JUDGMENT
Varghese Kalliath, J.
1. This is an appeal by the plaintiff. The plaintiff is a bank. The suit was one for recovery of an amount of Rs. 30,000 and interest on that amount from the first defendant who was a customer of the plaintiff. The first defendant had a N. R. E. Account No. 5 of 1980.
On April 5, 1982, he produced before the plaintiff’s branch at Kidangara, an instrument, exhibit A-1, dated March 29, 1982. It was in the form of an order for payment of Rs. 30,000. Exhibit A-1 has been issued by the International Finance and Exchange Corporation, Doha, Qatar. Exhibit A-1 contains the following :
“Pay the Federal Bank Ltd. (Kidangara branch) NRE A/c. No. 5 of 1980 M.P. Joseph or order amount Indian rupees thirty thousand only.”
2. Further, it is seen stated in exhibit A-1, payable at Syndicate Bank-Code No. 115, Baker Junction, Kottayam. Accepting exhibit A-1, the branch manager of the plaintiff-bank credited an amount of Rs. 30,000 in the account of the first defendant. It was done on April 5, 1982, itself. The branch manager sent exhibit A-1 for collection to the Syndicate Bank, Kottayam branch, though there is no clear evidence in this case as to when exactly it was sent. It is seen that exhibit A-1 was dishonoured by the Syndicate Bank and the bank issued a memo on April 8, 1982. This memo was received by the plaintiff-bank only on April 12, 1982.
3. The first defendant issued a savings bank withdrawal form for Rs. 37,000. This savings bank withdrawal form is exhibit A-2. It is dated April 10, 1982. Obviously, since there was a credit in the account of the first defendant on that date, the amount was paid. When the bank came to know that exhibit A-1 was dishonoured, it demanded the amount from the first defendant. Exhibit A-1 was dishonoured with the noting “refer to drawer”. It means that there is no money available to honour exhibit A-1. Though the plaintiff demanded the amount of Rs. 30,000 from the first defendant, he declined to pay the amount and that necessitated the institution of the suit.
4. The first defendant contended that he is not liable to pay the amount to the bank. According to him, he has deposited Rs. 30,000 with the International Finance and Exchange Corporation and got exhibit A-1 and so when he has paid consideration for exhibit A-1, he has no liability to pay the amount to the plaintiff-bank. According to him, the plaintiff-bank can seek appropriate remedy against the Syndicate Bank or the International Finance and Exchange Corporation.
5. The court below considered the evidence and the law applicable to the facts revealed in the case. It was found by the court below that exhibit A-1 is not a negotiable instrument within the meaning of the Negotiable Instruments Act. It seems that the first defendant represented that exhibit A-1 is equivalent to a draft or a cheque and so, even before collecting
the amount under exhibit A-1, credit can be given to the first defendant. Normally when a cheque is presented by a customer, if the cheque is of a different bank, usually, only after collection, the amount will be credited in his account. But if the branch manager has got confidence in the customer, in certain cases, the amount will be credited even on the presentation of the cheque and, in that event, the customer can obtain the amount under the cheque from the bank. In this case also, what really happened was that the branch manager reposed some confidence in the first defendant and credited the amount in his account even before collecting the amount under exhibit A-1. When once it was credited, the first defendant got an entitlement to withdraw the amount from his account by issuing a cheque or a withdrawal form and he has withdrawn the amount on April 10, 1982. So it is clear that a credit entry was made in the account of the first defendant on the basis of exhibit A-1, which is found to be not a negotiable instrument at all. Obviously, the credit entry made by the branch manager is a mistake committed by him. In fact, the first defendant had absolutely no entitlement to get credit in his account on the basis of exhibit A-1 before collection of the amount under exhibit A-1. So the credit entry of Rs. 30,000 given in the account of the first defendant will not give any entitlement to him to withdraw that amount from his account.
