Jibon Krishna Mukherjee & ANR Vs.
New Bheerbhum Coal Co. Ltd. & ANR  INSC 132 (10 November 1959)
CITATION: 1960 AIR 297 1960 SCR (2) 198
CITATOR INFO :
E 1984 SC1471 (54)
Decree, execution of-Receiver appointed and
authorised by court to sell Property-Sale by receiver-Application to set aside
such sale on deposit-Maintainability-Code of Civil Procedure (Act V of 1908),
ss. 51, 151, O. 21, r. 89.
On the judgment debtor's default in paying
the agreed installments of the decretal amount a receiver was appointed by the
Court in execution of the decree under s. 51 of the Code of Civil Procedure
with power to sell the judgment debtor's property either by private agreement
or public auction. The receiver entered into an agreement with respondent No.
2, a third party, for the sale of the property for a larger sum than the
decretal amount on the condition that the sale should be confirmed by the High
Court. The High Court allowed the decree holder's application for confirmation
of the sale by the receiver but allowed the judgment debtor time to pay the
balance of the decretal amount in which case the sale was not to be confirmed.
The judgment debtor made partial payments but failed to pay the entire decretal
amount within the prescribed time and in spite of several opportunities given
to him by the Court to do so. He ultimately applied to the Court for
cancellation of the agreement for sate by the receiver and prayed for leave to
deposit the whole balance of the decretal amount. I his was disallowed by a
Single judge and on appeal by a Division Bench of the High Court.
The main question that arose for decision
both in the High Court, and Supreme Court, oil appeal by special leave, was
whether the provisions of s. 21, r. 89 of the Code of Civil Procedure apply to
a sale held by a receiver appointed by the Court. The High Court answered this
question in the negative.
Held, that the High Court was right in
refusing to entertain the appellant's applications under s. 21, r. 89.
In a sale by the receiver lie is not required
to issue a proclamation of sale as required by s. 21, r. 66 of the Code of
Civil Procedure and as such the provisions of s. 21, r.
89 under which a sale proclamation is an
essential element, do not apply to a sale held by him.
Minatoonnessa Bibee and Others v.
Khatoonnessa Bibi and Others (1898) I.L.R. 21 Cal. 479, Golam Hossein Cassin
Ariff v. Fatima Begam (1910) 16 C.W.N. 394, jogemaya Dasee v. Akhoy Coomar Das
(1912) I.L.R. 40 Cal. 140, Basir Ali v. Hafiz Nazir Ali, (1916) I.L.R. 43 Cal.
124 and Rani Bala Bose and Others v. Hirendra Chandra Ghose and Others (1948)
52 C.W.N. 739, considered.
199 Held, further, that the High Court was
right in holding that the court's jurisdiction could not be invoked in favour
of the appellant under s. 151 of the Code of Civil Procedure in view of the
fact that he committed repeated defaults in spite of several opportunities
given to him by the Court to pay the balance of the decretal amount, and that
this court would not interfere with the discretion exercised by the High Court
in such circumstances.
The order of the High Court confirming the
sale by the receiver was not a conditional one. It gave an opportunity to the
judgment debtor to pay the decretal amount in the manner prescribed by it
failing which the sale was to stand confirmed. There is no scope for applying
the principle that the court had inherent power to deal with an application to
set aside an order made ex parte on a proper case being substantiated, as laid
down in S. M. Sudevi Devi v. Sovaram Agarwallah (1906) 10 C.W.N. 306.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 342 of 1959.
Appeal by special leave from the judgment and
decree dated April 29, 1959, of the Calcutta High Court, in appeal from
Original Order No. 188 of 1958.
H. N. Sanyal, Additional Solicitor-General of
T. S. Venkatarama, K. R. Sarma and K. R.
Chaudhry, for the appellants.
S. N. Mukherjee, for respondent No 1.
N. C. Chatterjee, S. K. Acharyya and R. S.
Narula, for respondent No. 2.
