Dhirendra Nath Gorai and Subal
Chandrashaw & Ors Vs. Sudhir Chandra Ghosh & Ors [1964] INSC 55 (4
March 1964)
04/03/1964 SUBBARAO, K.
SUBBARAO, K.
GUPTA, K.C. DAS DAYAL, RAGHUBAR
CITATION: 1964 AIR 1300 1964 SCR (6)1001
CITATOR INFO:
RF 1981 SC 693 (5,6)
ACT:
Execution-Court sale of property in execution
of a decree in respect of a loan-Judgment-debtor not objecting to valuation
even after service of notice-Application for setting aside the sale on the
ground of 1002 non-compliance of the provisions of s. 35 of the Bengal Money
Lenders Act-Maintainability-Sale if, valid-Bengal Money Lenders Act, 1940 (10
of 1940), s. 35-Code of Civil Procedure, 1908 (V of 1908), O.XXI, rr. 64, 66
and 90.
HEADNOTE:
In execution of a decree passed in a mortgage
suit, the appellant annexed in the execution application a Schedule comprising
of 11 properties sought to be sold for the satisfaction of the claim. The
appellant gave valuation of the said properties. Though the 1st respondent
received a notice under O.XXI, r. 66 of the Code of Civil Procedure, he did not
file any objection to the valuation. Though he got the sale adjourned a number
of times promising to pay the decretal amount, he failed to do so. Finally, two
of the said properties were sold. The 1st respondent then filed an application
in the executing court for setting aside the said sale under O.XXI, r. 90 of
the Code of Civil Procedure, inter alia, on the ground that s. 35 of the Bengal
MoneyLender's Act was not complied with. The learned subordinate Judge held
that there was no fraud in publishing and conducting the sale, that the price
of the lots sold was fair and that the sale was not vitiated by reason of
infringement of s. 35 of the Act. On appeal, the High Court held that though
there had not been any substantial injury to the 1st respondent, the provisions
of s. 35 of the Act were mandatory and. therefore, the infringement of the said
provisions would invalidate the sale. In this Court it was contended on behalf
of the appellants that whether s. 35 of the Act was mandatory or directory, the
sale held in violation of the said provision was only illegal but not a nullity
and, therefore, it could be set aside only in the manner and for the reasons
prescribed in O.XXI, r. 90 of the Code of Civil Procedure, and further that, as
the respondents did not attend at the drawing up of the proclamation of sale,
the sale could not be set aside at their instance.
Held: The non-compliance with the provisions
of s. 35 of the Act is a defect or a irregularity in publishing or conducting
the sale. A party who received the notice of the proclamation but did not
attend at the drawing up of the proclamation or did not object to the said
defect cannot maintain an application under O.XXI, r. 90 of the Code of Civil
Procedure. Even if he could, the sale cannot be set aside unless by reason of
the said defect or irregularity he had sustained substantial injury.
Ashram Thikadar v. Vijay Singh Chopra, I.L.R.
(1944) 1 Cal.
166, distinguished.
Manindra Chandra v. Jagdish Chandra, (1945)
50 C.W.N. 266 and Maniruddin Ahmed v. Uman prasamma,(1959) 64 C.W.N. 20,
approved.
On a true construction of s. 35 of the Act,
it must be held that it was intended only for the benefit of the judgment debtor
and, therefore, he could waive the right conferred on him under s. 35 of the
Act.
Case law reviewed.
1003 If that be the legal position, O.XXI. r.
90 of the Code of Civil Procedure is immediately attracted. The concurrent
finding of the courts is that by reason of the nonobservance of the provisions
of s. 35 of the Act no substantial injury was caused to the judgment-debtor.
Further, though notice was given to the judgment debtor' in one case he did not
file objection at all and in the other case, though the judgment-debtor filed
objections, he did not attend at the drawing up of the proclamation. The sales
are, therefore, not liable to be set aside under the terms of the said
provision.
CIVIL APPELLATE JURISDICTION: C.A. Nos. 85
and 86 of 1961.
Appeals from the judgment and decree dated
November 23, 1954 of the Calcutta High Court in Appeals from Original Orders
Nos. 84 and 83 of 1953.
B. Sen and P. K. Ghosh, for the appellants
(in both the appeals).
