Vs. Mattaparthi Syamala & Ors  Insc 468 (14 March 2008)
S.B. Sinha & V.S.
CIVIL APPEAL NO 2001 OF 2008 (Arising out of SLP (Civil) No.9102 of 2007)
V.S. SIRPURKAR, J.
1. Leave granted.
2. The dismissal judgment of the Madras High Court in Civil Miscellaneous
Appeal under Order 43 Rule 1 of the Code of Civil Procedure, filed by the
appellant herein, is in challenge before us. This appeal was filed against the
order dated 9.9.2004 passed by Subordinate Judge, Yanam in Execution
Application No.9 of 2003 in Execution Petition No.15 of 2002. The said
Execution Application was filed under Order XXI Rule 58 whereby the appellant
sought to make a prayer for raising the attachment on the suit property or in
the alternative to declare the sale being subject to the claim in Original Suit
being OS No.31 of 2000. The following facts will highlight the controversy.
3. Second Respondent herein, namely, Mattaparthi Satyam owned 14 acres of
land. He put up the said land for sale and the present appellant having offered
highest market value of Rs.29,000/- per acre, executed an Agreement of Sale for
14 acres in favour of the appellant on 20th March, 1993 after having received a
sum of Rs.1 lakh from the appellant. The appellant thereafter paid Rs.2 lakhs
on 27.3.1993 and Rs.20,000/- on 16.4.1993 which payments were endorsed on the
reverse side of the Agreement by the Second Respondent. However, the Second
Respondent failed to execute the registered Sale Deed inspite of several
requests and, therefore, the present appellant filed Original Suit No.605 of
1996 before the Subordinate Judge, Pondicherry for specific performance of the
Sale Agreement which suit was later on transferred to Sub Court, Yanam and was
renumbered as Original Suit No.31 of 2000. The said suit is still pending.
4. In the year 2000, the first respondent, who is none else but the wife of
the second respondent filed a maintenance case being OP No.34 of 2000 before
the Family Court, Yanam. She filed one IA No.582 of 2000 seeking an injunction
restraining the second respondent from alienating the schedule properties and
this application was granted on 17.2.2000.
This petition was also transferred to the Sub Court Yanam and was re-
numbered as OS No.63 of 2000. Thereafter this suit was decreed on 22.1.2002.
Execution Petition No.10 of 2002 came to be filed on the basis of the decree
passed in OS No.63 of 2000 for recovery of arrears of maintenance payable by
the second respondent to the first respondent.
The second respondent did not pay the arrears of maintenance but instead
filed IA No.4 of 2003 in OS No.63 of 2000 before Sub Court, Yanam to set aside
the above decree dated 22.1.2002. However, even this application was dismissed
on merits on 27.2.2003. The first respondent thereafter filed E.P. No.15 of
2002 before Sub Court, Yanam for execution of the decree dated 22.1.2002 passed
in OS No.63 of 2000. A public auction was ordered in that Execution Application
and the same was conducted on 2.7.2003 in which public auction the third
respondent herein purchased the said suit property. The present appellant,
therefore, filed a petition in E.P.
No.15 of 2002 in OS No.63 of 2000 under the provisions of Order XXI Rule 58,
raising objections to the said auction and to declare that the sale is subject
to the appellant's claim in OS No.31 of 2000 which was pending on the file of
Sub Court, Yanam. This application was numbered as Execution Application No.9
of 2003. The said application came to be dismissed by the Subordinate Court.
The appellant herein filed an appeal against the said order of dismissal dated
9.9.2004. However, by its order dated 16.3.2007, the High Court of Madras
dismissed CMA 3254 of 2004 holding that the application was not maintainable.
The logic of the Madras High Court as well as the Trial Court seems to be that
once the sale takes place during the execution, then the objection raised would
be of no consequence and the application will be untenable. The High Court has
thus considered the question of the stage at which the objection could be
raised and has dealt with that such objection would not be tenable on the
backdrop of the language of Clause (a) of proviso to Order XXI Rule 58.
The stress is thus on the stage at which the objection could be raised (or
the time when the objection is raised). These concurrent orders are now in
challenge before us.