1959. November 10. The Judgment of the Court
was delivered by GAJENDRAGADKAR J.-The principal question which Gajendragadhar
J. which this appeal by special leave raises for our decision is: Whether the
provisions of s. 21, r. 89 of the Code of Civil Procedure apply to a sale held
by a receiver appointed by the court and authorized to sell the property in
question. The learned Single Judge on the Original Side of the Calcutta High
Court as well as the Division Bench of the, said High Court have answered this
question in the negative. The appellants contend that the view taken by the
Calcutta High Court is erroneous.
This question arises in this way. In Suit No.
1024 of 1953 on the Original Side of the Calcutta High Court a decree for the
payment of Rs. 18,497-15-0 was 200 passed by consent in favour of the New
Bheerbhum Coal Co. Ltd., (hereinafter called respondent 1) and against' the
Benares Ice Factory, Ltd., (hereinafter called appellant 2) on December 5,
1955. The decree provided for the payment of the decretal amount by six equal installments
and it directed that in case of default of any one of the installments the
balance of the decretal dues would at once become payable.
A first charge was created by the decree on
the plant and machinery of appellant 2 for securing the payment of ,the
decretal amount. A default having occurred in the payment of installments
respondent I applied for the execution of the decree on April 10, 1956. On this
application an interim order was made on May 17, 1956, appointing Mr. A. K.
Sen, as Receiver of the properties charged. The said application was finally
decided by an order passed on May 30, 1956, by which the appointment of the
receiver was confirmed and he was given liberty to sell the said properties
either by private treaty or by public auction. It is common ground that the
receiver took possession of the said property in December 1956.
Subsequently, on March 10, 1958, the receiver
entered into an agreement with Sukhlal Amarchand Vadnagra (hereinafter called
respondent 2) for the sale of the said property for Rs. 30,000. The terms and
conditions embodied in the said agreement provided inter alia that within one
month from the date of the receipt by the purchaser of intimation from the
receiver that the sale bad been confirmed by the High Court the purchaser shall
deposit with the said receiver the full price of Rs. 30,000. On March 31, 1958,
respondent I applied to the court for confirmation of the said agreement and on
May 9, 1958, G.K. Mittter, J., allowed the application. He ordered that the
appellants should deposit the sum of Rs. 3,000 with the attorneys of the decree
bolder towards its claim under the said decree and further directed that if the
said amount was paid within the time aforesaid and the balance of the decretal
amount was paid within ten weeks thereafter the agreement of sale shall not be
confirmed. The order further provided that in default 201 of the appellants
paying the amounts as directed within the respective due dates the sale of the
charged property by the receiver to the second respondent as get out in the
agreement shall be confirmed.
Pursuant to this order the appellants
deposited with the attorneys of the decreeholder Rs. 3,000 on May 30, 1958.
They had also paid to the receiver Rs. 3,500
in August, 1957, towards the decretal dues. It appears that when the appellants
were unable to pay the balance as directed by the court appellant 2 applied to
the court praying that the agreement of sale should be cancelled and the time
within which he was directed to pay the balance of the decretal amount should
be extended. The application also sought for certain other directions. G.K.
Mitter, J., who heard this application dismissed it on July 29, 1958, and
confirmed the agreement of sale.