Sukumar Ghosh, for the respondents Nos. 12
and 13 (in C.A. No. 85 of 1961).
March 4, 1964. The Judgment of the Court was
delivered by SUBBA RAO J.-These two appeals raise the question of the validity
of the court sale held in contravention of s. 35 of the Bengal Money-Lenders
Act, 1940 (Bengal Act X of 1940), hereinafter called the Act.
The facts in both the appeals may be briefly
stated. In Civil Appeal No. 85 of 1961, Sudhir Chandra Ghosh, respondent No. 1,
executed a first mortgage in favour of one Provash Chandra Mukherjee, since
deceased, for a sum of Rs.
12,000/-. Respondent No. 1 executed a second,
third and fourth mortgages in favour of the appellant for a total sum of Rs.
7,700/-. He also executed another mortgage in favour of the 9th respondent. In
the year 1948 respondents 2 and 3, representing the first mortgagee's estate,
filed Title Suit No. 8 of 1948 in the 7th Additional Court of the Subordinate
Judge at Alipore, for enforcing the first mortgage. To that suit the puisne
mortgagees were also made parties. On May 24, 1948, a preliminary decree by
consent was made in the suit where under the judgment1004 debtor was directed
to pay a sum of Rs. 15,473-7-9 to the appellant in 7 equal annual installments.
As the judgment debtor failed to pay the said amount, in due course a final
decree was passed in the mortgage suit on or about February 2, 1949.
Thereafter, the decree was put in execution on January 31, 1950, and in the
said execution application a schedule of properties sought to be sold for the
satisfaction of the said claim was annexed. The schedule comprised 11 properties
and the appellant gave valuation of the said properties. Though the 1st
respondent received a notice under O. XXI, r. 66 of the Code of Civil
Procedure, he did not file any objection to the valuation. Though the first
respondent got the sale adjourned a number of times promising to pay the
decretal amount, he failed to do so.
Finally two of the said properties were put
up for sale on June 23, 1951, and one of the said properties was purchased by
the 12th respondent for a sum of Rs. 11,800/and the other, by the 13th
respondent for a sum of Rs. 10,100/-. On July 21, 1951, the 1st respondent
filed an application in the executing court for setting aside the said sale
under O.
XXI, r. 90 of the Code of Civil Procedure,
inter alia, on the ground that s. 35 of the Act was not complied with. The
learned Subordinate Judge held that there was no fraud in publishing and
conducting the sale, that the price of the lots sold was fair and that the sale
was not vitiated by reason of infringement of s. 35 of the Act. On appeal a
Division Bench of the High Court held that though there had not been any
substantial injury to the 1st respondent, the provisions of s. 35 of the Act
were mandatory and, therefore, the. infringement of the said provisions would
invalidate the sale. In that view, it set aside the sale and directed the
appellant to refund the money with interest.
Civil Appeal No. 86 of 1961 also arises out
of the same execution proceedings. Under the said compromise preliminary decree
the judgment-debtor agreed to pay the decretal amount of Rs. 25,687/to the
executors of the estate of the first mortgagee, respondents 2 and 3. As the
amount was not paid, the said respondents filed an application in the 7th Court
of the Additional Subordinate Judge, Alipore, for the execution of the said
decree. In the 1005 execution petition 8 properties were described and their
valuations were given. The judgment-debtor filed objections to the valuations
given by the decree-holders, but on the date fixed for settling the valuations
of the said properties neither the judgment-debtor nor his advocate appeared in
court. The learned Subordinate Judge, by his order dated February 11, 1950,
directed that both the valuations of the decree holders and the judgment-debtor
be noted in the sale proclamation. Thereafter the sale proclamation was duly
issued and the date of the sale was fixed for May 11, 1950. The judgment-debtor
took as many as 15 adjournments of the sale promising to pay the decretal
amount, but did not do so. Finally the sale of the properties was fixed for
June 23, 1951 and on that date two lots of the property were sold in execution
and the appellants purchased lot No. 1 at a price (if Rs. 14,000/and respondent
No. 9 purchased Lot No. 2 at a price of Rs. 19,600/-. On July 21, 1951, the 1st
respondent filed an application before the learned Subordinate Judge for
setting aside the sale under O. XXI, r. 90 of the Code of Civil Procedure, on
grounds similar to those raised in the other application, the subject-matter of
Civil Appeal No. 85 of 1961. The said application was heard by the learned
Subordinate Judge along with the said other application.