5. Shri Narasimha, learned counsel appearing on behalf of the appellant took
us through the orders and contended that the view expressed by both the courts
below to the effect that the Execution Application is not tenable is patently
incorrect. As against this Shri Vishwanathan, learned counsel appearing on
behalf of the first respondent and Shri Chandrachud, learned counsel appearing
on behalf of the third respondent supported the order contending that in the
wake of the completed auction under Order XXI Rule 58, the High Court and the
Trial Court were justified in holding that the appellant's claim was not
tenable at all. It is, therefore, to be seen as to whether the appellant's
claim is tenable at all.
6. Learned counsel for the appellant took us through both the orders and
firstly pointed out that the suit by the appellant being OS No.605/96 before
Sub Court, Pondicherry which was later on transferred to Sub Court, Yanam and
re-numbered as OS No.31 of 2000 was prior in point of time. From that suit it
is clear that the first respondent was the wife of the second respondent.
Though she fully knew about the pendency of the aforementioned suit, not only
filed another suit but brought a decree.
According to the appellant it is obvious that the said decree was a
collusive one. As if this was not sufficient, she also attached the very same
property which was the subject matter of OS No.31 of 2000 and got it sold in a
public auction on 2.7.2003. It was pointed out that the sale was not confirmed.
Learned counsel, therefore, pointed out that the appellant not only had a
substantial obligation regarding the property but was rightly entitled to
object to the auction sale. Thus, the learned counsel urges that even after the
sale the objection to the attachment and the sale could be raised and more
particularly because the present appellant would be necessarily a person having
locus standing due to obligation regarding the property. According to the
learned counsel these two factors, namely, the time of taking the objection and
the locus of the objector have to be considered and while the courts below
considered only the "time factor" or the "stage factor",
the court did not consider the "locus factor".
7. As against this a contention was raised by the learned counsel Shri
Vishwanathan that the wife, respondent no.1 herein, had filed OP No.34 of 2000
in Family Court in her individual right as a wife. She had also secured the
order of injunction restraining the second respondent from alienating the
schedule properties as she was interested in the property being preserved so
that she could recover her maintenance out of that property and there was
nothing wrong in it. It is pointed out that the injunction was granted and
though there was a publication about the same, the appellant never raised any
objection to it. The said OP which was renumbered as OS 63 of 2000 came to be
ultimately decreed and there was nothing wrong on the part of the first
respondent in filing the Execution Petition No.10 of 2000 for recovery of
arrears of maintenance and when the second respondent did not comply with the
orders, she was driven to file Execution Petition No.15 of 2002 for the sale of
the schedule property by public auction to recover the arrears of maintenance.
He further claimed that the second respondent had never brought to her
knowledge about OS No.31 of 2000. Learned counsel, therefore, claimed that
there was no collusion between the first and the second respondent and her
rights of maintenance are independent of any said suit which had arisen 18
years ago when her marriage was solemnized with the second respondent.
Our attention was drawn even to the counter filed by the second respondent
before the Trial Court where the second respondent had denied the Agreement. It
was alleged by him that the Agreement set up by the appellant was only by way
of security as the appellant had advanced a sum of Rs.1 lakh to be paid to
Mattaparthi Syamala and others on behalf of the second respondent. It was
pointed out that the second respondent had flatly denied any such Agreement to
Sell. Learned counsel, therefore, urged that the courts below were right in
holding the application, filed by the appellant, to be not tenable particularly
in view of the completed auction under Order XXI Rule 58.
8. Even the learned counsel appearing on behalf of third respondent urged
that he was a bona fide purchaser of the auction held on 2.7.2003 and he was
the highest bidder and that he did not know about OS No.31 of 2000 filed by the
appellant. It was his contention that in fact the appellant, in collusion with
the second respondent, had filed an objection to the Execution. He pointed out
that the third respondent had deposited the entire bid amount into the court
and only the confirmation of sale had remained to be done.
