Ramrao Jankiram Kadam Vs. State of
Bombay [1962] INSC 266 (26 September 1962)
26/09/1962 AYYANGAR, N. RAJAGOPALA AYYANGAR,
N. RAJAGOPALA SINHA, BHUVNESHWAR P.(CJ) GUPTA, K.C. DAS
CITATION: 1963 AIR 827 1963 SCR Supl. (1) 322
CITATOR INFO :
R 1964 SC 436 (13)
ACT:
Revenue Sale-Public auction-Connotation of
"Sale" Whether sale for predetermined nominal price is such
sale-LegalitySuit to set aside sale-Limitation-Waiver and estoppel-Bombay Land
Revenue Code 1879 (Bom. V. of 1879) Ch. XI, 167, 203--Bombay Revenue
Jurisdiction Act, 1876, (Bom.X of 1876), ss. 4(c) and 11-Transfer of Property
Act, 1882 (IV of 1882), s. 41.
HEADNOTE:
A sum of about Rs. 9,000 was due from the
appellant to the Government on account of excise dues. The movable and
immovable property of the appellant was several times put for sale by auction
under Ch. XI Bombay Land Revenue Code but the amount remained unrecovered and
three items of lands remained unsold. In view of a Government Order dated
August, 30, 1933, which prescribed such a course, the Mahalkari sought
permission of the Collector to make a nominal bid of Re. 1/for each item of
land in the next auction. The permission was granted and the Mahalkari informed
the appellant that if no bidders came forward at the next auction the lands
would be sold at the nominal price of Re. 1. The auction was held and as no
stranger came to bid the Mahalkari made the nominal bid of Re. 1 for each item
of land. The bid was accepted and the sales were later confirmed. Subsequently,
the Collector sold these lands for adequate consideration and the purchasers
were put in possession. The appellant filed a suit challenging the validity of
these sales. The purchasers contended that the suit not having been brought
within one year of the sales was time barred, that the suit was barred by ss.
4(c) and 1 1 of the Bombay Revenue jurisdiction Act and, that the appellant was
disentitled to relief on the ground of acquiescence and estoppel.
Held, that the Sales were invalid and the
suit was liable to be decreed. The purchase for a predetermined nominal price
of Re 1, irrespective of the actual market value was not a sale by public
auction as contemplated by s. 167 of the Bombay Land Revenue Code. An auction
is. a proceeding at which people are invited to compete for purchase of
property by successive offers of advancing sums and a sale by auction is a
means of ascertaining what the property is worth i.e. its fair 323 market price
If at the sale there are no bids there cannot be a sale. The Government Order
had no statutory force at all, and could not authorise or render valid the
transaction if otherwise it lacked a legal basis. There was no provision in the
Code which authorised such a course which amounted to forfeiture of the
property of a defaulter. It was anomalous that the Collector who moved the
machinery for realisation of arrears by sale and who was constituted the
authority to determine judicially allegation of irregularity in the conduct of
the sale should, without authority of any statutory power, bid at the auction
conducted by his deputy.
The mere fact that the appellant had been
informed before hand of the nominal bid did not render the sales valid. Nor was
the appellant estopped from questioning the legality of the sales.
Tumdu Dhansing v. Government for the Province
of Bombay, I.L.R. 1947 Bom. 75, approved.
The suit was not barred by Art. 11 of the
Limitation Act.
The article was applicable only to cases
where there was need for setting aside a sale and not to cases where no sale as
contemplated by law had taken place.
The provisions s. 4(c) Bombay Revenue
jurisdiction Act, 1876 applied to cases where there was a sale and it was
sought to be set aside on the ground of irregularities other than fraud. They
did not apply where there was only a purported sale which did not pass title,
Section 1 1 barred a suit when there was an appeal provided against the act or
omission of a revenue officer and the party failed to avail of the remedy. in
the present case there was no order which was appealable under s. 203 and s. 1
I could not be applied.
There was no scope for invoking the aid of s.
41 Transfer of Property Act. The purchasers had not relied upon any
representation, act or conduct of the appellants but on the belief that
Government had acquired a good title to the lands. If the Government had no
title the purchasers could not acquire any.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 67 of 1956.
