intrusion, the zamindar is not permitted to reduce, by way of equitable set-off, the mesne profits payable under the decree by the amounts of rent, revenue and cesses that became due after the date of delivery of possession. The Court reasoned that the two cross-demands arose from distinct transactions. The plaintiff’s claim for mesne profits stemmed from the defendant’s wrongful act of trespass, whereas the zamindar’s claim for rent, revenue and cesses derived from the ordinary landlord-tenant relationship and the obligations it created.

The judgment was issued under the civil appellate jurisdiction of the Supreme Court. It arose from appeals against judgments and decrees dated 23 February 1945 issued by the High Court of Judicature at Calcutta, which had reversed earlier judgments and decrees of the District Judge of Birbhum dated 16 December 1938. The principal issues were common to all the appeals and the Court chose to resolve them in a single comprehensive judgment. Counsel for the appellant in Civil Appeals Nos. 68 to 74 of 1951 were represented by a senior advocate together with two junior counsel. The respondent No. 1 in the same appeals was represented by a senior advocate and a junior counsel. In Civil Appeals Nos. 75 to 92 of 1951, the appellant was again represented by a senior advocate with two juniors, while respondents Nos. 1 to 3 were represented by a senior advocate assisted by a junior. The Court, after considering the arguments and the legal principles involved, delivered its opinion as recorded above.

In this case the Court first outlined the background of a litigation that had extended for about fifty years. The seven suits that gave rise to Appeals Nos. 68 to 74 were instituted in September 1904 by Maharaja Bahadur Singh in the various Munsif courts at Rampurhat. The suits were directed against the late Raja Ranjit Singh Bahadur and other defendants and sought a declaration of the plaintiff’s title to the lands described in each suit together with mesne profits from the year 1899 until the plaintiff recovered possession. The plaintiff alleged that the lands concerned were chowkidari chakran lands situated within his patnidari, which had been granted to his predecessors on 14 November 1853 by the ancestors of the defendants. Because the lands were held by village watchmen on service tenures, the plaintiff claimed that they were exempt from land-revenue assessment and that no rent had been paid on them. The plaintiff further contended that, under sections 50 and 51 of Bengal Act VI of 1870, the Government had resumed the lands in 1899, terminated the service tenures and settled the lands with the zamindar. In that circumstance the plaintiff, as patnidar, became entitled to actual physical possession, and the zamindar’s taking of possession was therefore wrongful, giving rise to the reliefs claimed. The two courts decreed the suits on 17 August 1905 and 19 August 1905 respectively, and the District Judge affirmed those decisions on appeal. On special appeal to the High Court the suits were remanded for trial on a question of limitation; after remand the trial court and the Court of Appeal dismissed the suits as barred by limitation. On a second appeal the higher court held that the suits were within the limitation period and decreed them a second time, a decision that was subsequently affirmed by His Majesty in Council. The plaintiff actually obtained possession of the disputed lands in August 1913. On 6 November 1918 the plaintiff filed an application for the assessment of mesne profits, which the defendant contested, arguing that the plaintiff was not entitled to interest on mesne profits, that the zamindar was entitled to the profits of the disputed lands, and that deductions should be made from the mesne profits for munafa, chowkidari dues and other cesses payable by the plaintiff. On 24 June 1927 the zamindar filed another set of objections, claiming an equitable set-off of payments he had made after delivery of possession and of munafa that became payable after that date. After a prolonged enquiry the trial court on 18 December 1937 decreed the plaintiff’s claim for mesne profits, allowing the zamindar the deductions he had claimed up to the date of assessment of mesne profits but disallowing the equitable set-off for the subsequent period.

