9911796707
TMI Blog1987 (4) TMI 488X X X X Extracts X X X X X X X X Extracts X X X X ..... was credited and drawn by the defendant on the same day; that on receipt of confirmation telegram, dated 21-6-1980, by mistake or oversight a further sum of ₹ 1,00,000/- was credited to the account of the defendant bona fide believing that there was another T.T. Advice to credit the said sum, though, in fact, there was none. The official dealing with this particular work, thinking that the confirmation telegram itself was a separate T.T. advice, had credited another sum of ₹ 1,00,000/-. The defendant took unfair advantage of this mistaken credit transfer and had drawn the said amount of ₹ 1,00,000/- on the same day, though he had no information from his constituent to credit a further sum of ₹ 1,00,000/- from R. S. Puram, Coimbatore Branch. Thereby the defendant made an unlawful gain of one lakh of rupees. There were some more transactions till the closure of the account, but the defendant had kept silent about the wrong credit and withdrawal of the same on 21-6-1980. After nearly two years the plaintiff found out that there was a wrong credit on 21-6-1980 and immediately the plaintiff approached the defendant on 13-7-1982 and explained the circumstances un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account which covers the entire transaction from the inception fill the closure of his account. Except the transaction noted in Ex. P-12, defendant had no other transaction. Deposits noted in Ex. 11-12 are the deposits received by transfer and credited to his account. Ex. P-13 is the T.T. Advice received from R. S. Puram, Combater Branch to credit a sum of ₹ 1,00,000 defendant's account. Ex. P-14 is the confirmation telegram dated 21-6-1980 and he has explained how this credit was made twice with reference to a single T.T. Advice, P.W. 2 who was the then Accountant had corroborated in material particulars as to how the 'double credit' came to be made. In view of this unimpeachable oral and documentary evidence, the finding on the first issue, viz., that there was a mistaken credit on 21-6-1980 does not call for interference. A person to whom money is paid by mistake is bound to repay or return it -- vide S. 72 of the Contract Act. It is, having regard to this documentary evidence, this Court on 14-11-1986, when this case was listed for admission, ordered notice regarding award of interest only. 8. Sri B. V. Katageri, learned counsel for the appellant, submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foundation was laid in the pleading to establish the existence of a state of circumstances which attracts the equitable jurisdiction .. So also the decision of the Supreme Court in Pilloo Dhunji Shaw v. Poona Municipality, [1970]3SCR415 may not be of much assistance, as the award of interest appears to have been based on S. 34 of the C.P.C. 12. Grant of interest cannot also be sustained on the basis of quasi-contract in view of the decision of the Privy Council in Bengal Nagpur Railway Co. Ltd. v. Ruttanji Ramji which reads thus: - There is a considerable divergence of judicial opinion in India on the question of whether interest can be recovered as damages under S. 73, Contract Act, where it is not recoverable under the Interest Act. Now, S. 73, Contract Act, gives statutory recognition to the general rule that, in the event of a breach of a contract, the party who suffers by such a breach is entitled to recover from the party, breaking the contract, compensation for any loss or damage thereby caused to him. On behalf of the plaintiffs, reliance is placed upon Illus. (n) to that section. The illustration however, does not deal with the right of a creditor to recover int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sri Udaya Holla, learned counsel for the respondent, is that though the defendant may not fall within the meaning of 'trustee' as defined under the Trusts Act he will be a 'constructive trustee' in the eye of law and hence, he is liable to pay interest as provided under S. 23 of the Trusts Act or S. 4 of the Interest Act of 1978. 14. Constructive Trusts can arise over a wide variety of situations. According to Cardozo, J., a constructive trust is a formula through which the conscience of equity finds expression . nell has defined it as a 'Trust' which is raised by the construction of equity in order to satisfy the demands of justice without reference to any presumable intention of the parties, either expressed or implied. In United States, the concept of a constructive trust has been said to be 'one of the instrumentalities which a Court of equity may =ploy to prevent the unjust enrichment of one person -at the expense of another'. But the American doctrine regards a constructive trust, not as a substantive trust, but as a 'remedial institution', an equitable remedy of a proprietary nature, available to prevent unjust enrichment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is indispensable to resort to Courts of Equity for adequate relief and especially where the transactions are complicated, and a discovery from the defendant is requisite. Prof. A- W. Scott in his book on Trusts has explained the 'constructive trust' as follows: - Similarly where chattels are conveyed or money is paid by mistake, so that the person making the conveyance or payment is entitled to restitution, the transferee or payee holds the chattels or money upon a constructive trust. In such a case, it is true, the remedy at law for the value of the chattels or for the amount of money paid may be an adequate remedy, in which case a Court of equity will not ordinarily given specific restitution. If the chattels are of a unique character, however, or if the person to whom the chattels are conveyed or to whom the money is paid is insolvent, the remedy at law is not adequate and a Court of equity will enforce the constructive trust by decreeing specific restitution. The beneficial interest remains in the person who conveyed the chattel or who paid the money, since the conveyance or payment was made under a mistake ............... The beneficial interest in the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eof (as the case may be), to the extent necessary to satisfy their just demands. This section has incorporated the same principles referred to above. Though S. 95 states that a person holding property shall perform the same duties and be subject to the same liabilities and disabilities as if he were a trustee of the property for the person for whose benefit he holds it, authorities have tried to distinguish between an 'express trust' and a 'constructive trust'. From the above discussion, we have no doubt in coming to the conclusion that there exists a fiduciary relationship between the plaintiff and the defendant. 16. Before determining the liability of defendant as a 'constructive trustee' under the Trusts Act, we would like to deal with his liability to pay interest under the Interest Act. Section 4 of the Interest Act, 1978, which has come into force with effect from 14-8-1981, reads thus : 4. Interest payable under certain enactments.- (1) Notwithstanding anything contained in S. 3, interest shall be payable in all cases in which it is payable by virtue of any enactment or other rule of law or usage having the force of law. (2) Notwithst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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