Appeal from the judgment and decree dated
March 20, 1950, of the Bombay High Court in first Appeals Nos. 142 and 211 of
1947.
S.P. Varma, S. N. Andley, Rameshwar Nath and
P. L. Vohra, for the appellant.
324 H.R. Khanna, R. H. Dhebar and T. M. Sen,
for the respondent No. 1.
C.B. Agarwala and Naunit Lal, for the
respondents Nos. 2 and 5.
1962. September 26. The judgment of the Court
was delivered byAYYANGAR, J.-This appeal comes before us on a certificate of
fitness granted by the High Court of Bombay under Art. 133 (1) (a) of the
Constitution.
The appeal was heard by us in November last
and judgment was reserved on 9/11/1961. Within a short time thereafter, learned
Counsel for the Appellant intimated the Registry that the 2nd respondent had
died on November 5, 1961, and that steps were being taken to have the legal
representative brought on record. The certificate under O. XVI r.13 was
received by this Court and on its basis substitution was ordered at the end of
August 1962. The appeal was subsequently reported for hearing and we have now
heard the learned Counsel for the parties.
The facts giving rise to the appeal are
briefly as follows:
The plaintiff who is the appellant brought a
suit in the Court of the Civil judge at Jalgaon for a declaration that the sale
of certain of his lands which were held by the Revenue Authorities in
circumstances which we shall detail later was void, and to recover possession
of the lands from the defendants who had purchased these lands in revenue
auction. In view of the prayer for the declaration regarding the invalidity of
the sale, the Province of Bombay was impleaded as a defendant to the suit.
The plaintiff's father was an excise
contractor and he and the plaintiff were licensees of certain opium shops in
1931
32. By the end of March 1934 a sum of about
Rs. 8,500/were due to the Government in respect of the excise dues from these
opium shops. For the realisation of these dues the lands 325 belonging to the
plaintiff were brought to sale and among others Survey Field No. 35, 40 and 80
in Mauje Therole, Peta Edalabad and a house bearing Survey No, 23A in the village
of Kurhe was brought to sale and sold. The three items of lands were purchased
by government at the sale for a nominal bid of Re. 1/for each item for
realisation of these dues.
The sale was confirmed and possession taken
by government of these lands. Later the government sold the land bearing Survey
No. 80 to the second defendant for Rs. 2,000/-and Survey Nos. 35 and 40 to the
fifth defendant for Rs.
1,750/-. Possession of these properties was
delivered to the respective defendants in 1939. As substantially the arrears
due to government still remained undischarged, because the sales were for
nominal amounts, the house property at Kurhe was attached and brought to sale
and was sold on November 6, 1940, but the purchase in the case of the house was
not by the government but the property was bid for and purchased by the second
defendant for Rs. 76/-. A certificate of sale was issued to him on February 13,
1941.
It was the validity of these sales that was
challenged in the suit which has given rise to this appeal.
The suit was substantially decreed in favour
of the plaintiff by the trial-judge but on appeal the plaintiff's suit was
dismissed in respect of the relief in regard to the three plots above-named
which were the subject of sale on September 21, 1938, and of the house which
was sold on November 6, 1940. The learned trial-judge had held that these sales
were not in accordance with the provisions of the Bombay Land Revenue Code and
were consequently void.
The learned judges of the High Court, on the
other hand, were of the opinion that the sales and the purchase by government
for a nominal sum of Re. 1/ for each of the plots were authorized by the Code
and were therefore valid and binding on the plaintiff. It is the correctness of
this view of the High Court that is raised for consideration in the appeal.
326 Before dealing with the arguments
addressed to us regarding the validity of the sales it is necessary to set out
the statutory provisions which bear upon the power of government to effect sales
for the realisation of arrears due to them.
Section 34 of the Bombay Abkari Act enables
arrears of excise revenue to be recovered as an " arrear of land
revenue". Chapter XI of the Bombay Land Revenue Code lays down the
procedure for the realisation of land revenue and other revenue demands. Among
the provisions of this Chapter it is necessary to refer to s.155 reading :
"155. The Collector may also cause the
right, title and interest of the defaulter in any immovable property other than
the land on which the arrear is due to be sold." Section 165 directs the
Collector to issue a proclamation, in the vernacular language of the district
of the intended sale, specifying the time and place of sale, while the section
following requires that a written notice of the intended sale should be affixed
in the public offices named therein. Section 167 enacts that sales shall be
made by auction by such persons as the Collector may direct.
