Decided on October 28,1953

M.SUBBA RAO Respondents


Mohapatra, J. - (1.) It is the unsuccessful defendant in both the Courts below who has filed this Second Appeal against the decree and judgment dated 28-2-1949 of Sri B. S. Patnaik, Additional Subordinate Judge of Cuttack, confirming the decree and judgment in favour of the plaintiff by Sri T. V. Rao, Second Munsif of Cuttack. The plaintiff, who happens to be a senior member of the Cuttack Bar, brought the suit for recovery of his dues under two registered simple mortgage bonds executed by the defendant on 22-9-1933 and 16-1-1943, the mortgage bonds being for consideration of Rs. 670/- and Rs. 800/- respectively. The properties described in the Schedule KA were mortgaged by the first transaction and those described in Schedule KHA by the second transaction. The plaintiff has claimed. Rs. 1339/- as the due towards the first mortgage bond and Rs. 832/11/3 as the due towards the second transaction as per accounts given in the plaint. The defence which is pertinent for our purpose is only in respect of a small part of the claim. According to the defence, the plaintiff, as his lawyer, recovered a sum of Rs. 175/- from the High Court towards refund of court-fee due to the defendant on 5-2-1934 in First Appeal No. 14 of 1930 and appropriated the same towards mortgage debt as was the understanding between the parties. The plaintiff also in the same capacity, that is, as the defendant's lawyer, withdrew from time to time a sum of Rs. 26872/- towards the pension bill of the defendant from 11-1-1945 to 30-6-1946, the defendant being a retired Government servant. This amount also was to be adjusted towards the mortgage dues. The defendant, therefore, claims a deduction of the above amounts totalling Rs. 44372/- from the dues of the plaintiff. It is to be noted here that these averments, that the plaintiff had withdrawn the court-fee amount of Rs. 175/- on 5-2-34 on behalf of the defendant in F. A. 14730 and further that the plaintiff in the selfsame capacity had also withdrawn a sum of Rs. 26872/- towards the pension bill of the defendant between the dates as noted above, were specifically made in the written statement and the plaintiff, while deposing at the trial, admitted that he had received the said amounts on behalf of the defendant, but had, appropriated the same towards his fees for some other litigations.
(2.) The learned Courts below have concurrently found, giving sufficient reasons, that there was no understanding between the parties that the aforesaid amounts withdrawn by the plaintiff were to be adjusted towards the mortgage dues and in fact the amounts had not been so adjusted. On this finding they have decreed the plaintiff's suit in full observing that the defendant may seek his remedies by other appropriate proceedings.
(3.) In my view, the above finding of the Courts, below that there was no understanding between, the parties that the said amounts withdrawn by the plaintiff would be adjusted towards mortgage dues is not sufficient to dispose of the matter. The principles of appropriation are codified under Ss. 59, 60 and 61, Contract Act. Section 59 runs thus: "Where a debtor, owing several distinct debts to one person, makes a payment to him, either with express intimation, or under circumstances implying that the payment is to be applied to the discharge of some particular debt, the payment, if accepted, must be applied accordingly." Even under the provisions of Section 59, the creditor has got to prove the existence of the several distinct debts. But that apart the above finding of the Courts below can, at the worst for the debtor,, take the case out of the provisions of Section 59 of the Act and may bring it within the language of Section 66 of the Act which runs as follows: "Where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits." Indeed where the debtor did not intimate as to which debt the payment was to be made and applied it was entirely at the option of the creditor to appropriate the amount received towards any lawful debt including a debt barred by limitation even. But to me it appears to be absolutely clear that in order that a creditor may take advantage of the provisions of Section 60 and will be entitled to exercise his free option to appropriate towards any other debt, he (the creditor) has got to prove it to the satisfaction of the Court that that there was a lawful debt actually due and payable to him from the debtor and that he had appropriated the game in discharge of the said debt. In this view of the matter it was incumbent upon the present plaintiff to have proved in Court that his fees in respect of any litigation of the defendant was due as against the defendant and that in fact he had appropriated these two sums which he admits to have received on behalf of the defendant in satisfaction of these lawfully payable dues. The plaintiff did not in fact produce even his diaries and prove the existence of these aforesaid legal dues. I will, in this connection, with respect, follow a Bench decision of their Lordships Sir Ashutosh Mukherjee and George Claus Rankin JJ. of the Calcutta High Court, (two of the eminent Judges of India) in the case of -- 'Brindarani v. Narendra', AIR 1928 Cal 229 (A). Their Lordships laid down the principle that "When the creditor invokes the aid of Section 60, it is incumbent upon him to establish that there was a lawful debt actually due and payable to him from the debtor for the satisfaction of which the sums paid have been applied by him." In coming to this conclusion, their Lordships relied upon the decision of the Madras High Court reported in -- 'Munuswami Mudali v. Perumal Mudaly', AIR 1919 Mad 534 (B) and an English decision reported in -- 'Cory Brothers & Co. v. Owners of Turkish Steamship "Mecca"', 1897 AC 286 (C).;

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