9. Shri Narasimha, learned counsel appearing on behalf of the appellant
invited our attention to the language of Order XXI Rule 58 CPC which is as
"58. Adjudication of claims to, or objections to attachment of
property. (1) Where any claim is preferred to, or any objection is made to the
attachment of, any property attached in execution of a decree on the ground
that such property is not liable to such attachment, the Court shall proceed to
adjudicate upon the claim or objection in accordance with the provisions herein
Provided that no such claim or objection shall be entertained (a) where,
before the claim is preferred or objection is made, the property attached has
already been sold;
or (b) where the court considers that the claim or objection was designedly
or unnecessarily delayed.
(2) xxxxxx (3) xxxxxx (4) xxxxxx (5) xxxxxx"
It is pointed by the learned counsel from the language of the clause (a) of
proviso to Rule 58(1) that where any objections are taken to the attachment on
the ground that such property is not liable to attachment, the court has to
proceed to adjudicate upon the claim or objections in accordance with the Rule.
Learned counsel further argues that there is a rider to this Rule in the shape
of a proviso and it is suggested that such claim or objection need not be
entertained where firstly the property attached has already been
"sold". Learned counsel points out that merely because of the auction
of the suit property, it cannot be said that the said property is sold, thereby
leaving no right in or opportunity with the objector to object to the
attachment. Learned counsel invited our attention to the judgment of the Andhra
Pradesh High Court in M/s.Magunta Mining Co.
v. M. Kondaramireddy & Another [AIR (1983) A.P. 335] where the similar
situation had arisen on the basis of an application made by the appellant under
Order XXI Rule 58 CPC. The objector was none else but the son of the Judgment-Debtor
whose property was auctioned. The objection was that since there was a prior
lease in respect of the said property and since in pursuance of that lease the
objector-appellant had been in possession of the same and, therefore, the
attachment was not valid and has to be vacated. An objection was also raised
that the properties which were attached were already sold and, therefore, the
objection to the attachment and the appeal had become infructuous. The Court,
therefore, dealt with the effect of the court sale conducted by the lower
court. It was an admitted position that before the said order of High Court
reached the sale was already completed in respect of all the items where the
Decree-holder himself purchased the properties. It is also seen from the facts
that there the sale was not confirmed. The Division Bench, speaking through
Hon'ble Jagannadha Roa, J. (as His Lordship then was) observed in para 15:
"Whenever a claim is preferred under O. 21 R. 58 CPC against attachment
of immovable properties, the fact that the properties are sold or the sale
confirmed will not deprive the court of its jurisdiction to adjudicate on the
claim. The inquiry into the claim can be proceeded with by the trial court or
the appellate court (under the amended Code) and in the event of the claim
being allowed, the sale and the confirmation of sale shall to that extent be
treated as a nullity and of no effect, as the judgment-debtor had no title
which could pay to the court auction-purchaser."
Relying heavily on this case the learned counsel pointed out that there is
no contrary decision of this Court on this issue and, therefore, this decision
has to be held as good law. In support of the argument that the appellant had
the locus standi, the learned counsel pointed out that it is only during the
pendency of the suit by the appellant which was based on the prior Agreement of
Sale in respect of the suit property that the subsequent suit for maintenance
was filed by the wife and the decree obtained and, therefore, obviously the
judgment-debtor, the second respondent could not have passed a clean title
during the auction sale and it would have to be held that he could not pass
better rights that he himself had. Learned counsel urged that the rights which
were passed on to the auction purchaser in the court sale were subject to the
Agreement of Sale. In support of this proposition the learned counsel relied on
the reported decision in Vannarakkal Kallalathil Sreedharan v. Chandramaath
Balakrishnan & Anr. [(1990) 3 SCC 291] where the situation was more or the
less same. This Court in para 9 observed:
".The agreement for sale indeed creates an obligation attached to the
ownership of property and since the attaching creditor is entitled to attach
only the right, title and interest of the judgment-debtor, the attachment
cannot be free from the obligations incurred under the contract for sale"
This Court had held the decisions by Bombay High Court in Rango Ramachandra
Kulkarni v. Gurlingappa Chinnappa Muthal [AIR 1941 Bom. 198] and Yeshvant
Shanker Dunakhe v. Pyaraji Nurji Tamboli [AIR 1943 Bom 145] and the High Court
of Travancore-Cochin in Kochuponchi Varughese v. Ouseph Lonan [AIR 1952 TC
467], to the same effect to be the good law.