Section 171 is the next relevant section and
this reads:
"When the sale is finally concluded by
the officer conducting the same, the price of every lot shall be paid for at
the time of sale, or as soon after as the said officer shall direct, and in
default of such payment the property shall forthwith be again put up and sold.
On payment of the purchase-money the officer holding the sale shall grant a
receipt for the same, and the sale shall become absolute as against all
per-sons whomsoever." As some point was made before us of a violation in
the instant case of the provisions of ss. 172 and 173, we shall read these also
327 "172. When the sale is. subject to confirmation, the party who is
declared to be the purchaser shall be required to deposit immediately
twenty-five per centum on the amount of his bid, and in default of such deposit
the property shall forthwith be again put up and sold. The full amount' of
purchase-money shall be paid by the purchaser before sunset of the day after he
is informed of the sale having been confirmed, or, if the said day be a Sunday
or other authorized holiday, then before sunset of the first office day after
such day. On payment of such full amount of the purchase-money, the purchaser
shall be granted., a receipt for the same, and the sale shall become absolute
as against all persons whomsoever." "173. In all cases of sale of
immovable property, the party who is declared to be the purchaser shall be
required to deposit immediately twenty-five per centum on the amount of his
bid, and in default of such deposit the property shall forthwith be again put
up and sold." Section 175 sets out the effect of a default in payment of
purchase-money and this runs:
"175. In default of payment within the
prescribed period of the full amount of purchase-money, whether of movable or
immovable property, the deposit, after defraying therefore the expenses of the
sale, shall be forfeited to the Provincial Government, and the property shall
be resold, and the defaulting purchaser shall forfeit all claim to the property
or to any part of the sum for which it may be subsequently sold." Section
178 enables sales to be set aside for irregularity and this section runs 328
"178. At any time within thirty days from the date of the sale of
immovable property application may be made to the Collector to set aside the sale
on the ground of some material irregularity, or mistake, or fraud, in
publishing or conducting it;
but, except as is otherwise provided in the
next following section, no sale shall be set aside on the ground of any such
irregularity or mistake, unless the applicant proves to the satisfaction of the
Collector that he has sustained substantial injury by reason thereof.
If the application be allowed, the Collector
shall set aside the same and direct a fresh one." The consequential
provision is in s. 179 which reads:
"179. On the expiration of thirty days
from the date of the sale, if no such application as is mentioned in the last
preceding section has been made, or if such application has been made and
rejected, the Collector shall make an order confirming the sale; provided that,
if he shall have reason to think that the sale ought to be set aside
notwithstanding that no such application has been made, or on grounds other
than those alleged in any application which has been made and rejected, he may,
after recording his reasons in writing, set aside the sale." and s. 182
enacts :
"182. The certificate shall state the
name of the person declared at the time of sale to be the actual purchaser; and
any suit brought in a Civil Court against the certified purchaser on the ground
that the purchase was made on behalf of another person not the certified
purchaser, though by agreement the name of the certified purchaser was used,
shall be dismissed." 329 Section 214 of the Code empowers a State
Government by a notification published in the official gazette to make rules
not inconsistent with the provisions of the Act to carry out the purposes and
objects of the Act and for the guidance of all persons in matters connected
with the enforcement of the Act or in cases not expressly provided for therein.
In the Rules framed under the Code Ch. XVIII is concerned with making provision
for sales. Rule 128 which is the second of the Rules in this Chapter.
prescribes "Where any land or other property is sold by public auction, an
upset price shall, if the Collector thinks fit, be placed thereon;
Provided that where in the opinion of the
Collector difficulty is likely to be experienced in effecting speedy recovery
of the arrears or bidders are likely to be deterred from offering bids, no such
upset price shall be placed." Rule 129 has a new sub-r. (4) added after
the sales which are now in controversy were effected reading :
"Where in the opinion of the Collector
difficulty is likely to be experienced in effecting speedy recovery of the
arrears or bidders are likely to be deterred from offering bids, it shall be
lawful for the Collector or his nominee to bid at the auction and purchase the
land or other property for a bid of rupee one." We shall now proceed to
narrate the proceedings that preceded the impugned sales where are stated to be
in contravention of statutory provisions.