The trial court had assessed mesne profits but had refused to allow the amount claimed on the basis of equitable set-off for the period after that assessment. On appeal, the learned District Judge set aside that part of the trial judgment. He permitted the defendant to recover the amount he claimed by invoking equitable set-off, but imposed a condition that the defendant’s liabilities be first deducted from the plaintiff’s liabilities until the defendant’s balance was fully satisfied. The judge explained that the plaintiffs had been in possession of the land since 1910 and had been receiving rent from tenants. However, under law they did not have an unconditional right to possession. Since all facts were now before the court and a final account settlement was required, the court must achieve substantial justice between the parties. It would be insufficient to reject the equitable set-off merely because the plea had not been raised at the earliest stage. The circumstances were unusual, and it was unreasonable to expect the parties to raise that plea at the outset. The litigation had proceeded in a highly circuitous manner, frequently disturbed by conflicting rulings, and no one could have foreseen such an extraordinary course at the beginning. Consequently, the court has a duty to consider events that occurred later in order to do justice. Concerning the nature of equitable set-off, the judge observed that questions of time-barred debts or uncertain sums do not arise. An equitable set-off cannot be used merely as a defensive shield, nor does it raise any issue of court-fee payment. In the judge’s view there was no real difference in the character of the parties throughout the whole period; any attempt to draw a distinction on overly technical grounds would be futile. The argument advanced by the appellant was strong: the appellant’s claim for set-off was essentially a cross-demand arising from the same transaction and connected in nature and circumstances. Therefore, after considering all perspectives, the judge held that the appellant’s claim for equitable set-off for the later period, by deducting the chowkidari revenue, the cess paid by him, and the amount of munafa, should be allowed. The amount awarded would accrue interest at six per cent per annum up to the date of payment. The “subsequent period” was defined as the time from the delivery of possession up to the financial year 1927-28. The judgment and the decrees of the lower court were set aside against this reasoning.

The plaintiff, after the decree of the District Judge, instituted appeals before the High Court at Calcutta. In the judgment that is now before the Court, the High Court altered the decrees previously issued by the District Judge, entirely rejecting the plaintiff’s claim for equitable set-off with respect to the subsequent period and thereby restoring the original decree of the trial court. Following this decision, the zamindar submitted applications seeking leave to appeal to His Majesty in Council. Those applications were combined with other similar applications that had been filed in the second batch of suits, and a certificate of leave to appeal to the Privy Council was subsequently granted. By an order dated 9 June 1947, all of the appeals were admitted, and the order directed that the entire proceedings be printed and transmitted to England for consideration. During the pendency of the appeals in the Calcutta High Court, Raja Bhupendra Narayan Singh died; consequently, the present appellant was impleaded in his place as the heir and representative of the deceased zamindar. An additional application was also made in the High Court requesting permission to raise further grounds that had not been previously alleged. After the Privy Council’s jurisdiction was abolished, the appeals were transferred to the Supreme Court of India. At the hearing of those appeals, an application was filed under Order XIX, rule 4 of the Supreme Court Rules, praying that the appellant be allowed to rely upon two extra grounds in support of the appeals: (i) that the calculation of the munafa (rent) should not be based on the principles laid down in Radhacharan v. Maharaja Ranjit Singh, and (ii) that the munafa should instead be assessed on the basis of a fair share of the profits derived from the land. The second batch of appeals, numbered 75 to 92 of 1951, originated from eighteen suits that had been instituted in the Court of the Munsif of Rampurhat on 22 December 1909 by Ganpat Singh and Narpat Singh, who were predecessors in interest of respondents 1 to 3, against the predecessor in interest of the appellant, the late Raja Ranjit Singh Bahadur, together with certain other tenants under him. The plaintiffs sought a declaration of their title to the resumed chowkidari chakran lands, specific (khas) possession of those lands, and mesne profits. The allegations and the defence in these suits were identical to those presented in the first group of suits. The trial Judge delivered a decree on 30 September 1910, stating that the plaintiffs’ title to the lands in dispute was declared, that they would be granted khas possession by ejecting the tenant defendants, and that they were required, as a condition, to pay an additional rent to defendant No. 1. The additional rent was to be determined on the principle that the original patni rent should maintain the same ratio to the patni rent now payable by the plaintiffs as the original hustbood at the time of the creation of the patni bore to the present increased hustbood, or alternatively any other fair and equitable rent that might be fixed at the time of assessing the mesne profits. The decree further provided that the plaintiffs would obtain the right of wasilat.

