Janak Raj Vs. Gurdial Singh & ANR [1966]
INSC 249 (8 November 1966)
08/11/1966 MITTER, G.K.
MITTER, G.K.
WANCHOO, K.N.
CITATION: 1967 AIR 608 1967 SCR (2) 77
CITATOR INFO:
R 1968 SC 86 (7) D 1968 SC 954 (4) R 1982 SC
989 (61) E&R 1990 SC1828 (9) RF 1992 SC 385 (6,7,11)
ACT:
Code of Civil Procedure (Act 5 of 1908),
O.XXI. rr. 89-92-Ex parte money decree-Sale of property in execution-Decree set
aside before confirmation-If sale could be confirmed.
HEADNOTE:
The appellant, a stranger to the suit, was
the auctionpurchaser of the judgment-debtor's immovable property in execution
of an ex parte money decree. On the question whether he was entitled to a
confirmation of the sale, under O.XXI, r. 92, Civil Procedure Code,
notwithstanding the fact that after the holding of the sale the ex parte decree
was set aside.
HELD : The sale should be confirmed.
The law makes ample provision for the
protection of the interests of the judgment-debtor, when his property is sold
in execution. He can file an application for setting aside the sale under the
provisions of O.XXI, rr. 89 and 90.
Apart from exceptional cases when a court
will refuse to confirm a sale because it was held without giving notice to the
judgment debtor, or the court was misled in fixing the reserve price, or where
there was no decree in existence at the time when the sale was held,
ordinarily, if a sale had been validly held, an application for setting it
aside can only be made under O.XXI, rr. 89 to 91. If no such application was
made, or when such an application was made and disallowed, the court has no
choice but to confirm the sale. [78 F-H; 79 H; 80 A-B] Case law reviewed.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1322(N) of 1966.
Appeal from the judgment and order dated
December 24,. 1965, of the Punjab High Court in L.P. Appeal No. 20 of 1965.
The appellant appeared in person.
D. D. Sharma and M. C. Bhatia, for respondent
No. 1.
The Judgment of the Court was delivered by
Mitter, J. This is an appeal from a judgment and order of the Punjab High Court
dated December 24, 1965 on a certificate granted by the said court.
The question involved in this appeal is,
whether a sale of immovable property in execution of a money decree ought to be
confirmed when it is found that the ex parts decree which was put into
execution has been set aside subsequently.
The facts are simple. One Swaran Singh
obtained an ex parte decree on February 27, 1961 against Gurdial Singh for Rs.
519/-. On an application to execute the
decree, a warrant for the attachment 78 of a house belonging to the
judgment-debtor was issued on May 10, 1961. At the sale 'which took place, the
appellant before us became the highest bidder for Rs. 5,100/on December 16,
1961. On the 2nd of January 1962, the judgment-debtor made an application to
have the ex parte decree set aside. On January 20, 1962 he filed an objection
petition against the sale of the house on the ground that the house which was
valued at Rs. 25,000/had been auctioned for Rs. 5,000/only and that the sale had
not been conducted in a proper manner inasmuch as there was nodue publication
of it and the sale too was not held at the proper hour. By an order dated April
19, 1962, the executing court stayed the execution of the decree till the
disposal of the application for setting aside the ex parte decree. On October
26, 1962 the ex parte decree against the defendant-judgment-debtor was set
aside. On November 3, 1962 the auction purchaser made an application for
revival of the execution proceedings and for confirmation of the :sale under
O.XXI, r. 92 of the Code of Civil Procedure. On November 7, 1962 the
judgment-debtor filed an objection thereto contending that the application for
revival of execution proceedings was not maintainable after setting aside the ex
parte decree and that the auction purchaser was in conspiracy and collusion
with the decree-holder and as such not entitled to have the sale confirmed. It
is to be noted here that the case of collusion was not :substantiated. On
August 31, 1963 the executing court over-ruled the objection of the
judgment-debtor and made an order under O.XXI, r. 92 confirming the sale. This
was affirmed by the first ,appellate court. On second appeal to a single Judge
of the Punjab High Court, the auction purchaser lost the day. An appeal under
cl. 10 of the Letters Patent in the Punjab High Court met the same fate.