For the same reasons, he dismissed the
application. On appeal, the Division Bench of the High Court heard the appeal
along with the connected appeal and set aside the sale. The present appeals are
filed by certificate against the common judgment of the High Court in both the
matters.
Mr. Sen, learned counsel for the appellants
in both the appeals, contends that whether s. 35 of the Act is mandatory or
directory the sale held in violation of the said provision is only illegal but
not a nullity and, therefore, it can be set aside only in the manner and for
the reasons prescribed in O. XXI, r. 90 of the Code of Civil Procedure, and further
that, as the respondents did not attend at the drawing up of the proclamation
of sale, the sale cannot be set aside at their instance.
To appreciate the argument it is necessary
and convenient to read at the outset the relevant provisions of the Act and the
Code of Civil Procedure.
1006 Section 35 of the Act.
"Notwithstanding anything contained in
any other law for the time being in force, the proclamation of the intended
sale of property in execution of a decree passed in respect of a loan shall specify
only so much of the property of the judgment-debtor as the Court considers to
be saleable at a price sufficient to satisfy the decree, and the property so
specified shall not be sold at a price which is less than the price specified
in such proclamation :
Provided that, if the highest amount bid for
the property so specified is less than the price so specified, the Court may
sell such property for such amount, if the decree-holder consents in writing to
forego so much of the amount decreed as is equal to the difference between the
highest amount bid and the price so specified." CODE OF CIVIL PROCEDURE
Order XXI, r. 64 Any Court executing a decree may order that any property
attached by it and liable to sale, or such portion thereof as may seem necessary
to satisfy the decree, shall be sold, and that the proceeds of such sale, or a
sufficient portion thereof, shall be paid to the party entitled under the
decree to receive the same.
Order XXI, r. 66.
(1) Where any property is ordered to be sold
by public auction in execution of a decree, the Court shall cause a
proclamation of the intended sale to be made in the language of such Court.
(2) Such proclamation shall be drawn up after
notice to the decree-holder and the judgment 1007 debtor and shall state the
time and place of sale, and specify as fairly and accurately as possible(a) the
property to be sold;
Order XXI, r. 90.
(1) Where any immovable property has been
sold in execution of a decree. the decree holder, or any person entitled to
share in a rateable distribution of assets or whose interests are affected by
the sale, may apply to the Court to set aside the sale on the ground of a
material irregularity or fraud in publishing or conducting it or on the ground
of failure to issue notice to him as required by rule 22 of this Order :
Provided (i) that no sale shall be set aside
on the ground of such irregularity, fraud or failure unless. upon the facts
proved. the Court is satisfied that the applicant has sustained substantial
injury by reason of such irregularity, fraud or failure.
(ii) that no sale shall be set aside on the
ground of any defect in the proclamation of sale at the instance of any person
who after notice did not attend at the drawing up of the proclamation or of any
person in whose presence the proclamation was drawn up, unless objection was
made by him at the time in respect of the defect relied upon.
Under O. XXI. r. 64 of the Code of Civil
Procedure, the executing court may order that any property attached by it and
liable to sale or such portion thereof as may seem necessary to satisfy the
decree shall be sold. Under r. 66 of the said Order of the Code when a property
is ordered to be sold in public auction in execution of a decree the court
shall cause a proclamation of the intended sale to be made and such
proclamation shall specify as fairly and accurately as possible, among others,
the property to 1008 be sold and such proclamation shall be drawn up after
notice to the decree-holder and the judgment-debtor: under sub-r.
(4) thereof, the court may summon and examine
any person or require him to produce any document in his possession or power
relating thereto. Under the said provisions the court has power to direct the
sale of the entire property attached or a part thereof sufficient to satisfy
the decree and it shall also specify the said property directed to be sold in
the proclamation fixed after giving notice to both the decree-holder and the
judgment-debtor. Under s. 35 of the Act a duty is cast upon the court in settling
the proclamation of the intended sale of property in execution of a decree
passed in respect of a loan to which the Act applies to specify only so much of
the property of the judgment debtor as the court considers to be saleable at a
price sufficient to satisfy the decree and not to sell the property so
specified at a price which is less than the price so specified in such
proclamation. This provision is in effect a statutory addition to O. XXI, r. 66
of the Code of Civil Procedure. Indeed, this provision could have been added as
another clause to the said rule. This statutory provision pertains to the field
of proclamation. The rule says so in terms. The said two conditions are also
steps to be taken by the court in the matter of publishing or conducting the
sale. If a sale is held without complying with the said conditions, what is the
remedy open to a party affected thereby to get the sale set aside? Order XXI,
r.