The District Judge, on being appealed to, sent the matters back to the lower court for a detailed determination of the conditions and terms by which the patnidar was to hold the lands under the zamindar, and he also ordered that the profits due be ascertained. In the interval, the plaintiffs actually obtained the conveyance of possession of the lands on 23 November 1910. Dissatisfied with the remand order, the plaintiffs filed appeals before the High Court. The High Court, in the judgment of the appeals, declared that it would set aside the part of the District Judge’s decision that required the cases to be remanded to the original court for determining the conditions of the patnidar’s holding of the lands. The High Court retained the remainder of the remand order, but it expressly reversed the portion of the Munsif’s decree that had imposed, as a condition of granting khas possession, the payment of an additional rent to the zamindar. The parties then sought special leave to appeal these High Court decrees to His Majesty in Council. The Privy Council, after hearing the appeal, set aside the High Court’s decrees and articulated its reasoning. It observed that there was no justification for disturbing the long-standing line of authority, extending back to the year 1900, which had consistently recognized the zamindar’s right to have an additional rent fixed for such lands. Moreover, the Privy Council noted that, in the cases previously considered by the Board, the patnidar had never taken exception to the fixing of such rents as a condition for being placed in possession of the land.

Subsequently, on 8 December 1922, the plaintiffs filed applications in the suits seeking a determination of mesne profits for the period from 1906 to 1910. The defendant raised objections on 17 April 1923, contending that any mesne profits awarded to the plaintiffs should be reduced by the amount of rent to which the defendant was entitled with respect to the lands, as fixed by the earlier judgment of the Munsif. A further application was lodged by the zamindar on 28 May 1927, requesting that the amounts due to him for rent from 1910 onward, together with sums he had subsequently paid towards revenue and cesses, be deducted by way of an equitable set-off. After an extensive inquiry, the Munsif delivered a final decree on 18 December 1937. The decree granted the plaintiffs’ claim for mesne profits, but it allowed deductions for the amounts claimed by the defendant up to the date when possession was delivered. The Munsif held that the appellant could not claim any equitable set-off for expenditures made in paying revenue and cesses, nor for any profit (munafa) earned for the period after the delivery of possession. Thus, the final order reflected the plaintiff’s entitlement to mesne profits after accounting for the limited deductions acknowledged by the court.

The District Judge, hearing an appeal, issued his judgment on 16 December 1938 and allowed an equitable set-off for the period after delivery of possession. He directed that the defendant’s dues be deducted from the plaintiff’s dues and, if after such deductions any amount remained payable to the plaintiff, a decree should be entered for that amount. He further stated that if, upon calculation, the defendant’s dues exceeded the plaintiff’s dues, the plaintiff’s prayer for mesne profits must be dismissed. Special appeals against this decision were lodged before the High Court, and the judgment under appeal restored the trial court’s order. Subsequently, applications were made for leave to appeal to His Majesty in Council; these applications were granted and a certificate issued for the appeals. Because the jurisdiction of the Privy Council has been abolished, those appeals now stand before this Court for determination. The matters to be decided in these appeals are threefold: first, whether the appellant may deduct, by way of equitable set-off, from the mesne profits the sums due to him for rent, revenue and cessations accruing after the dates of delivery of possession; second, whether interest should be awarded on the mesne profits found due, and, if so, at what rate; and third, whether the rent due to the appellant from the patnidar on those funds should be calculated on the basis of the annual value of the land, as in Radhacharan v. Maharaja Ranjit Singh (1), or on a fair and equitable basis. The claim for set-off concerning the period for which mesne profits were claimed has already been allowed and therefore does not arise for consideration in these appeals. With respect to the amounts claimed by the appellant as rent after the transfer of possession, that claim is unrelated to the subject matter of the various suits. It is evident that an equitable set-off cannot be invoked when the cross-demands do not arise out of the same transaction. The mesne profits sought by the plaintiff relate to the period during which the appellant was in wrongful possession of the lands, whereas the sums claimed by the defendant pertain to a later period when the appellant no longer possessed the land and had ceased to be a trespasser; consequently, no mesne profits are recoverable for that later period. The appellant’s right to recover additional rents from the plaintiff stems from a distinct cause of action, independent of the claim for mesne profits. If, after obtaining possession, the patnidar defaulted in payment of any additional rents due for any period, nothing prevented the appellant from pursuing recovery of those rents through appropriate legal proceedings.