6. Before me, there is no serious dispute as regards the finding that exhibit A-1 would not constitute a negotiable instrument. The court below, after finding that exhibit A-1 is not a negotiable instrument, held that, not being a negotiable instrument, the plaintiff had no business to credit the amount and so the plaintiff is not entitled to recover the amount on the basis of not collecting the amount under exhibit A-1. I feel that this finding is not correct. The credit was given hi the account of the first defendant on the basis of exhibit A-1 and, when once exhibit A-1 is found to be of no value, that credit itself is without any basis and that will not enable the first defendant to claim that amount which is seen credited in his account. It can be treated only as a wrong entry in his account. This I say because if the first defendant has approached the bank at a time when the bank came to know that exhibit A-1 was dishonoured, can the first defendant insist on payment of Rs. 30,000 simply because the bank has acted as a collecting agent ? In effect, the plaintiff-bank was only, a collecting agent. While acting as a collecting agent, because of the confidence in the customer, even before collection, the bank has credited the amount in the account of the first defendant. This, as I said earlier, will not give any entitlement to the first defendant for claiming Rs. 30,000
from the bank. So long as the first defendant has no claim to receive Rs. 30,000 from the plaintiff-bank, the first defendant has got the liability to pay back the amount to the plaintiff-bank. The court below found that the claim made by the bank on the basis of exhibit A-1 instrument is not one on a negotiable instrument. But the court below considered the matter under Section 70 of the Contract Act and held that Section 70 of the Contract Act is available to the plaintiff on the facts disclosed in the case. But, since the plaintiff has not pleaded a case under Section 70 of the Contract Act, the court declined to grant a decree.
7. Counsel for the appellant submitted that Section 70 of the Contract Act is squarely applicable in this case. Further, he submitted that there is sufficient pleading to attract Section 70 of the Contract Act. Section 70 of the Contract Act runs thus :
“Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered.”
8. Admittedly, the first defendant has received the amount but he has no entitlement to receive the amount. On this broad fact, it can be concluded that if the first defendant is not disgorged of the amount he has received, it will amount to allowing him to have unjust enrichment. Section 70 of the Contract Act is based on the theory of unjust enrichment or unjust benefit. It is said that, in Sections 69 and 70 of the Contract Act, the principle of unjust enrichment is very much embedded. Further, certain decisions go even to the extent of stating that these sections are wider in scope than the doctrine as applied in England and even go far beyond it, vide A.R.G. Krishnamurthi and Co. v. Sitaramayya, AIR 1958 AP 427 and Golab Chand v. M.J.V. Miller [1938] AM 960.
9. Section 70 of the Contract Act is made applicable even in cases of erroneous accounts. Where the accounts are shown to be erroneous or are drawn up and assented to by parties under a common mistake as to their rights and obligations, the accounts may be directed to be reopened and, in those cases, the law implies an obligation to repay the money which was an unjust enrichment. This case will squarely come under this principle. The account of the first defendant requires to be reopened and, when once it is reopened, it can be seen plainly and clearly that as regards Rs. 30,000 there is unjust enrichment for the first defendant which has to be disgorged.
10. In Thomas Abraham v. National Tyre and Rubber Co. of India Ltd., AIR 1974 SC 602, the Supreme Court has held that an amount paid on an incorrect calculation is repayable under Section 70, see also Williamson v. Barbour [1878] 9 Ch 529 at page 533 and Halsbury’s Laws of England, 3rd edition, volume 26, para 1725, at page 927, which reads thus :
“Accounts settled under common mistake.–Where accounts are drawn up and assented to by parties under a common mistake as to their rights and obligations, the accounts may be directed to be opened.”
11. Even in a case when an account is stated and the balance paid, it can be reopened on the ground of a mistake : see Daniell v. Sinclair [1881] 6 AC 181 (PC) and Thomas v. Hawkes (8 M & W 140). In Nanakchand Shadurain v. Tinnevelli Tuticorin Electric Supply Co. Ltd. [1975] AM 103, the excess price paid by a buyer because of wrong weight and wrong calculation given in the invoice is found refundable to the buyer as no person can enrich himself unjustly due to a mistake, wanton or otherwise.
12. Counsel for the respondent submitted that, in order to attract Section 70 of the Contract Act, several requirements enlisted in the section have to be complied with. He said that it contemplates a person doing something lawfully for another person or a person lawfully delivering something to another person. He said that here, the plaintiff has not done anything within the meaning of “a person lawfully does”. According to him, the expression “does” does not include the payment of money. I cannot agree. The expression “does” will include payment of money also.