Hence this appeal.
Before referring to the various decisions
cited at the Bar and noted in the judgment appealed from, it may be useful to
take into consideration the relevant provisions of the Code of Civil Procedure.
So far as sales of immovable property are concerned, there are some special
provisions in O.XXI beginning with r. 82 and ending with r. 103. If a sale had
been validly held, an application for setting the same aside can only be made
under the provisions of rr. 89 to 91 of O.XXI. As is well-known, r. 89 gives a
judgment-debtor the right to have the sale set aside on his depositing in,
court -a sum equal to five per cent of the purchase money fetched at the :sale
besides 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 sale, have been received by the decree holder. Under sub-r. (2) of r.
92 the court is obliged to make an order setting aside the sale if a proper
application under r. 89 is made accompanied by a deposit within 30 days from
the date of :sale. Apart from the provision of r. 89, the judgment-debtor has
79 the right to apply to the court to set aside the sale on the ground of a
material irregularity or fraud in publishing or conducting it provided he can
satisfy the court that he has sustained substantial injury by reason of such
irregularity or fraud. 'Under r. 91 it is open to the purchaser to apply to the
court to set aside the sale on the ground that the judgment-debtor had no
saleable interest in the property sold. Rule 92 provides that where no
application is made under any of the rules just now mentioned or where such
application is made and disallowed the court shall make an order confirming the
sale and thereupon the sale shall become absolute. Rule 94 provides that where
the sale of immovable property has become absolute, the court must grant a
certificate specifying the property sold and the name of the person who at the
time of sale was declared to be the purchaser. Such certificate is to bear date
of the day on which the sale becomes absolute. Section 65 of the Code of Civil
Procedure lays down that where immovable property is sold in execution of a
decree and such sale has become absolute, the property shall be deemed to have
vested in the purchaser from the time when it is sold and not from the time
when the sale becomes absolute. The result is that the purchaser's title
relates back to the date of sale and not the confirmation of sale. There is no
provision in the Code of Civil Procedure of 1908 either under O.XXI or
elsewhere which provides that the sale is not to be confirmed if it be found
that the decree under which the sale was ordered has been reversed before the
confirmation of sale. It does not seem ever to have been doubted that once the
sale is confirmed the judgment-debtor is not entitled to get back the property
even if he succeeds thereafter in having the decree against him reversed. The
question is, whether the same result ought to follow when the reversal of the
decree takes place before the confirmation of sale.
There does not seem to be any valid reason
for making a distinction between the two cases. It is certainly hard on the
defendant-judgment-debtor to have to lose his property on the basis of a sale
held in execution of a decree which is not ultimately upheld. Once however it
is held that he cannot complain after confirmation of sale, there seems to be
no reason why he should be allowed to do so because the decree was reversed
before such confirmation. The Code of Civil Procedure of 1908 contains
eleborate provisions which have to be followed in cases of sales of property in
execution of a decree. It also lays down how and in what manner such sales may
be set aside. Ordinarily, if no application for setting aside a sale is made
under any of the provisions of rr. 89 to 91 of O.XXI, or when any application
under any of these rules is made and disallowed, the court has no choice in the
matter of confirming the sale and the sale must be made absolute. If it was the
intention of the Legislature that the sale was not to be made absolute 80
because the decree had ceased to exist, we should have expected a provision to
that effect either in O.XXI or in Part 11 of the Code of Civil Procedure of
1908 which contains ss. 36 of 74 (inclusive).
It is to be noted however that there may be
cases in which, apart from the provisions of rr. 89 to 91, the court may refuse
to confirm a sale, as, for instance, where a sale is held without giving notice
to the judgment-debtor, or where the court is misled in fixing the reserve
price or when there was no decree in existence at the time when the sale was
held. Leaving aside cases Eke these, a sale can only be set aside when an
application under r. 89 or r. 90 or r. 91 of O.XXI has been successfully made.