Before doing so, however, we might point out
that in regard to the sale of the house in the village of Kurhe no irregularity
which would vitiate the sale as pointed out, and the only complaint was that
the house which was estimated to the worth about Rs. 200/was sold for an
inadequate sum of Rs. 76/-. Obviously standing alone this could not be a ground
for holding 330 the sale void. In the rest of this judgment, therefore, we
shall confine our attention to the sale of the three plots bearing Survey Nos.
35, 40 and 80 which were purchased by the Government for a nominal bid of Re.
1/-.
The relevant facts in relation to the sale of
these three plots were these: In January 1934 the Mahalkari of Edalabad brought
to the notice of the Collector of East Khandesh that an amount of over Rs.
9,000/was due in respect of excise transactions from the plaintiff and his
father and he pointed out that the amount remained unrecovered notwithstanding
that the defaulter's movable property was put up for sale eighteen times and
his immovable property eight times. He suggested to the Collector that
"'in order to bring home a sense of responsibility to the defaulters and
to make them realise the need for quickly paying up the arrears", the
procedure laid down in a Government order dated August 30, 1933, might be
applied to them. The procedure indicated was that contained in a Government
resolution in the Revenue department bearing No. 474 of 1933 that "if
defaulters were contumacious the Collector would have authority to purchase on
behalf of Government the defaulter's property on a nominal bid." By this
letter the Mahalkari desired to have the permission of the Collector to make a
nominal bid of Re. 1/at the next auction of' the defaulter's property. The
principal question raised in this appeal is whether or not the procedure
indicated in this resolution is in accordance with the provisions of the Land
Revenue Code. Before continuing the narrative it is necessary to refer to a
further resolution No. 4135 of April 16, 1936, which ran "The procedure of
purchasing on behalf of Government a defaulter's property nominal bid should be
adopted in order a speedy recovery of Government by offering a order to effect
dues in cases where a real difficulty is experienced in making 331 such
recoveries and no purchaser is forthcoming to buy the land......... It should
not be adopted except as a last resort when various remedies for the recovery
of dues have failed or unless it is clear that bidders are deterred from
offering bids by other reasons than purely economic considerations." The
reason for the adoption of this procedure was stated to be that it would
produce a good deterrent effect and would put a stop to any obstructive tactics
on behalf of defaulting licensees.
The permission sought was granted by the
Collector enabling the Mahalkari to bid at the auction. Thereafter the
Mahalkari intimated the defaulters the plaintiff and his father that if no
bidder came forward at the time of the public auction-sale and nobody bid, the
lands mentioned in the proclamation would be sold at a nominal price of Re.
1/and it was after this notice that the
purchase by Government on the above terms was effected. The sales were held, no
stranger bid at the sale and thereupon the Mahalkari acting under the
resolution of Government and the terms of the permission granted by the
Collector, made a nominal bid of Re. 1/for each lot on behalf of the Government
and the bids were accepted and thereafter the sales were confirmed.
The validity of the sale was attacked before
us on several grounds : (1) that under r. 128 the Collector was bound to have
fixed an upset price and that his failure to do so rendered the sale void., (2)
Rather inconsistently with this that the Collector had actually fixed an upset
price and that in theface of this fixation the purchase by the Mahalkari on
behalf of the Government for a nominal sum of Re. 1/was illegal and rendered
the sale void., (3) that on the terms of section 171, the sale-price had to be
paid for at the time of the sale and that as this was not done, the
sale-officer was statutorily bound to have put up 332 the property for sale
again, (4) that ss. 172 and 173 laid an obligation on the purchaser to deposit
25 per cent of the sale-price immediately the bid was knocked down and further
required him to pay the balance within 15 days thereafter and also prescribed
the consequences of default, viz., the sale shall be avoided and that a resale
shall take place and that in the present case the Mahalkari who bid on behalf
of the Government, or the Government itself had not made either the deposit or
the final payment with the result that the purchase stood automatically
cancelled by reason of that default and (5) that the purchase by the Government
on a nominal bid of Re.1/was not a sale by public auction as was contemplated
by s. 167 of the Code and in consequence the sale was void and that no title
passed by reason of that sale.