13. Counsel referred me to the Full Bench decision of the Allahabad High Court in Sheo Nath prasad v. Sarjoo Nonia, AIR 1943 All 220. This decision of five judges was concerned mainly with the application and interpretation of Section 91 of the Evidence Act. Separate judgments were written by Collister J., Bajpai J., Hamilton J., Bar J. and Mathur J. Mathur J. has made an observation that payment of money to another will not come within the net of “a person lawfully does”. In the judgment of Mathur J., there is a reference to the Full Bench decision in Kunwar Bahadur v. Suraj Baksh, AIR 1932 Oudh 235. The main judgment of the Full Bench case was delivered by Srivastava J. which was agreed to by Sir Wazir Hasan C. J. but, on very different grounds. The third judge, Raza J. only recorded the concurrence and that case also was on the question of application of Section 91 and the exclusion of parol evidence in regard to a promissory note. This Full Bench decision of Oudh was not approved by the Full Bench decision in Sheo Nath v. Sarjoo Nonia, AIR 1943 All 220. Considering the judgment of Sir Wazir Hasan C. J.,
Mathur J. said (at page 232) : “His opinion was that the payment of the amount by the plaintiff to the defendant at the latter’s request was a lawful act not intended to be done gratuitously by the plaintiff and, therefore, the defendant was bound to make compensation to the plaintiff in respect of the payment. With all respect to the Hon’ble judge, I must hold that Section 70 does not contemplate the case of payment of money and it will be doing violence to the language of the section to hold that the words “lawfully does anything” mean payment of money. Sulaiman and Kendall JJ. also applied Section 70, Contract Act in Kundan Lal v. Sahu Bhikhari Das, AIR 1929 All 254.
14. I think it is difficult to say that payment of money has to be excluded while interpreting the content and width of the expression “lawfully does anything”. I feel that the expression “lawfully does anything” would mean payment of money also. In Kundan Lai v. Sahu Bhikhari Das, AIR 1929 All 254, Sulaiman J. has said very clearly that Section 70 is applicable in the case of payment of money also. The court observed thus (at page 257 of AIR 1929 All) :
“That the hundis were not the documents embodying the whole of the contract between the parties but they were executed in token of the advance made by the plaintiffs is partially admitted by both the defendants, inasmuch as, in their written statement, they pleaded that the hundis were executed by way of security for the prospective losses in certain transactions. Suraj Bhan, one of the defendants who was examined as a witness in this case, also stated that he was approached by Dal Chand of Bombay to clear off the Bombay account and that the hundis were written partly for the losses of the Bombay transaction and partly as security for the future transactions to be made by Kundan Lal.
We further think that even if the plaintiffs were not able to prove the whole contract by this additional evidence, they could succeed if their suit were treated as one for recovery of the amount had and received or for compensation for the amount paid by them, on behalf of the defendants to the creditor of the latter under Section 70, Contract Act. The suit, therefore, cannot necessarily fail because the hundis are not admissible in evidence.”
15. I may also refer to the Full Bench decision of the Madras High Court relied on by the Allahabad High Court in Sheo Nath v. Sarjoo Nonia, AIR 1943 All 220, viz., Perumal Chettiar v. Kamakshi Ammal, AIR 1938 Mad 785. In this case also, Justice Varadachariar was not concerned mainly
with the application of Section 70 of the Contract Act. As an obiter observation, Varadachariar J. said that (at page 794) :
“It only remains to add that Section 70, Contract Act, which has sometimes been appealed to, is scarcely appropriate to a case of money lent to the defendant. There is no possibility in such a case or even a contemplation of the “thing delivered” being restored which obviously means in specie ; and lending money to the defendant cannot be described as something done for the defendant.”
16. Lending is not equivalent to simple payment of money. It involves a contract, an executory contract with a promise to repay the amount paid.
17. Section 70 has been applied in the matter of building contracts where the contractor has done something beyond the terms of the contract and which has been accepted by the other party. There, the contractor is entitled to a decree for money and money only. There are several cases where applying Section 70 of the Contract Act, without restoring the objects in specie, the court directed payment of money. I prefer to follow the decision in Kundan Lal v. Sahu Bhikhari Das, AIR 1929 All 254.