90 of the Code in terms provides for the
remedy. It says that a person whose interests are affected by the sale may
apply to the court to set aside the sale on the ground of a material
irregularity or fraud in publishing or conducting it or on the ground of
failure to issue notice to him as required by r. 22 of the Order. As the
non-compliance with the said conditions is a material irregularity in
publishing or conducting the sale the court under the first proviso to O. XXI,
r. 90 of the Code cannot set aside the sale unless it is satisfied that the
applicant had sustained substantial injury by reason of such irregularity. That
apart, under the second proviso to the said rule, no sale shall be set aside on
the ground of any defect in the proclamation of sale at the instance of any
person, who after notice did not attend at the drawing up 1009 of the
proclamation or of any person in whose presence the proclamation was drawn up
unless objection was made by him at the time of drawing up of the proclamation
in respect of the defect relied upon. Shortly stated, the noncompliance with
the provisions of s. 35 of the Act is a defect or a irregularity in publishing
or conducting the sale. A party who received the notice of the proclamation but
did not attend at the drawing up of the proclamation or did not object to the
said defect cannot maintain an application under O. XXI, r. 90 of the Code of
Civil Procedure. Even if he could, the sale cannot be set aside unless by
reason of the said defect or irregularity he had sustained substantial injury.
On this question a divergence of views is
reflected in the decisions cited at the Bar. Mukherjea and Pal, JJ., in Asharam
Thikadar v. Bijay Singh Chopra(1) set aside the order of the executing court
and sent the case back to that court, as the said court inserted in the
proclamation the valuation of the property given by the judgment-debtor as well
as that given by the decree-holder and did not, as it should do under s. 3 5 of
the Act, determine the price of the property which was to be put up for sale on
proper evidence. This decision has no relevance to the question raised before
us, as the appeal before the High Court was against the order made by the
executing court dismissing the application filed by the judgment-debtor
requesting the court to demarcate the property to be sold pursuant to the
provisions of s. 35 of the Act. The question whether a sale held in
non-compliance with the said provisions could be set aside de hors the
provisions of O. XXI, r. 90 of the Code of Civil Procedure did not arise for
consideration therein.
The question now posed before us directly
arose for decision before a Division Bench of the Calcutta High Court,
consisting of Akram and Chakravartti, JJ., in Manindra Chandra v. Jagadish
Chandra (2) Chakaravartti, J., met the objection raised by the judgment-debtor
who sought to set aside the sale on the ground of non-compliance with the
provisions of s. 3 5 of the Act, thus :
(1) I.I..R. [1944] 1 Cal. 166.
134-159 S.C.-64 (2) (1945) 50 C.W.N. 266,270.
1010 "It (s. 35 of the Act) is a
provision relating to the contents of the sale proclamation and its effect, to
my mind, is to amend or supplement Or. 21, r. 66 (2) (a) which directs the
Court to specify in the sale proclamation "the property to be sold".
Any objection regarding non-compliance with sec. 35 in specifying the property
to be sold is, in my view, a defect in the sale proclamation within the meaning
of the second proviso to Or. 21, r. 90, C.P.C. It follows that an objection
that the sale proclamation did not conform to sec. 35 of the Bengal
MoneyLenders Act cannot avail a judgment-debtor in an application under Or. 2
1, r. 90, if he was present at the drawing up of the sale proclamation and did
not raise any such objection at the time, nor can it avail a judgment-debtor
who, after receiving notice did not attend at the drawing up of the sale
proclamation at all." We agree with this reasoning. Another Division Bench
of the Calcutta High Court, consisting of Guha and Banerjee, JJ., in Maniruddin
Ahmed v. Umaprasanna(1), considered the entire case law on the subject,
including the decision now under appeal, and differed from the view expressed
by S. R. Das -Gupta and Mallick, JJ., in the decision now under appeal and
agreed with the view expressed by Akram and Chakravartii, JJ., in Manidra
Chandra v. Jagdish Chandra (2). The said decisions are in accord with the view
we have expressed earlier. The contrary view is sustained by the High Court in
the present case on the principle that the sale held in contravention of the
provisions of s. 35 of the Act was a nullity and, therefore, no question of
setting aside the sale within the meaning of O. XXI, r. 90 of the Code of Civil
Procedure would arise. This raises the question whether such a sale is a
nullity. If a provision of a statute is only directory, an act done in
contravention of the provision is manifestly not a nullity. Section 35 of the
Act is couched in a mandatory form and it casts in terms a duty on the court to
comply with its (1) (1959) 64 C.W.N. 20.