10. On the basis of these two judgments, the learned counsel urged that the
objection application in the Execution Petition could not have been, therefore,
thrown away by the Trial Court and the High Court as not being maintainable.
Considering the law laid down in Magunta Mining's case (supra) it must be said
that mere holding of the auction does not bar the objections thereto. It is our
considered opinion that in this case the sale was not confirmed and that made
substantial difference. The word "sold"
in Clause (a) of the proviso to Rule 58 has to be read meaning thereby a
complete sale including the confirmation of the auction. That not having taken
place, it cannot be said that the objection by the appellant was not ill-
founded or untenable as has been held by the High Court and the Trial Court.
11. However, a contrary view has been taken by the Patna High Court in a
reported decision in Kewal Singh v. Umesh Mishra [AIR 1983 Patna 303] where the
Division Bench of the Patna High Court held that the term "sold" used
in proviso (a) means the stage when the property is auctioned by the court and
the bid is accepted by the court. The term does not refer to the stage of
confirmation of the sale when it is made absolute under Rule 92. The learned
Judge who was considering the interpretation of the proviso, after clearing
some factual grounds, discussed the issue in para 7 of the judgment. In coming
to the conclusion that the word "sold" would include the sale under
Rule 58, even when it is not made absolute under Rule 92, the learned Judge has
taken into account the term "sold", "sale set aside" and
"sale confirmed and made absolute". The learned Judge held that these
three terms referred to three stages in relation to the court sale. While Rule
58 provides for the objection made before the property is "sold",
Rule 64 and onwards provide for the proclamation of sale. The learned Judge
then took note of two headings, one with respect to the sale of movable
property and the other Rule 82 with respect to the sale of immovable property.
The learned Judge then proceeded to take note of Rules 89, 90 and 91. It was
noted by the learned Judge that the implication of the term "the sale
having been made absolute" has been specifically provided in Section 65 of
the Code which provided that where the immovable property is sold in execution
of a decree and such sale has become absolute, the property shall be deemed to
have been vested in the purchaser from the time when the property is sold and
not from the time when the sale become absolute. The learned Judge then observed
"Thus, this rule is a pointer to the significance that though the sale
is complete when it is ultimately made absolute but title to the purchaser
vests from the date of the sale. It may be noticed, at this place, that there
are uses of the two terms "property sold" and "sale becomes
absolute" in this S. 65 and the two terms used in the same section clearly
suggests the two stages as to the sale having been held and the sale
subsequently made absolute. But what I have to determine, in the present case
is to find out the meaning of the term 'the property already sold' in the
proviso to R. 58 mentioned above. That term speaks of the 'sale held' and not
'sale having been made absolute' and as the distinction may be marked the
former term used in S. 58 implies that that refers to the stage when the
"sale was held" and not the stage which would come subsequently when
the "sale is made absolute". I am supported of this view by two Bench
decisions of this Court and a Bench decision of the Calcutta High Court"
The learned Judge then made reference to the decision in Most. Puphup Dei
Kuar v. Ramcharitar Barhi [AIR 1924 Pat. 76] and proceeded to hold ultimately
"I am of the view that the term 'property has been already sold' used
in the proviso to Cl. (1) of R.58 refers to the stage when the sale had taken
place and does not refer to the stage when the sale becomes absolute."
Learned counsel for the respondent very heavily relied on this judgment and
pointed out that the decision in M/s.Magunta Mining Co's case (supra) the court
had not considered the impact of Section 65 CPC. It will, therefore, be our
task to decide the correctness or otherwise of both the judgments.
12. Reverting back to the judgment of Andhra Pradesh High Court in
M/s.Magunta Mining Co's case, it will be seen that in para 14 of its judgment,
the learned Judge considered the impact of Order XXI Rule 59.