18. If we go deep into the principles on which a creditor is allowed to sue on original consideration, when he fails to sue on an incomplete negotiable instrument, we can see the principles embodied in Section 70 of the Contract Act. There are several decisions allowing a creditor to sue on original consideration on failure of bills of exchange or a promissory note. I need not quote those decisions here. In Kundan Lal v. Sahu Bhikhari Das, AIR 1929 All 254, the Division Bench cited those decisions also In support of the proposition that Section 70 is applicable when the hundis embodying the contract between the parties cannot be put into action. In these circumstances, I feel that it is a proper case where Section 70 of the Contract Act can be invoked. The finding of the court below is that Section 70 of the Contract Act is applicable.
19. As I said earlier, the court below though it found that Section 70 of the Contract Act is applicable, said that there is no proper pleading in regard to Section 70 of the Contract Act and so the court cannot grant a decree relying on the principles under Section 70 of the Contract Act. I have gone through the plaint. All the facts necessary for attracting the requirements under Section 70 of the Contract Act are discernible from the averments in the plaint. All the circumstances, in great detail, have been stated in the plaint.
20. Counsel for the respondent referred me to two decisions in Union of India v. Sita Ram Jaiswal, AIR 1977 SC 329 and Devi Sahal Palliwal v. Union of India, AIR 1977 SC 2082. The circumstances revealed in the case in Union of India v. Sita Ram Jaiswal, AIR 1977 SC 329 are quite different. In paragraph 7 of the above decision, it is stated that “the plaint lacked the two other essential features to constitute a cause of action under Section 70 of the Indian Contract Act. These were that the respondent delivered the goods lawfully to the appellant and that the appellant enjoyed the benefits thereof.” Essentially, those are the two requirements which ought to have been stated for attracting Section 70 of the Indian Contract Act. Here, it is stated that exhibit A-1 was produced by the first defendant and, pursuant to exhibit A-1, Rs. 30,000 was credited in the account of the first defendant. This will constitute delivery of the property or it will constitute that something has been done not intending to be done gratuitously. It is also seen that the first defendant has withdrawn the amount on April 10, 1982. When once the first defendant has withdrawn the amount, he has accepted it and so there are clear averments to attract Section 70 of the Indian Contract Act. I do not think that this decision in Union of India v. Sita Ram Jaiswal, AIR 1977 SC 329, is applicable to the facts of this case. In Devi Sahal Palliwal v. Union of India, AIR 1977 SC 2082, the facts are totally dissimilar to the facts of this case. It is a suit for vacant possession of the suit premises and there it was said that Section 70 has no application, since there is no allegation in the plaint to support any pleadings under Section 70 of the Indian Contract Act. The court found that there was no enforceable contract and the delivery is not clean by virtue of Section 70 of the Contract Act. The court also found that the suit cannot be decided by applying the principles under Section 70 of the Contract Act. In fact, in paragraph 7 of the judgment, the Supreme Court held that there was a greater hurdle and that hurdle was insurmountable for the appellant since the entire cause of action was misconceived. It is stated thus (at page 2083) :
“If Gaya Prasad had taken possession and if Gaya Prasad, according to the appellant, is a trespasser the suit would lie against Gaya Prasad, It is admitted that the respondent is no longer in possession and was not in possession of the premises after he had delivered possession to Gaya Prasad. If any decree was passed in favour of the appellant against the respondent, obviously, if the decree had to be executed, it could not be executed against the respondent. Therefore, the only remedy that the appellant had was to file a suit against Gaya Prasad. The appellant chose not to do so.”
21. Of course, the court below relied on these two decisions and I would say that the court below has gone wrong in relying on these two decisions on the facts unfolded in the case.
22. In the result, I feel that the plaintiff is entitled to a decree. The judgment and decree of the court below are, necessarily, to be set aside. I do so. I pass a decree directing the first defendant to pay an amount of Rs. 30,000 to the plaintiff. In regard to interest, since the decree is passed applying Section 70 of the Contract Act, it is in the nature of compensation and so I think that interest can be awarded only from the date of decree. So I direct that the first-defendant has to pay interest at the rate of 12% per annum on the said amount of Rs. 30,000 from the date of decree.
23. Appeal is disposed of as above. No costs.