(2) (1945) 50 C.W.N. 266, 270.
1011 provisions before a sale is held. Prima facie
the provision is mandatory; at any rate, we shall assume it to be so for the
purpose of these appeals.
Even then, the question arises whether an act
done in breach of the mandatory provision is per force a nullity. In Ashutosh
Sikdar v. Behari Lal Kirtania(1), Mookerjee, J., after referring to Macnamara
on "Nullity and Irregularities", observed :
no hard and fast line can be drawn between a
nullity and an irregularity; but this much is clear, that an irregularity is a
deviation from a rule of law which does not take away the foundation or
authority for the proceeding, or apply to its whole operation, whereas a
nullity is a proceeding that is taken without any foundation for it, or is so
essentially defective as to be of no avail or effect whatever, or is void and
incapable of being validated." Whether a provision falls under one
category or the other is not easy of discernment, but in the ultimate analysis
it depends upon the nature, scope and object of a particular provision. A
workable test has been laid down by Justice Coleridge in Holmes v. Russell(2),
which reads:
"It is difficult sometimes to
distinguish between an irregularity and a nullity; but the safest rule to
determine what is an irregularity and what is a nullity is to see whether the party
can waive the objection; if he can waive it, it amounts to an irregularity; if
he cannot, it is a nullity." A waiver is an intentional relinquishment of
a known right but obviously an objection to jurisdiction cannot be waived, for
consent cannot give a court jurisdiction where there is none. Even if there is
inherent jurisdiction, certain provisions cannot be waived. Maxwell in his book
"On the (1) (1908) I.L.R. 35 Cal. 61, 72. (2) [1841] 9 Dowl. 487.
1012 Interpretation of Statutes", 11th
Edn., at p. 375, describes the rule thus:
"Another maxim which sanctions the nonobservance
of a statutory provision is that cuilibet licet renuntiare juri pro se
introducto. Everyone has a right to waive and to agree to waive the advantage
of a law or rule made solely for the benefit and protection of the individual
in his private capacity, which may be dispensed with without infringing any
public right or public policy." The same rule is restated in "Craies
on Statute Law", 6th Edn., at p. 269, thus :
"As a general rule, the conditions
imposed by statutes which authorise legal proceedings are treated as being
indispensable to giving the court jurisdiction. But if it appears that the
statutory conditions were inserted by the legislature simply for the security or
benefit of the parties to the action themselves, and that no public interests
are involved, such conditions will not be considered as indispensable, and
either party may waive them without affecting the jurisdiction of the
court." The Judicial Committee in AL. AR. Vellayan Chettiar v. Government
of Madras(1) pointed out that there was no inconsistency between the
propositions that the provisions of s. 80 of the Code of Civil Procedure were
mandatory and must be enforced by the court and that they might be waived by
the authority for whose benefit they were provided. In that case the Judicial
Committee held that s. 80 of the Code of Civil Procedure was explicit and
mandatory; but still it held that it could be waived by the authority for whose
benefit that was provided. This aspect of the law in the context of s. 35 of
the Act was considered by a Division Bench of the Calcutta High Court in Gaya
Prosad v. Seth (1) [1947] L.R. 74 I.A. 223, 228.
1013 Dhanrupwal Bhandari(1). Dealing with
this argument, P. N. Mookerjee, J., speaking for the court, observed :
"It is true that section 35 of the
Bengal MoneyLenders Act casts a duty upon the court but such duty is solely for
the benefit-the private benefit-of the judgment-debtor. It is, therefore, open
to him to waive this benefit, or, in other words, to waive his objection of
nonobservance of that statutory provision by the court. . . . . .
