1. MUHAMMAD YOUSAF SARAF, J.-This second appeal has arisen out of the following circumstances:- Land measuring 35 kanals 11 marlas under survey numbers 304 Min, 649 and 263 situate in village Lawasi, Tehsil Muzaffarabad was sold by Mst. Chahi and Mst. Hussaini, daughters of Noor Muhammad through a sale deed registered on 21-10-61 for a sum of Rs. 1,000 to one Faqir A.I on whose death respondents 1 to 14 were substituted as his legal representatives.
2. The appellant instituted a suit for pre-emption on the basis of his relationship with the vendors.
3. While decreeing the suit in his favour, the subordinate Judge, vide his order dated 30-4-66 directed him to deposit Rs. 200 as balance of the sale price, he having already deposited a sum of Rs. 200 as one-fifth; he was also directed to deposit the costs of stamps and registration up to the extent of Rs. 400 which amounted to Rs. 15 but at the same time was allowed the costs of the suit which amounted to Rs. 36-6-0.
4. The legal representatives of the vendee who went in appeal to the District Judge made an application on 14-11-67 informing tae Court that the decree-holder-pre-emptor had deposited only Rs. 200 in the trial Court and on account of not having deposited Rs. 15, the costs of stamps and registration, the suit had automatically stood dismissed. The learned counsel for the pre--emptor had replied that no exact amount having been specified either in the judgment or the decree, his client could not be penalised for a default resulting from such circumstances. Rejecting this plea, the District Judge held that the suit had already stood dismissed. It is against this judgment that the pre-emptor has now come in appeal to this Court.
5. The learned counsel for the appellant contended that there had been a complete lack of understanding of the case in the lower appellate Court. He based his argument on the ground that his client had been granted costs of the suit to the extent of Rs. 36-6-0 which according to him he was entitled to deduct from the decrial amount awarded against him and therefore a short-fall of only Rs. 15 in the said deposit which was far less than the amount allowed to him as costs, in no way amounted to a non-compliance with the terms of the decree. In this connection he brought to our notice AIR 1937 All. 756, a ruling which was reversed on appeal though on a different point.
6. The relevant law is contained in Order XX, rule 14, C. P. C. Which is reproduced below:- "Where the Court decrees a claim to pre-emption in respect of a particular sale of property and the purchase-money has not been paid into Court, the decree shall-
(a) specify a day on or before which the purchase-money shall be so paid, and
(b) direct that on payment into Court of such purchase-- money, together with costs (if any), decreed against the plaintiff, on or before the day referred to in clause (a), the defendant shall deliver possession of the property to the plaintiff, whose title thereto shall be deemed to have accrued from the date of such payment, but that, if the purchase --money and the costs (if any) are not so paid, the suit shall be dismissed with costs."
7. The only rule which speaks of the same decree under which both parties are entitled to recover sums of money from each other is rule 19, Order XXI, which is reproduced below:- "Where application is made to a Court for the execution of a decree under which two parties are entitled to recover sums of money from each other, then:-
(a) If the two sums are equal, satisfaction for both shall: be entered upon the decree, and
(b) If the two sums are unequal, execution may be taken out only by the party entitled to the larger sum and for so much only as remains after deducting the smaller sum and satisfaction for the smaller sum shall be entered upon the decree."
8. This rule reproduces section 247 of the Code of 1882. It is difficult to visualise a pre-emption case which can be covered by this rule because the amount of costs awarded to the plaintiff may never be equal to the sum awarded to the vendee in lieu of pre-emption. At best, so far as the present case is concerned, it is covered neither by sub-rule (a) nor by the sub-rule (b).
9. This rule, however, has relevant importance in that it gives statutory recognition to the doctrine of equitable set-off, which, as we shall presently see, has been consistently applied to pre--emption decrees for over 85 years.
10. Rule 14, Order XX reproduces section 214, the C. P. C. Of 1882. The changes brought about by the Code of 1908 in this rule are that while sub-rule (b) was newly added, the words "whose title thereto shall be deemed to have accrued from the date of such payment" were inserted in sub-rule (a).
11. But neither in the Code of 1882 nor in that of 1908 was any provision made with regard to costs awarded against the defendant. Section 214 of Act No. XIV of 1882 provided for payment of sale- price plus the costs awarded against the plaintiffs the same position was repeated in 1908.