Provisions in the Code of Civil Procedure
over the years have not been unanimous in this respect. In Sorimuthu v. Muthukrishna(1)
Madhavan Nair, J. traced the course of these provisions from the Code of 1859
up to the Code of 1908.
The relevant sections in the Code of 1859
were ss. 256, 259 and 260. The net effect of these provisions was that no sale
of immovable property would become absolute until the sale had been confirmed
by the court' and after the sale had become absolute, the court was to grant a
certificate to the purchaser stating that he had purchased the right, title and
interest of the defendant in the property sold. Sec. 314 and S. 316 of the Act
of 1877 correspond in part with s.
256 and s. 259 of the Act of 1859. Sec. 316
was amended in 1879. The proviso to this section as amended was to the effect
that the purchaser was to have title to the property sold from the date of the
confirmation of the sale only if the decree under which the sale took place was
subsisting at that date. Sec. 316 with the proviso was re-enacted in the Code
of 1882. In the Code of 1908 s. 316 was split up into, s. 65 and O.XXI r. 94
but the proviso was not included either in s. 65 or in r. 94 of O.XXI.
Elaborate arguments were put forward in the
Madras case just now cited as to the cause and effect of the deletion of the
proviso to S. 316 of the Code of 1908. Madhavan Nair, J.
referred to the report of the Select
Committee which considered the Bill to amend the Civil Procedure Code of 1877
as -showing that the alteration was effected in order to preclude the doubt
which had arisen in Bombay where a certificate had been granted to an auction
purchaser in ignorance of the fact that the decree under which the sale took
place had been previously reversed in appeal. Probably the decision which the
Select Committee had in mind was the case of Basappa v. Dundayya (2) before the
said decision in the High Court of Bombay. In that case, the court had observed
that it was the duty of the purchaser to satisfy himself before he applied for
confirmation of the sale that the decree was still in existence. The learned
Judge Madhavan Nair, J. pointed out that neither in the Act of (1) A.I R. 1933
Madras 598.
(2) I.L,R. 2 Bombay 540.
8l 1859 nor in the Act of 1877 was there any
specific statement of' law regarding the time when the title to the property
vested in the auction purchaser as is to be found in s. 316 of the Act of 1877
after the amendment in 1879, which was repeated as s. 316 of the Act of 1882,
and in the present Act of 1908. Further, according to the learned Judge :
"By s. 49, Amending Act of 1879, it was
enacted that the title of the auction purchaser to the property would start
from the date of the certificate and in order that it may be so formal
recognition was given to the principle that there must be a decree in existence
at the time of the certificate; and that the proviso came to be enacted as a necessary
condition upon which would depend the commencement of the title of the auction
purchaser ; and when the law on the latter point was altered, there was no need
for the existence of the proviso and so it was dropped out from the new
Code." Nothing has been urged before us which would lead us to take a
contrary view. Under the present Code of Civil Procedure, the Court is bound to
confirm the sale and direct the grant of a certificate vesting the title in the
purchaser as from the date of sale when no application as is referred to in r.
92 is made or when such application is made
and disallowed.
We may now proceed to take note of a few
decisions before the Code of 1908 came into force. In Subbayya v. Yellamma(1)
which was decided in the year 1885 the suit having been instituted in 1876, the
facts were as follows.