On August 20, 1958, appellant 2 took out a
notice of motion of an application made by him on the same day praying that
leave may be granted to him to deposit the whole of the balance of the decretal
amount and that the receiver should be restrained from receiving any money from
the intending purchaser in terms of the agreement of sale. It appears that on
August 22, 1958, respondent 2 tendered a cheque for Rs. 30,000 to the receiver
towards the payment of the purchase money under the agreement of sale. Soon
thereafter, however, respondent 2 took back the cheque and paid Rs. 30,000 in
cash on September 1, 1958. The application made by appellant 2 for leave to pay
the balance of the decretal amount was dismissed by G. K. Mitter, J., on
September 4, 1958. The learned judge, however, stayed the delivery of
possession of the property to respondent 2 for a week from the date of his
The appellants then filed an appeal against
the order of the learned judge before a Division Bench of the High Court and
obtained an order for stay of delivery pending the decision of the appeal. On
April 29, 1959, the Division Bench dismissed the appeal and refused to grant
certificate to the appellants to file an appeal in this Court. The appellants
26 202 then applied for and obtained special leave from this Court on May 20,
1959. That is how this appeal has come before us; and the main point which Mr.
Sanyal, for the appellants, has raised for our decision is that the courts below
were in error in refusing to give relief to the appellants under 0. 21, r. 89
on the ground that the said rule was inapplicable to the sale held by the
It is common ground that the receiver was
appointed with "power to him to get in and collect the outstanding debts
and claims due in respect of the charged property and with all powers provided
for in 0. 40, r. 1, cl. (d) of the Code of Civil Procedure ". The order
appointing the receiver also expressly directed that the receiver shall be at
liberty to sell the said property charged in favour of respondent 1 either by
private treaty or by private auction to 'the best purchaser or purchasers that
can- be got for the sale but he shall not hold such sale before the 13th day of
August, 1956. In other words, the receiver was appointed in execution
proceedings under s. 51 and was given all the powers under 0. 40, r. 1(d) of
the )Code. It is by virtue, of those powers that he entered into the agreement
of sale with respondent 2 and sold the property to him and gave him its
possession. Section 51 which deals with the powers of the court to enforce
execution provides for the execution of the decree by five alternative modes
specified in cls. (a) to (e). One of the modes of execution is the appointment
of a receiver which means that a decree for the payment of money can be
executed by the appointment of a receiver. He may either collect the income of
the property belonging to the judgment-debtor and thereby satisfy the decree,
or if so authorised he may sell the property of the judgment-debtor and thereby
arrange for the satisfaction of the decree.
Thus, in dealing with the question as to
whether the -,ale held by the receiver is a sale ordered by the court to which
0. 21, r. 89 applies it is necessary to
remember that the appointment of the receiver itself is a mode of execution of
203 When the receiver so appointed is given
all the powers under
0. 40, r. 1(d) it is these powers which he
seeks to exercise when selling the judgment-debtor's property in execution of
the decree. The sale held by the receiver under such conditions would no doubt
be governed by the provisions of
0. 40, and the court may supervise or issue
directions in respect of such a sale under the provisions of the said order.
Prima facie the sale held by the receiver appointed in execution proceedings in
pursuance of the powers conferred on him under 0. 40, r. 1(d) would be governed
by the powers conferred on him and the terms and conditions on which the said
powers may have been conferred and by other relevant provisions of 0. 40. It
does not seem, to attract the provisions of 0. 21.
Courts have had occasion to consider
questions about the applicability of several provisions of 0. 21 to sales held
by receivers and opinions expressed on such questions have differed more
particularly in the Calcutta High Court as we will presently indicate. In the
present appeal we do not propose to consider or decide the general question
about the character of the sale held by the receiver nor do we propose to
attempt to specify which provisions of 0. 21 will apply to such sales and which
will not. We are dealing with the narrow question as to whether 0. 21, r. 89
applies to such a sale; and it is to the decision of this narrow question that
we will address ourselves in the present appeal.
Order 21 , r. 89 enables the persons
specified in subr. (1) to apply to have the sale held in execution proceedings
set aside on two conditions, (a) the applicant must deposit for payment to the
purchaser a sum equal to 5% of the purchase money, and (b) for payment to the
decreeholder the amount specified in the proclamation of sale as that for the
recovery of which the sale was ordered less any amount which may since the date
of such proclamation of sale have been received by the decreeholder. The second
requirement immediately raises the question as to whether it is necessary for
the receiver in selling immoveable property in execution proceedings to issue
204 a proclamation as required by 0. 21, r. 66 of the Code. In our opinion
there can be no doubt that the provisions of the said rule do not apply to
sales held by receivers. No decision has been cited before us where a contrary
view has been expressed. The provisions of the said rule apply where property is
ordered to be sold by public auction in execution by the court, and the order
for the sale of such property must be made by any court other than the Court of
Small Causes as provided by r. 82. Where the court appoints a receiver and
gives him liberty to sell the property the receiver may either sell the
property and thereby realise the money for the satisfaction of the decree, or
he may, even without selling the property, seek to satisfy the decree by the
collection of rents due from the property or other ways open to him under the
law. In such a case it is difficult to hold that by- the very appointment of
the receiver clothing him with the power to sell the property if he thought it
necessary to do so the court had ordered the sale of the said property within
the meaning of 0. 21, r.