As regards the first four of the objections
set out above, they have, in our opinion, no substance on the facts of the
present case. We do not however consider it necessary to deal with them because
they were raised for the first time in this Court and they involve questions of
fact which were not the subject of pleading or investigation in the Courts
below. We intimated to the learned Counsel that we would not permit him to urge
those grounds before us. It is only the last of these grounds that therefore
requires to be considered.
This raises a question of some importance in
the law relating to revenue sales. The question of the validity of such sales
was raised before the High Court of Bombay on an earlier occasion and the
judgment of the Court is reported in Pumdu Dhansing v. Government for the
Province of Bombay (1). The Court was then concerned with an auction-sale
conducted by the Mamlatdar---a revenue officer of the Government by which a
property of a substantial value belonging to a surety for a toll-contractor was
sold to the Revenue-Patel acting for and on behalf of the government for a
nominal sum of Re. 1/-. The (1) I. L. R. 1947 Bom. 75.
333 contractor was in default and for the
recovery of the amount due from him the provisions of Ch. XI of the Bombay Land
Revenue Code became applicable. Several attempts were made to sell the property
of the defaulter and the reserve prices which were fixed for the lots were
never reached.
Subsequently at 'the next auction when no
bids were forthcoming, the Patel acting under the orders of the Collector made
a bid on behalf of Government, of Re. 1/for each lot and this was accepted by
the Mamlatdar who was conducting the auction, and this sale was confirmed later
by the Collector and possession was thereafter taken of the property thus
purchased. It was the validity of this sale that was challenged in a suit filed
by the defaulter.
Support for the validity of the sale was
sought in the resolutions of the Government of 1933 and 1936 which we have
extracted earlier. On the facts of the case before the Court there were certain
special features to which attention was drawn by the learned judges : (1) The
first was that the proclamation of sale set out that a reserve price had been
fixed and where a sale was subject to such a condition, "the conditions of
sale" which are prescribed by the rules made a special provision
invalidating the acceptance of bids below the reserve price, (2) there was no
evidence that the defaulter had been served with any special notice that the
different procedure of the purchase for a nominal price by government would be
resorted to. Though the learned judges pointed out these two features, the
reasoning by which they held the sale void rested on wider grounds. Stone C.J.
speaking for the Court said:
"The production of the nominal one rupee
for all the property, cannot be regarded as bid at an auction sale for property
lotted into five lots with a separate reserve price on each.
The word "nominal' shows that there was
nothing of substance about the offer and the endorsements 334 and formalities
by which an attempt was made to give some semblance regularity to what was done
cannot in my opinion cloak in legal guise that which was nothing better than a
device to vest the appellant's property in a Revenue Officer holding on behalf
of Government. The Bombay Land Revenue Code contains no power either to forfeit
or to foreclose a defaulter's property. Yet the scheme formulated by the
Resolutions referred to at the commencement of this judgment aims in effect at
bringing about such a result, for, if effective it would achieve the
extinguishment in favour of Government of all the appellant's rights and
ownership in his land. In my judgment what took place at the alleged auction
sale was of no effect and did not give to the Revenue Pail or to Government any
right, estate or interest in the appellant's property." When the present
appeal was before the learned judges of the Bombay High Court it was pressed
before the Division Bench which heard the appeal in the first instance that the
reasoning of the decision in Tumdu Dhansing v. Government for the Province of
Bombay (1) governed the present case also and entitled the plaintiff to succeed
and that the appeal should be dismissed. The learned judges observed:
"It must be conceded that if the
decision in Tumdu Dhansing v. Government for the Province of Bombay represents
good law, the decision of the trial Court is correct".
They however, went on to say :
"With respect however, to the learned
judges who decided that case (Tumdu Dhansing v. Government for the Province of
Bombay) we find great difficulty in understanding the reasoning and doubt
whether the conclusion is correct".
(1) I. L. R. 1947 Bom. 75.
335 They therefore suggested a reference to a
Full Bench for an answer to the question :
"Whether when at a sale held under s.
153 of the Bombay Land Revenue Code the land is purchased by the Government
under a nominal bid the sale is either void or voidable":
The learned Judges of the Full Bench however
without deciding whether the decision in Tumdu Dhansing v.