The learned Judge held:
"The provisions of O. 21 Ru.59 CPC show that where before a claim is
preferred or objection made, and the property attached had already been
advertised for sale, the court may, if the property is immovable, make an
order, that pending the adjudication of the claim or objection the property
shall not be sold, or that pending such adjudication, the property may be sold
but the sale shall not be confirmed and any such order may be made subject to
such terms and conditions as to security or otherwise as the court thinks fit.
This provision therefore provides that pending adjudication of a claim in
respect of immovable property the court may proceed with the sale but stay the
confirmation. Obviously this has been made with a view to expedite the sale
proceedings so that in the event of the claim being rejected, the further
proceedings can go on expeditiously. But it is clear that as long as the sale
is not confirmed the status quo ante can be restored in case the claim is
allowed. It has been held that once the claim petition is allowed the sale will
be treated as void because the interest of the judgment-debtor that was sold
did not in fact belong to him and the Court auction-purchaser would not get any
title to the property as the judgment-debtor had no interest therein and
because the claimant continues to retain his interest in those properties vide
Bibi Umatul Rasul v. Lakho Kuer [AIR (1941] Patna 405]. To the same effect is
the decision in Madholal v. Gajrabi [AIR (1951) Nag. 194]."
"The term of O.21 R.63 are imperative and they declare that any order
passed by the executing Court is subject to the result of such a suit. In Phul
Kumari v. Ghanshyam Misra, (1907) ILR 35 Cal 202: (35 Ind App 22 (PC) their
Lordships of the Privy Council pointed out that the object of a suit under
S.283, Civil P.C. of 1882 which corresponds to O. 21 R. 63 of the present Code
is in effect to set aside a summary decision.
When the claimant succeeds in getting a decree in his favour declaring his
title to the property attached and that the property is not liable for
attachment and sale in execution of a particular decree the executing court's
power to sell the property in that execution proceedings must cease. The
claimant's success in a suit under O. 21 R. 63 ousts the jurisdiction of the
executing court. If that is the result, the sale must be pronounced to be a
nullity and consequently not capable of being confirmed under O. 21, R. 92,
These observations will show that the Andhra Pradesh High Court not only
considered the language of Rule 59 and the impact thereof as clearly displayed
but also went on to consider the fact of the prior obligation regarding the
objector in the property and the fact that even if the sale is effected under
Rule 58, it cannot obliterate the claims of the objectors which were created
prior to the sale. This very situation with regard to impact of the prior
interest in the shape of Agreement of Sale was taken into consideration in the
subsequent judgment of Vannarakkal Kallalthil Sreedharan (cited supra) wherein
the judgments of the Bombay High Court and the Travancore-Cochin High Courts
were approved. Thus in considering the "time factor" of challenging
the sale, the judgment also considers the "locus standi factor" on
account of any prior interest of the objector in the suit property. This
situation is very conspicuously absent in the judgment of the Patna High Court
which has merely chosen to go by the language of Section 65 CPC. We must hasten
to add that even if under Section 65 CPC, the title "after the sale has
been made absolute under Rule 92" relates back to the date of sale, it
would still be subject to the earlier rights of the objector and his interest
in the suit property.
Therefore, in our opinion Section 65 would not, by itself, provide any
guidance regarding the interpretation of the term "sold" in the said
Once it is held, as has been confirmed by this Court in Vannarakkal
Kallalathil Sreedharan's case that the attachment cannot be free from the
obligations under the contract of sale, then the necessary sequatur must follow
that even after the factum of sale the objection would still lie before the
sale is made absolute. In our opinion, therefore, the law laid down by the
Andhra Pradesh High Court in M/s.Magunta Mining Co's case is preferable to the
law laid down by the Patna High Court in Kewal Singh's case.
13. We have examined the relied on judgments of the Patna High Court
reported in Janki Mohan & Anr. V. Dr. S. Samaddar & Ors. [AIR 1962
Patna 403] where the High Court relied on the judgments of the Calcutta High
Court in Sasthi Charan Biswan Banik & Ors. V. Gopal Chandra Saha & Ors.
[AIR 1937 Cal 390] as also judgment of Patna High Court in Mt.Puhupdei Kuar v.