12. The question for the first time came up for decision before the Allahabad High Court in 1884 in a case entitled Ishri v. Gopal Saran and another ((1884) 4 A W N 125=8 I C" 635). In this case a decree for pre--emption was passed on payment of Rs. 399-15-0. The plaintiff was however granted costs of the suit which exceeded 15 annas. He deposited Rs. 399 only and then applied for delivery of possession as well as the recovery of his costs minus 15 annas which he had not deposited in the Court. The vendee resisted execution on the plea that the suit had become null and void because the amount that the pre-emptor had deposited was less by 15 annas than the amount required to be deposited under the decree and that the decree-holder was not entitled to deduct from this amount such sum as had been awarded to him as costs. The trial Court upheld the objection and dismissed the execution application. The District Judge confirmed this order in appeal. The plaintiff, therefore, went in second appeal to the High Court. It was heard by a Division Bench but the judgment was written by Justice Sayed Mahmood. The contention of the learned counsel for the appellant that the sum awarded to him as costs could be deducted by him on his own on the basis of the doctrine of equitable set-off was upheld by the great Judge. Reproduce below is a portion of the judgment:- "Is there, then, anything in the Code, or any equitable consideration which would prohibit a pre- emptor-decree-- holder from availing himself of the doctrine of set-off by deducting the costs allowed to him from the purchase-money which he has to deposit under the very decree which awards him costs? The Civil Procedure Code, as we have pointed out, falls short of providing any specific rule to meet exactly the case before us. The doctrine of set-off, which owes its original to Roman Jurisprudence, was well known to the Civil law under the more comprehensive title of compensation, which, in the words of Story, J., may be defined to be the reciprocal acquittal of debts between two persons who are indebted, the one to the other; or, as it is perhaps better stated by Pothier, compensation is the extinction of debts, of which two persons are reciprocally creditors to one another, by the credits of which they are reciprocally creditors to one another. The Civil law itself expressed it in a still more concise form compensation est debiti et crediti inter se contribution. The Civil law treated compensation as founded upon a natural equity, and upon the mutual interest of each party to have the benefit of the set-off, rather than to pay what he owed, and then to have an action for what was due to himself (Story's Eq. Juris., sections 1438-39). The doctrine of compensation in the Civil Law. Of course, has never been fully adooted either in England or in this country, probably for reasons based upon the inconvenience and delay which would arise in the trial of suits. But in the case before us, there can be no, such inconvenience or delay; the decree which declares the plaintiff- pre-emptor entitled to obtain possession of the pro--perty in suit on payment of the purchase-money declares him in the same breath, entitled to recover costs from those against whom the decree has to be enforced.
13. But it is contended by the learned pleader for the res--pondents, in support of the lower appellate Court's judgment, that the pre-emptor-decree-holder-appellant's right to execute his pre-emption decree was contingent upon his depositing the full purchase-money within time, and that till such deposit was actually made he could not be held to be entitled to any costs whatsoever, and could not therefore deduct them from the purchase-money in making the deposit required by the decree. The argument, though plausible, has no force. It seems to aim at giving to mere formality the significance of a substantive effect. For it seems to us to involve a very untenable proposition, that for a pre--emptor-decree-holder the only way to enforce his decree is to come into Court with the full purchase-money in the one hand, offering it to the judgment-debtors, and to stretch out the other hand asking them to give him the costs which the very decree, under which he is depositing the purchase-money, awards him. The argument also involves the contingency that a pre-emptor should pay up the purchase-money to the judgment-debtors in ready cash, and may have to wait for years before recovering from them the costs awarded to him by the Court, and it is conceivable that he may never be able to recover them at all. We cannot regard such results as con--sonant with the principles of justice, equity and good conscience, which we are bound to administer in such cases; and holding these views, we cannot adopt the reasoning upon which the judgment of the lower appellate Court pro--ceeds, nor the argument urged before us in support of that judgment by the learned pleader for the respondents. The effect of our views is to apply, by analogy of sections 221 and 247, the doctrine of set-off to the case before us-a course which is consonant in principle with that followed by Jackson, J. In the case of Jugo Mohun Bukshee v.