The plaintiff obtained a decree against the
defendant for Rs. 5,617/12/0. On the death of the defendant, his son was made a
party to the suit as a representative of his father and when the son died, the
grandson was made a party to the suit as representative of his grandfather. In
1883 the decree-holder attached certain lands and the grandson the petitioner
before the High Court, filed an objection to the attachment claiming the
property as his own. The objection and the claim were disallowed by the
District Judge by order dated August 20, 1883. On December 5, 1883, the
petitioner filed an appeal in the High Court against that order and the High
Court on February 22, 1884 reversed the order of the District Judge. In the
meantime the lands attached were put up for sale and were purchased on February
22, 1884-the same day as the High Court allowed the order disallowing the
petitioner's claim. The District Judge was not aware of the order of the High
Court nor did it appear which order was made first in point of time on February
22. The highest bidder was a stranger to the suit who had paid the purchase
money (1) I.L. R. 9 Madras 130.
82 and was a bona fide purchaser. On August
16, 1884, the petitioner filed a petition in the District Court praying that
the attached lands might be given to and put in his possession. This was
dismissed by the District Judge. The petitioner applied to the High Court in
revision under s.
622 of the Code of Civil Procedure on the
ground that the District Judge had refused to exercise the authority vested in
him to restore the petitioner to possession under the order of the High Court
and on the ground that the confirmation was made without jurisdiction. He also
presented an appeal against the order as a question between the decreeholder
and petitioner, parties to the suit, relating to execution. The High Court
observed that the petitioner might have applied to the District Court to stay
the execution pending the sale, but did not do so, and he might, by diligence,
after the appeal order was made have prevented the sale certificate and the
possession from being given to the purchaser, but he did not do so. In these
circumstances, the Court felt that even if it had the power to order the
District Judge to deliver possession to the appellant, it would be inclined to
refuse to do so.
In Rewa Mahton v. Ram Kishen Singh(1) the
Judicial Committee observed that notwithstanding anything in s. 246 of the Code
of Civil Procedure of 1877, the auction purchaser was not bound to inquire
whether the judgment-debtor held a cross decree of higher amount against the
decree-holder any more than he was to inquire, in an ordinary case, whether the
decree, under which -execution had issued, had been satisfied or not.
In Zain-ul-Abdin Khan v. Muhammad Asghar Ali
Khan(2) certain sales had been held in execution of an ex parts decree and some
of the properties were bought by bona fide purchasers.
The ,decree wag modified afterwards as a result
of an appeal to Her Majesty in Council and it was found that as the decree
finally stood, it would have been satisfied without the sales in question
having taken place. The judgmentdebtor sued the purchasers of some of the sales
including holders of the decree and bonafide purchasers. It was held by the
Judicial Committee that as against the bonafide purchasers Who were strangers,
the suit must be dismissed.
In Doyamoyi Dasi v. Mojundar(3) which the
Code of 1882 both the learned Judges held in favour of the judgment-debtor.
Maclean, C.J remarked that when the ex parte
decree was discharged, no decree in the suit remainded and that being the
position no sale could be confirmed when the decree under which was made had
ceased to exist. Both the learned judges referred to s. 316 of the Code which
included the proviso.
(1) I.L.R. 14 Calcutta 18. (2) I.L.R. 10
Allahabad, 166.
(3) I.L.R. 25 Calcutta 175.
83 In Chitambar Shrinivasbhat v.
Krishnappa(1) there was an ex parte decree which was found to have been
fraudulently obtained by the first defendant against the plaintiff and in
execution thereof certain lands belonging to the plaintiff had been sold by
auction and purchased by the second defendant. The plaintiff sued to set aside
the sale and to recover possession of the land. It was found that although the
decree was obtained by fraud, the property was sold at a considerable
undervalue and the purchaser had no knowledge of the fraud. It was held by the
Bombay High Court that a purchaser for valuable consideration without notice of
the fraud was not liable to have the sale in his favour set aside. It will thus
be seen that even before 1908 the different High Courts were always disposed to
uphold the auction purchase in favour of a stranger to the suit when he was no
party to a fraud against the judgment-debtor and where the case did not clearly
fall within the proviso to s. 316 of the Code of 1882.