Guha and Banerjee, JJ., expressed much to the
same effect in Maniruddin Ahmed v. Umaprasanna(2) thus, at p. 30:
"The Bengal Money-Lenders Act, 1940
enacted for the purpose of making better provision for the control of
money-lenders and for the regulation and control of money-lending, has
certainly a public policy behind it. But some of its provisions, and section 35
one of them, are intended for the benefit of the individual judgment debtors
and have no public policy behind them. Such provisions may be waived by the
person for whose benefit the same were enacted." A Division Bench of the
Patna High Court in Sheo Dayal Narain v. Musammat Moti Kuer(3), speaking
through Meredith, J., in the context of the provisions of s. 13 of the Bihar
Money-Lenders (Regulation of Transactions) Act, 1939, which are pari materia
with the provisions of s. 35 of the Bengal Money-Lenders Act, 1940, rejected
the contention that a sale held in contravention thereof was a nullity in the
following words "Illegal the sale may have been, in the limited sense that
it was held in a manner at variance with a mandatory statutory provision.
That provision, however, has no reference at
all to the jurisdiction of the Court. It affords no foundation for (1) (1953)
58 C.W.N. 503. 508.
(2) 64 C.W.N. 20.
(3) (1942), I.L.R. 21 Pat. 281, 286.
1014 the contention that the sale was one
which the Court concerned had no power at all to hold." Where the court
acts without inherent jurisdiction, a party affected cannot by waiver confer
jurisdiction on it, which it has not. Where such jurisdiction is not wanting, a
directory provision can obviously be waived. But a mandatory provision can only
be waived if it is not conceived in the public interests, but in the interests
of the party that waives it. In the present case the executing court had
inherent jurisdiction to sell the property. We have assumed that s. 3 5 of the
Act is a mandatory provision. If so, the question is whether the said provision
is conceived in the interests of the public or in the interests of the person
affected by the non-observance of the provision. It is true that many
provisions of the Act were conceived in the interests of the public, but the
same cannot be said of s. 35 of the Act, which is really intended to protect
the interests of a judgment-debtor and to see that a larger extent of his
property than is necessary to discharge the debt is not sold. Many situations
may be visualized when the judgment-debtor does not seek to take advantage of
the benefit conferred on him under s. 3 5 of the Act; for instance, if the part
of the property carved out by the court for sale is separated from the rest of
his property, the value of the remaining property may be injuriously affected
by the said carving out, in which case the judgment-debtor may prefer to have
his entire property sold so that he may realize the real value of the property
and pay part of the sale price towards the decretal amount. He cannot obviously
be compelled to submit to the sale of a part of the property to his
disadvantage. A provision intended for his benefit cannot be construed in such
a way as to work to his detriment. But it is said that the proviso to s. 35 of
the Act indicates a contrary intention.
Under that proviso, "if the highest
amount bid for the property so specified is less than the price so specified,
the Court may sell such property for such amount, if the decree holder consents
in writing to forego so much of the amount decreed as is equal to the
difference between the highest bid and the price so specified". This is
only an option given to the decree-holder : he may exercise this option, if he
does 1015 not like to go through the entire sale proceedings overagain. In one
contingency this proviso also Works for the benefit of the judgment-debtor, for
he will be relieved of part of his indebtedness. But anyhow this does not show
that the main provision is not intended for the benefit of the judgment-debtor.
We are, therefore, satisfied, on a true construction of s. 3 5 of the Act, that
it is intended only for the benefit of the judgment-debtor and, therefore, he
can waive the right conferred on him under s. 35 of the Act.
If that be the legal position, O. XXI, r. 90
of the Code of Civil Procedure is immediately attracted. The concurrent finding
of the courts is that by reason of the nonobservance of the provisions of s. 35
of the Act no substantial injury was caused to the judgment-debtor.
Further, though notice was given to the
judgment-debtor, in one case he did not file objections at all and in the other
case, though the judgment-debtor filed objections, he did not attend at the
drawing up of the proclamation. The sales are, therefore, not liable to be set
aside under the terms of the said provision.
In the result the orders of the High Court
are set aside and those of the Additional Subordinate Judge are restored. The
appellants will get their costs throughout from the 1st respondent. There will
be one set of hearing fee.
Appeals allowed.
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