82. If the provisions of r. 66 of 0. 21 are
inapplicable to sales held by receivers it is obvious that the second condition
prescribed by r. 89(1)(b) is equally inapplicable and it is undoubtedly one of
the two essential conditions for the successful prosecution of an application
under the said rule. In our opinion this fact clearly emphasises the
inapplicability of the whole rule to sales held by receivers. We are,
therefore, satisfied that the High Court was right is refusing to entertain the
appellants' application under 0. 21, r. 89.
It is then argued that the High Court should
have considered the appellants' prayer under s. 151 of the Code.
It is no doubt a hard case where the
appellants have to lose their property though presumbly at the time when they
made the present application in the High Court they were able to produce for
the payment to the decreeholder the whole of the balance of the decretal
amount. As the judgment of the Division Bench shows the learned judges themselves
have observed that it was difficult not to feel sympathy for the appellants;
but, on the other hand, it is clear 205 from the record that the appellants
were given enough opportunity to pay the decretal amount. The decree was passed
by consent and included a default clause. The appellants committed default and
incurred the liability to pay the whole of the decretal amount. When the
agreement of sale executed by the receiver came before the court another
opportunity was given to the appellants to pay the decretal amount on the
specified conditions. The appellants again committed a default. It is only
later when it was too late that they rushed to the court with a prayer that
they should be allowed to pay the decretal amount themselves and their property
should be saved. Under such circumstances, if the learned judge who heard their
application as well as the appellate court came to the conclusion that the
court's jurisdiction under s. 151 cannot be invoked by the appellants, we do
not see how we can interfere with the said decision. It is true that s. 151 is
not specifically mentioned in the judgment of either of the courts below, but
that must be obviously because no specific plea under s. 151 was raised. Even
so the Division Bench has observed that it could not interfere with the order
of the learned judge when in his discretion he refused to make an order as
asked for by the appellants. This must inevitably refer to the discretion under
s. 151, because if 0. 21, r. 89 had applied and the appellants had satisfied
the conditions prescribed by it there would be no discretion in the court to
refuse such an application. It would then have been a right of the appellants
to claim that the sale should be set aside. We are, therefore, unable to accede
to the plea raised before us by Mr. Sanyal under s. 151 of the Code.
There is another point which Mr. Sanyal
attempted to raise.
He contended that the sale had not been
properly confirmed before he moved the court for leave to pay the decretal
amount, and so the courts below were in error in not allowing his application.
This argument is based on a decision of the Calcutta High Court in S.M. Sudevi
Sovaram Agarwallah(1). In that case
Woodroffe, J., was dealing with a (1) (1906) 10 C.W.N. 306.
206 conditional decree which entitled the
decreeholder, on the default of the defendant, to apply to the court which
passed the decree to direct the ejectment of the defend ant. It appears that
when disputes arose between the decreeholder and the judgment-debtor in regard
to the performance of the conditions imposed by the decree the decreeholder
obtained an order for ejectment of the defendant without notice to the
judgment-debtor. The judgment-debtor then applied for setting aside, modifying
or reviewing the said order.. Woodroffe, J., held that a court had inherent
power to deal with an application to set aside an order made ex parte, on a
proper case being substantiated. Mr. Sanyal contends that the sale in the
present case being conditional in the sense that it was subject to the
confirmation by the court it was open to the court to refuse to confirm it when
the appellants applied for leave to pay the balance of the decretal amount.
This argument necessarily assumes that the order passed by Mitter, J., on May 9,
1958, was a conditional order. In our opinion this assumption is not
well-founded. The said order no doubt gave an opportunity to the appellants to
pay the decretal a-mount in the manner prescribed by it but it clearly provided
that in default of the appellants complying with the said conditions within the
respective due dates the sale of the property by the receiver to respondent 2
be confirmed and that the said receiver do make over possession of the said
property to the said purchaser. It is clear that this order is not a
conditional order at all. It is a composite order. It provided for the payment
of the decretal amount by the appellants and in that sense gave an opportunity
to the appellants to avoid the sale of their property but, on the other hand, it
also provided that on their default to comply with the order the sale do stand
confirmed and the receiver do make over the possession of the property to the
purchaser. Therefore, in our opinion, there is no scope for applying the
principle laid down by Woodroffe, J., in the 'ease of S. M. Sudevi Devi (1).