14. Soorendra Nath Roy Chowdhary, long before the Legislature formulated the rules contained in the two sections just referred to."
15. Civil Procedure Code in its present form was enacted in 1908. A perusal of the relevant rule as reproduced above shows that the Legislature had accepted the interpretation of the learned Judge because although more than 24 years had since elapsed, no express provision was made in the Code to negative this interpretation. Section 214 of the 1882-Code expressly provided that the pre-emptor shall deposit into the Court the purchase-money and the costs awarded against him within a specified date ; thus payment into Court of the entire amount was made a condition precedent to the perfection of his title. The Allahabad High Court by applying the doctrine of equitable set-off, introduced a subtle change in the rule or to put it other--wise, gave it a look of reasonableness. Legislature must be presumed with the knowledge of this interpretation. The fact that it left the wording of the rule in this respect unaltered and took no steps to negative this interpretation, clearly shows that not only did it accept the application of the doctrine of equitable set-off in the matter but also that by enacting section 214 it had never intended to negative the said doctrine. As time passed this ruling has been relied upon by many a High Courts and quoted with approval not only in pre-emption case but in many identical situations with the result that it has come to stay as the leading authority on the subject. The same view was followed in Bechai v.
16. Sham! Nath (10 1 C 457). In this case, as AIR 1919 All. 45 states, Banerji, J. Held that :- "In accordance with other rulings of this Court, that in a case like the present one where the pre- emptor-plaintiff was entitled to costs, he was entitled to deduct any portion of the purchase- money unpaid from the amount of costs owing to him."
17. Similarly in A.I Hussaini v. Aminullah (34 All. 596=15 1 C 337) as quoted in the same ruling a Division Bench of the Allahabad High Court laid down that :- "Where pre-emptor deposited in the Court the sum he was required to pay by the decree to the vendee less the costs awarded to him he had completely complied with the order of the Court"
18. "There can be no doubt that the plaintiff was entitled to deduct the sum of money due to hi-n for costs from the pre--emption money. This has been held in the case of Ishri v. Gopal Saran, a decision with which we agree."
19. The next reported case; this Court is AIR 1939 All. 228. In this case both the plaint.' as well as the defendant were allowed costs by the District Judge, on appeal by the vendee, in addition to the purchase-money being raised by Rs. 500. The plaintiff was granted Rs. 169-10-0 as costs whereas the defendant was granted Rs. 92-7-0 as costs. There was no order by the Court about the payment in Court of the costs awarded to the defendant-appellant. The plaintiff deposited the decretal amount less the amount of costs awarded to him. A dispute arose as to whether he had complied with the decree and the objections taken by the vendee were-(1) that the plaintiff was not entitled to deduct any amount out of the costs awarded to him, and (2) if on the basis of the doctrine of equitable set-off he was entitled to do so then he should have also deposited the costs awarded to the defendant. Harries, J. Who heard the case as a single Judge, the judgment is reported as A 1 R 1937 All. 756, accepted the defendant's plea and held that although the plaintiff could deduct the costs awarded to her, but she could deduct only a sum of Rs. 77-3-0, the difference between the costs awarded to her and the defendant. Thus he also followed the trend of authority in his Court. On appeal by the plaintiff, the learned Judges while holding that in the absence of an order by the District Judge to deposit in the Court the costs awarded to the defendant, the plaintiff was not bound to do so, also held in conformity with the trend of authority of their Court that "It is well established law that in a pre-emption suit the plaintiff is entitled to deduct from the amount he is directed to deposit, the amount of the costs awarded to him. This principle was first approved by this Court in 6 All. 351.
20. That decision has been subsequently followed in 18 A L J 162 and 34 All. 596."
21. There is a reported decision from Lahore reported as AIR 1922 Lah. 1.42. In this case the plaintiffs were given a decree for pre-emption on payment of Rs.
97. A sum of Rs. 19-10-0 was, however, awarded to them as costs. Having already deposited Rs. 15, perhaps as one-fifth, they had now to deposit the balance of Rs. 84 or if the costs were deducted, then the sum of Rs. 64-6-0 only.