Government for the Province of Bombay was
right or wrong, upheld the sale in the present case on certain distinguishing
features : (1) the sale proclamation in the present case did not fix a
reserveprice and therefore there was no purchase for a nominal sum in disregard
of the price so fixed, (2) Before the bid for a nominal sum and a sale by the
acceptance of such a bid notice had been given to the defaulter stating that the
Government intended to pursue that course. Though on these grounds they held
the sale not to be void, the learned judges proceeded to point out that this
practice of purchasing property for nominal bids was neither fair nor
equitable. With this answer the case came back to the Division Bench where the
appeal by the defendant was allowed.
The question now for our consideration is
whether a sale for a "nominal" bid of Re. 1/is "a sale by
auction" within the provisions of the Bombay Land Revenue Code. Before
entering on a discussion of the relevant provisions it is necessary to state
that the Government Resolutions of 1933 and 1936 do not purport to have and
have no statutory force at all.
They cannot authorise or render valid the
transaction if otherwise it lacked a legal basis. A further matter which
requires to be pointed out is that para. (4) of r. 129, already set out, which
authorises the purchase by Government for a nominal price was added only in
1946 long after the sales in the present case and cannot serve as any basis for
sustaining the validity (1) I. L. R. 1947 Bom. 75.
336 of the sale. In the circumstances it is
not necessary to consider the scope or validity of this rule or its legal
efficacy for authorising such a sale or purchase.
It is common ground that the power of
Government to affect a sale by summary process for the recovery of amounts due
to them has to be gathered from the four comers of Ch. XI of the Code read in
conjunction with the relevant rules in Ch.
XVIII. Section 155 of the Code enables the
Collector to cause the right, title and interest of the defaulter in the
immovable property to be sold. The manner in which those sales might take place
is provided for by s. 167 which enacts that "sales shall be by public
auction by such person as the Collector may direct." Leaving aside for the
moment the provisions which detail the procedure to be followed in the conduct
of these sales, the point to be observed is that the realisation of the dues
has to be by "sates" by public auction to be held in the manner
prescribed. This therefore does not and cannot authorise a forfeiture of the
immovable property of a defaulter because of his contumacious conduct in not
paying up his dues when demanded. Nor does the Land Revenue Code contemplate or
provide for any punishment of defaulters because of their conduct in either not
paying up their dues or in not facilitating the realisation of the dues payable
by them by co-operating with the Government and securing a proper price for
their property such as would be sufficient for the discharge of their dues.
While on this point it might be interesting to point out that s. 58 of the
Revenue Sale Law (Bengal Revenue Sale Law) Act 11. of 1 859 enacts:
"'When an estate is put up for sale
under this Act for the recovery of arrears of revenue due thereon, if there be
no bid the Collector or other officer as aforesaid may purchase the estate on
account of the Government for one rupee ...................." 337 There is
no provision corresponding to this in the Bombay Code. The question then arises
whether a purchase for a predetermined nominal price of rupee one for property,
whatever its actual market value, is a sale by public auction within s. 167 of
the Code. An auction has been described as "'the proceeding at which
people are invited to compete for the purchase of property by successive offers
of advancing sums" and a sale by auction is a means of ascertaining what
the thing is worth, viz., its fair market price. If at the sale there are no
bids there cannot be a sale. A sale for a predetermined nominal sum cannot, in
our opinion, be held to be a "sale by public auction" in the absence
of any provision for such sales in the statute.
Such a sale appears to us to be somewhat
analogous to what Sir Richard Couch described, though in a slightly different
context. "'The offer and acceptance of a rupee was a colorable attempt to
obtain a title without paying for the land. Virtually it was a present which it
was not open to the authorities to make". (vide Luchmeswar Singh v. the
Chairman, of the Darbhanga Municipality(1). It may not also be out of place to
point out that it is the Collector who on behalf of Government sets in motion
the machinery for the realisation of the arrears by bringing the defaulter's
property to sale and it is he who is by the Land Revenue Code invested with the
power to make arrangements for the sale and s. 178 constitutes him the
authority to determine judicially any allegation about the irregularity in the
conduct of the sale. In these circumstances it looks to us somewhat anomalous
that the Collector should of his own motion and without the authority of any
statutory power claim the right to bid at the auction which his deputy is
conducting on his behalf for the realisation of the dues which he as the
executive authority is to recover and particularly when he is constituted the
authority to consider the validity or irregularity in the auction conducted at
his instance and the purchase made at his instance.