(1) (1906) 10 C.W.N. 306.
207 Before we part with this appeal we- may
very briefly indicate the nature of the divergence of views expressed in the
Calcutta High Court on the question about the character of sales held by
receivers appointed by courts to which our attention has been invited.
In Minatoonnessa Bibee & Ors. v.
Khatoonnessa Bibee & Ors.
(1), Mr. Justice Sale, held that the
purchaser at a receiver's sale is entitled to obtain the assistance of the
court in obtaining the possession under the provisions of the Code relating to
sales in suits. In coming to this conclusion the learned judge referred to a
precedent in the Calcutta High Court in that behalf, and made an order for
possession of the property in favour of the receiver. It may be pointed out
that the learned judge, in dealing with the question, has referred to the
important fact that in that particular case the sale had been already treated
as a sale by the court inasmuch, as the registrar had been directed under the
provisions of the Code to execute the conveyance on behalf of some of the
parties to the suit.
Thus the question was in a sense res
judicata. However, in dealing with the general question the learned judge has
no doubt observed that sales by receivers " are in all essential
particulars similar to sales by the registrar, and that if they are sales by a
civil court in a suit the procedure prescribed by the Code for sales in a suit
would be applicable." We do not think that these observations should be
divorced from the facts of the particular case with which the learned judge was
dealing, and read as laying down a general proposition that sales held by
receivers attract the application of all the provisions in the Code in regard
to sales held by the court. If such a proposition was really intended to be
laid down we would hold that it is not correct at least in regard to the
provisions of 0. 21, r. 89.
In Gulam Hossein Cassim Ariff v. Fatima Begum
(2) Mr. Justice Fletcher, has taken a contrary view. He has held that " a
sale by a receiver under the direction of court is not a sale by court and in
such a sale the court does not grant a sale certificate nor does it confirm the
sale." The learned judge referred to the (1)  I.L.R. 21 Cal. 479.
(2) (1910) 16 C.W.N. 394.
208 earlier decision of Sale, J., and
dissented from him. It is unnecessary for us to consider the correctness or
otherwise of this decision.
Fletcher, J., adhered to the same view in
Jogemaya Dasee v. Akhoy Coomar Das (1). In that case the learned judge was
dealing with the sale of properties by the Commissioner of Partition, and he
held that such a sale is not one by the court but is one made by the
Commissioner of Partition under the authority of the court.
Chaudhuri, J., considered the same question
in Basir Ali v. Hafiz Nazir Ali (2 ) and held that in all sales whether by the
court or under the court or by direction of the court out of court the
purchaser is bound to satisfy himself of the value, quality and title of the
thing sold just as much as if he were purchasing the same under a private
According to this decision the sales
certificate does not transfer the title. It is evidence of the transfer.
Accordingly,-he directed. the receiver to
execute a conveyance in favour of the purchaser. This decision is not quite
consistent with the view taken by Mr. Justice Fletcher.
In Rani Bala Bose v. Hirendra Chandra Ghose
Chakravarti, J., as he then was, has incidentally referred to this conflict of
judicial opinion in the Calcutta High Court, and has indicated his preference
for the view taken by Sale, J., though he has been careful enough to add that
he was not deciding the point and that the case with which he was concerned was
not covered by the actual decision of Fletcher, J.
These decisions show that there has been a
divergence of opinion as to the character of the sale held by a receiver as to
whether it is a sale by the court, or under the court, or under the directions
of the court. It is because our attention has been invited to these decisions
that we have thought it necessary to make it clear that our present decision is
confined to the narrow question as to whether the sale held by a receiver
attracts the provisions of 0.
21, r. 89. We (1) (1912) I.L.R. 40 Cal. 140.
(2) (1916) I.L.R. 43 Cal. 124.
(3) (1948) 52 C.W.N. 739.
209 hold that r. 89 of 0. 21 does not apply
to such a sale and that the High Court was right in rejecting the appellants'
claim based on the said rule.
The result is the appeal fails and is
dismissed with costs.