22. Instead they deposited Rs 83. A learned single Judge of the Court held that they had forfeited their decree because the amount deposited by them was less by one rupee. In this case the decree- holders had also already initiated execution proceedings not only for possession of the property but what is m,) re important, for the recovery of Rs. 19-10-0 as costs under the decree. The learned Judge, therefore, being of the opinion that the decree-holders never intended to deduct the amount of costs or any part thereof from the decretal amount, he came to the conclusion that the short-fall of one rupee in the decretal amount was not intended by the decree-holders as equitable set-off. On appeal to the Division Bench, the judgment was reversed and the Court held: ---- "The real question is whether, as a matter of fact, they actually, complied with the decree? As already pointed out, they were entitled to deduct their costs, and payment of a further sum of Rs.
23. 64-6-0 would have been sufficient compliance with the decree. They paid more than they were actually required to do, and we consider that the terms of the decree were fully satisfied. There is a case reported as Bechai Sing v. Shami Nath (already referred to above) which is exactly on all fours with the present case. There the suit was decreed on payment of Rs. 324-12-0 and the plaintiff was also awarded Rs. 9-1 1-0 as costs. The plaintiff paid Rs. 324 within the time fixed. This sum was annas twelve short of the amount named in the decree but it was held that the payment was sufficient, because the plaintiff was entitled to set-off the balance of annas twelve against the costs payable to him. Here the sum paid in rupee one less than the amount named in the decree, but we hold that the plaintiff is entitled to set-off the balance of rupee one against the costs payable to him."
24. There is a decision from Madras also reported as AIR 1936 Mad. 626. Incidentally it took 18 years to reach the stage of final judgment in the High Court. It was not a case of pre-emption but the question of equitable set-off under Order XX1, rule 19, C. P. C. Was involved. In this case the decree provided that on plaintiff's depositing into the Court a sum of Rs. 500 within a specified time, the defendant would execute a deed of conveyance in his favour. Costs were also awarded to the plaintiff payable by the defendant. The plaintiff deposited only a sum of Rs. 157-15-0 which according to him was the only amount payable by him under the decree after deducting (i) costs awarded to her by the decree, and (ii) a further sum representing other costs which she was entitled to recover by way of restitution, and (iii) the interest on certain items of costs. It was contended on behalf of the defendants that the plaintiffs were not entitled to deduct the costs themselves as rule 19, Order XXI, C. P. C. Was inapplicable. Justice Venkatasubba Rao who wrote the D. B. Judgment after referring to the judgment of Justice Mahmood and certain other authorities from Allahabad and Calcutta held:- These cases in our opinion proceed on a correct principle and we are prepared to follow them. First, as to the costs expressly payable to the appellant under the decree, the matter stands thus: she could have brought into Court the full amount of Rs. 500 and simultaneously attached a portion of that sum for realizing the costs due to herself. That would be a needless and idle formality to observe. Secondly, in regard to the costs due to her by way of restitution, the right to recover those costs also accrued to her in virtue of the same decree of the High Court. In short, the claims are in the nature of cross-demands arising out of the same transaction and the doctrine of equitable set-off allowed by Courts of equity holds good."
25. The learned counsel for the respondents referred to AIR 1925 Lah. 91, AIR 1924 Lah. 359 and 2001 Bk.
26. J & K H C R 275. We have gone through these rulings. They have no application to the present case.
27. In these cases there was no question of the adjust--ment of costs awarded to the plaintiff. They were simple cases of deposits made in pre-emption cases being less than required under the decrees. So we need not discuss them further.
28. We are in respectful agreement with the trend of authorities since 6 All. 351. While rule 19, Order XXI, does not, in my) opinion, cover such a case, there is no doubt that the doctrine of equitable set-off does come into play. Reasons for the application of this doctrine have been elaborately given in the judgments quoted above and we have nothing to add to the same.
29. For these reasons we accept the appeal, set aside the judgment and decree passed by the District Judge arid order that the plaintiff is entitled to possession of the property in the suit as well as to recover a sum of Rs. 20-6-0 from the judgment-1 debtors, that retains payable to him as balance of costs.
30. As the appeal succeeds on the ground of set-off, we think it is unnecessary to go into the merits of the other plea raised by the learned counsel for the appellant, for purposes of this appeal.
31. S. A. H.