The Court observed that mesne profits could not be used to support a claim for equitable set-off for the period after possession had been delivered to the plaintiff. It was clear that during the pendency of the suits no claim for equitable set-off against mesne profits could be made for the sums now sought to be deducted, because those amounts had not accrued at that time and the right to them had not yet arisen. The learned District Judge was therefore in error in holding that the appellant’s claim for equitable set-off was a cross-demand arising from the same transaction and that it was connected in nature and circumstances. He failed to recognise that the transaction which gave rise to the plaintiff’s demand stemmed from the defendant’s wrongful act as a trespasser, whereas the transaction that created the appellant’s demand derived from the landlord-tenant relationship and the obligations that flow from it. The Court held that a wrongdoer who has wrongfully withheld money belonging to another cannot invoke any principles of equity in his favour to deduct from those amounts the sums that have become due to him during that period. There is nothing improper or unjust in ordering the wrongdoer to rectify his wrong and not allowing him to profit from it. Such a person cannot be assisted by any equitable principle to recover amounts for which he could have pursued a legal remedy in the ordinary course of law, and which, for reasons unexplained, he failed to pursue, a claim that may now be barred by limitation. The appellant had contended that only after the decree of the Privy Council were his rights to the additional rent finally established and that until that moment no legal steps could be taken to enforce the demand. The Court rejected this contention as untenable. The appellant’s right to the additional rent had already been established by the decree of the trial court, which effected the transfer of possession from him to the patni-dar; the Privy Council merely affirmed that decision. Under the decree, the patni-dars were entitled to possession of the lands on the condition that they pay the additional rent due for the period they had been out of possession. That condition was satisfied by adjusting the appellant’s claim against the mesne profits, thereby fulfilling the decree and completely settling the cross-demands. The landlord’s claim for subsequent rents must now be enforced in the ordinary civil court if any default occurs in their payment, and it cannot remain permanently linked with the claim for mesne profits for any earlier period. Consequently, the decision of the High Court on this point was upheld. Regarding future interest payable on the decretal amount, the learned District Judge had observed that if he were not allowing the appellant’s claim for equitable set-off, he would have granted interest to the plaintiff at a uniform rate of four percent per annum from the beginning of the Washilat period, but because he was allowing the equitable set-off, he thought interest at the usual six percent per annum should apply for the whole period.

In this case the Court observed that if it had permitted an equitable set-off, it would have allowed interest to the plaintiffs at a uniform rate of four per cent per annum for the entire period beginning with the Washilat era up to the date of the decision. Because the Court was allowing the prayer for equitable set-off, it expressed the view that interest at the ordinary rate of six per cent per annum should be granted for the whole of that period. However, the High Court had disallowed equitable set-off while nevertheless upholding its earlier decision. The Court noted that when the claim for equitable set-off is rejected, there is no basis for allowing future interest at a rate exceeding four per cent for such a lengthy interval, especially where the plaintiff himself was not diligent in obtaining the amount of mesne profits that had been determined. The plaintiff had not even sought an enquiry into this matter for approximately twelve years. Considering all the circumstances, the Court concluded that future interest should not have been allowed to the plaintiff in the various suits at a rate higher than four per cent on the amounts decreed as mesne profits.

The Court then turned to the appellant’s final argument that the rent (munafa) should not be calculated according to the principle laid down in Radhacharan v. Maharaja Ranjit Singh, but should instead be assessed on a fair share of the land’s profits. The Court found this contention to be without merit because it had not been raised in the appeal to the Privy Council, nor was it included in the additional grounds of appeal. It was introduced for the first time before this Court at the hearing, and there were no valid reasons for entertaining such a late submission. Moreover, the Court observed that the claim lacked substance as there was no evidence showing what proportion of the original patni rent corresponded to revenue and cesses.

For these reasons the Court dismissed all the appeals, except to the extent that the decree of the High Court was altered so that the amounts awarded as mesne profits in the various suits would attract interest at a rate of four per cent instead of six per cent. Each party was ordered to bear its own costs in all the appeals. The appeals were consequently dismissed. Counsel for the appellant appeared on behalf of the appellant in Civil Appeals numbered 62 to 74 and 75 to 92. Counsel for respondent No 1 appeared in Civil Appeals numbered 68 to 74, and counsel for respondents Nos 1 to 3 appeared in Civil Appeals numbered 75 to 92.