(1) (1890) 1. I,. R. 18 Cal. 99, 106.
338 The next question for consideration is
whether the fact that the defaulter was appraised that Government would bid for
a nominal sum of one rupee for the property at the auction renders the sale
valid. We do not find it easy to discover the precise legal basis upon which
prior notice to the defaulter would have the effect of validating the sale. If
a sale for a nominal bid of one rupee were "a sale by public auction"
within s. 167 of the Code, notice to the defaulter that such a procedure would
be followed would be legally unnecessary and would not add to the legal
efficacy of the sale. If, on the other hand, such a sale or a sale in such
circumstances was not a sale by public auction then notice to the defaulter
could be of value only if (a) it operated as a waiver of the requirement of s.
167, or (b) created an estoppel which precluded him from questioning the
legality of the proceeding. First as to waiver, the power of Government to
effect the sale by summary process is a special provision resting on public
grounds and being so very special it is clear that the limitations on the power
thus conferred should be strictly construed. In our opinion, it is an essential
condition of the passing of property from the defaulter in invitem that there
should be a sale by public auction and if a sale in the manner in which it has
been conducted in the present case does not amount to a sale by public auction
there is no question of the title to property passing by virtue of such a sale.
The plea of waiver cannot therefore be of any avail.
Nor is there any basis for any argument that
by reason of the notice the defaulter is estopped from questioning the legality
of the sale. If waiver cannot cure the defect there is still less scope for
invoking the rule as to estoppel, for the essential condition of estoppel,
viz., representation by the person sought to be estopped and prejudice to the
person seeking the benefit of the rule, would both be absent. We therefore 339
come to the conclusion that the fact that the defaulter was informed that the
Government would make a nominal bid of rupee one and purchase the property is
really irrelevant for considering the validity of the sale.
The conclusion we have indicated earlier is
in accord with the decision of the Bombay High Court in Tumdu Dhansing v.
Government for the Province of Bombay(1) and
we consider that that case is correctly decided. We are further of opinion that
the ratio of that decision would also cover the case where notice was served on
the defaulter of the Government's intention to purchase the property for a
nominal price.
Learned Counsel for the respondent raised
several defenses besides seeking to support the judgment of the High Court on
the reasoning of the learned judges and sought to sustain the impugned sale on
various grounds. His first submission was that the sale was at the worst
irregular which rendered it voidable and that no suit having been brought
within one year of the sale, the suit was barred by Art. 11 of the Indian
Limitation Act. We consider however that there is no substance in this
contention because if, as we hold, a sale of the type now impugned was not
authorised by the statutory provision in that regard then it was not a question
of any mere irregularity in the conduct of a sale but a case where there was no
sale at all with the consequence that no property passed from the defaulter. It
was not disputed that Art. II of the Indian Limitation Act would only apply to
a case where there is need for the setting aside of a sale and that it has no
application to cases where no sale as contemplated by law has taken place.
It was next submitted that the appellants'
suit was barred by ss. 4 (c) and II of the Bombay Revenue (1) 1. L. R. 1947
Bom. 75.
340 jurisdiction Act, 1876. Section 4(c)
runs:"4. Subject to the exceptions hereinafter' appearing, no Civil Court
shall exercise jurisdiction as to any of the following matters:
(a)..........................................
(b)...........................................
(c)...........................................
claims to set aside, on account of
irregularity, mistake or any other ground except fraud, sales for arrears of
landrevenue;
and s. 11 enacts:
"11. No Civil Court shall entertain any
suit against the Government on account of any act or omission of any
Revenue-Officer unless the plaintiff first proves that previously to bringing
his suit, he has presented all such appeals allowed by the law for the time
being in force, as within the period of limitation allowed for bringing such
suit, it was possible to present." As to the applicability of s. 4 (c), it
would be noticed that resort to the Civil Courts is barred only as regards
certain specified classes of suits in which the validity of sales for arrears
Land Revenue are impugned. The classes so specified are those in which the
plaintiff seeks to set aside a sale on account of irregularities etc., other
than fraud. The provision obviously assumes that there is in existence a sale
though irregular under which title has passed to the purchaser and that sale
has to be set side, on grounds other than fraud, before the plaintiff can
obtain relief. Where however there is only a purported sale which does not pass
title and the suit is for recovery of possession of property ignoring 341 such
a sale, the provision and the bar that it creates have no application.