Ramcharitar Barhi & Ors. [AIR 1924 Patna 76].
However, since we have taken a view that the judgment of the Andhra Pradesh
High Court is correct, those judgments would have to be held as not laying down
a good law. A contrary view has been taken by Madras High Court in C.
Jagannadhan v. Padayya [AIR 1931 Mad 782] which supports the view of Andhra
Pradesh Judgment. We approve of that view.
14. Again, it cannot be said that the present appellant has no locus standi
to raise an objection to the sale for the simple reason that he had filed a
suit on the basis of an Agreement of Sale. The factum of the Agreement of Sale
was not denied by the second respondent. Therefore, whether the Agreement of
Sale was a good Agreement of Sale entitling the appellant for specific
performance on the basis of that agreement is essentially a question to be
decided subsequently in the suit (though the suit is earlier to the suit filed
by the first respondent). Under such circumstances there was a cloud on the
property and a person like appellant who had the obligation qua the property in
the shape of an Agreement of Sale could not be held to be an utter outsider
having no locus standi to take the objections. This is the import of the
aforementioned decision in Vannarakkal Kallalthil Sreedharan's case.
To the same effect is the judgment in Purna Chandra Basak v. Daulat Ali
Mollah [AIR 1973 Cal. 432] where the learned Single Judge of that Court has
"An attaching creditor can only attach the right, title and interest of
his debtor at the date of the attachment and on principle, his attachment
cannot confer upon him any higher right than the judgment-debtor had at the
date of the attachment. If a person, having a contract of sale in his favour,
has such pre-existing right the attachment could not be binding upon him. If
the promise get a conveyance, after the attachment, in pursuance of his
contract, he takes a good tile inspite of the attachment. "
The observations would only highlight the importance of the Agreement of
Sale which is prior in time of the attachment as also the unconfirmed sale.
15. Learned counsel also points out the observations of this Court in Desh
Bandu Gupta v. N.L. Anand & Rajinder Singh [(1994) 1 SCC 131] in paragraph
5 which are to the following effect:
"The auction-purchaser gets a right only on confirmation of sale and
till then his right is nebulous and has only right to consideration for
confirmation of sale. If the sale is set aside, part from the
auction-purchaser, the decree holder is affected since the realisation of his
decree debt is put off and he would be obligated to initiate execution
proceedings afresh to recover the decree debt." (Emphasis supplied) From
this the learned counsel contended that since in this case the sale had
remained to be confirmed, there was no question of holding the appellant to be
an utter outsider or throwing his application as untenable.
16. It was urged before the High Court that the provisions of Order XXI Rule
58 read with the provisions of Order 22 Rule 101 spells out the duty of the
court to adjudicate all the questions relating to the rights of the parties and
that the Executing Court had failed to consider the provisions in the proper perspective
and it should have decided as to whether the decree between the first and
second respondents is a collusive decree merely meant to defeat the right of
the appellant herein. The aforementioned proviso to Rule 58 and more
particularly Clause (a) thereof was the only provision relied upon by the High
Court which is clear from the observations made in internal page 10 of the
judgment of the High Court in the following words:
"Clause 5 of Order 21 Rule 58 CPC deals with a situation where the
claim or objection under the proviso to sub-rule (1) is refused to be
entertained by the court, the party against whom such order is made may
dispute, but, subject to the result of such suit, if any, an order so refusing
to entertain the claim or objection shall be conclusive. The highest bidder in
the auction sale has been declared as the purchaser and that therefore, the
proviso to Order 21 Rule 58 CPC is attracted."
We have already shown that this is not the situation in law. The High Court
further went on to suggest that a merely Agreement holder could not prevent the
right of the auction-purchaser to get the sale confirmed. This statement is
also patently incorrect statement in law. We have, therefore, no hesitation in
holding that the High Court and the Trial Court were in utter error in relying
on proviso to Clause (a) to Rule 58 of Order XXI CPC.
The appeal has, therefore, to succeed. The Executing Court thus shall be
obliged to decide the objections raised by the appellant.
17. In the above circumstances the appeal is allowed. However, in the facts
and circumstances of the case, there will be no order as to costs.