Nor is there any scope on the facts of the
present case to attract the application of s. 11. The section is based on the
principle that a party must exhaust the remedies provided by the Act before he
can seek the assistance of the Civil Court in respect of a claim against the
Government.
It therefore posits three matters before its
protection could be invoked. (1) There must be an act or omission of a revenue
officer which gives rise to a claim against the Government; (2) the Act must
provide for appeals against the said act or omission; and (3) lastly the party
should have failed to avail himself of the remedy by way of appeal to obtain
redress for his grievance. The only "act" of which, on the facts, the
appellant could be said to complain would be the direction by the Collector
anthorising the Mahalkari to offer the nominal bid of Re. 1/and purchase the
property. The question that next arises is whether the Statute had provided an
appeal against this "act" It was admitted that there was no such
specific provision. Learned Counsel for the respondent however drew our
attention to s. 203 of the Bombay Land Revenue Code.
"203. In the absence of any express
provision of this Act or of any law for the time being in force to the
contrary, an appeal shall lie from any decision or order passed by a revenue
officer under this Act or any other law for the time being in force, to that
officer's immediate superior, whether such decision or order may itself have
been passed on appeal from a subordinate officer's decision or order or
not." In the present case however, there was no order by any authority
which could be the subject of any appeal under s.
203. The Collector authorised administratively
the Mahalkari to offer the bid and that is certainly not "'a
decision" which is capable of 342 appeal within s. 203. No other order
which could by any stretch of language be construed to be a decision was
pointed out in respect of which an appeal could have been filed. In fact, there
was no decision and except the sale which is complained of as void and of no
effect nothing took place. If s. 203 is not attracted it was not suggested that
s. 1 1 of the Revenue jurisdiction Act created any bar to the entertainment of
the present suit.
It was then suggested that the plaintiff was
disentitled to any relief by reason of an estoppel raised by s. 41 of the
Transfer of Property Act. The basis for this argument was that some time after
the sale the second defendant had purchased the plot bearing Survey No. 80 for
Rs. 2,600/from the Government while the fifth defendant similarly purchased
plots bearing Survey Nos. 35 and 40 for Rs. 1,750/and that the inaction of the
plaintiff without taking proceedings to set aside the sale constituted a
representation to the world that the Government were properly the owners of the
property which they had purchased for nominal bids and this was the reasoning
by which s. 41 of the Transfer of Property Act was sought to be invoked.
The argument has only to be stated to be
rejected. The respondent did not rely on any representation or any act or
conduct on the part of the appellant but their belief that Government had
acquired title by reason of their purchase at the revenue sale. If the
Government had no title to convey, it is manifest the respondents cannot
acquire any. They would clearly be trespassers. In the circumstances we
consider there is no scope for invoking the rule as to estoppel contained in s.
41 of the Transfer of Property Act.
Lastly, it was submitted that the respondents
had made improvements to the property since they had purchased them for which
they were entitled to compensation under s. 51 of the Transfer of Property Act.
But no basis was laid for this plea which is 343 one of pure fact. No evidence
was led and no issues struck before the trial judge and we do not therefore
think it proper to entertain this point at this stage.
The Government of Bombay did not file any
Written Statement before the trial-judge, nor did they seek to support the sale
before the High Court. As we have stated, they were impleaded as the first
respondent in the appeal before this Court. In their statement of the case
which they filed they did not oppose the appeal but left it to the Court to
decide the matter and they took no part in the hearing except that learned
Counsel appearing on their behalf made a statement that no order as to costs
might be passed against them.
In the result the appeal is allowed and the
suit decreed as regards the three items of land bearing Survey Nos. 35, 40 and
80. The appeal will however stand dismissed as regards the,house in village
Kurhe. In view of the partial success of the appellant the appellant will be
entitled to half of the costs of the appeal here to be paid by the respondents
other than the State of Bombay (now Maharashtra).
Appeal partly allowed.
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