Let us now examine a few decisions given
under the Code of 1908. In Shankar v. Jawaharlal(2) a Full Bench of the
Judicial Commissioner's Court at Nagpur went elaborately into the question and
came to the conclusion that:
" a private satisfaction of a decree
certified in court after the sale of immovable property has been held and
before the confirmation of the sale is ordered, does extinguish the decree and
prevent the Court from confirming the sale in favour of the auction purchaser,
if he be the decree-holder himself, but it does not extinguish the decree and
prevent the court from confirming the sale where a third person has purchased
the property bonafide at the auction sale." In Kabiruddin v. Krishna
Rao(3) an application to set aside the decree under O.XXI r. 89 was made by the
judgment-debtor after the expiry of 30 days from the date of sale. The decree
had been satisfied before the date of the application. It was held by the
Judicial Commissioner's Court, by a majority, that the lower court was bound to
reject the application made under O.XXI r. 89 and therefore to confirm the
sale.
In Nanhelal v. Umrao Singh(4) the
decree-holder and judgment debtor had agreed to adjust the decree before
confirmation of an execution sale. Allowing the appeal from Nagpur, the
Judicial Committee held that when once a sale had been effected and third
party's interest intervened, there was nothing in O.XXI r. 2 to suggest that
the sale could be disregarded and the court could refuse to confirm the sale on
that ground. The Board pointed out:
(1) I.L.R. 26 Bombay 543.
(3) A.I.R. 1928 Nagpur 136.
(2) A.I.R. 1928 Nagpur 265.
(4) A.I.R. 1931 P.C. 33 84 "The only
means by which the judgment-debtor can get rid of a sale, which has been duly
carried out, are those embodied in r. 89, viz., by depositing in court the
amount for the recovery of which the property was sold, together with 5 per
cent on the purchase money which goes to the purchaser as statutory
compensation, and this remedy can only be pursued within 30 days of the
sale........
That this is so is, in their Lordships'
opinion, clear under the wording of r. 92, which provides that in such a case
(i. e., where the sale has been duly carried out), if no application is made
under r. 99:
"the Court shall make an order
confirming the sale and thereupon the sale shall become absolute"."
This aspect was stressed in the judgment of Madhavan Nair, J. who also referred
to certain instances where sales had been refused to be confirmed on grounds
other than those contained in O.XXI rr. 89 and 90. The learned Judge pointed
out that these were instances where the court held that in law there was no
sale at all. In Sorimuthu's case(1) Madhavan Nair, J. refused to set aside the
execution sale of property in favour of a stranger auction purchaser on the
ground that the decree leading to the sale had been upset in appeal before the
confirmation of the sale.
In Birdichand v. Ganpatsao(2) it was held
that it did not matter that the sale had not been confirmed at the date of the
reversal of the decree unless there was a successful application under rr. 89,
90 or 91 of O.XXI.
In Amhujammal v. Thangavelu Chettiar (3) it
was observed:
"There is no provision in the Code for
the cancellation of a sale merely because of the cancellation of the decree and
though it is in accordance with justice that a person who has succeeded in
appeal should get from the opposite party such restitution as is possible,
there is no principle of justice whereby an innocent third party who has purchased
in a valid auction held by the Court should be deprived of his property, merely
because the decree under which the sale was held has been cancelled in appeal.
On general principles the judgment-debtor can look to the decree-holder to give
restitution when the decree has been set aside in appeal, but there is no
general -principle which would give him a similar right to look to a third
party who has for good consideration purchased the property sold through the
Court." (1) A.I.R. 1933 Mad. 598. (2) A.I.R. 1938 Nagpur 525.
(3) A.I.R. 1941 Madras 399.
85 In S. Chokalingam v. N. S. Krishna(1)
there was a Letters Patent Appeal out of restitution proceedings in the SubCourt
at Madurai. The first respondent was the judgmentdebtor, the second respondent
was the decree-holderpurchaser and the appellant was a purchaser from the
decreeholder-purchaser. A Division Bench of the Madras High Court observed:
"If the purchaser were to lose the
benefit of his purchase on the contingency of the subsequent reversal of the
decree, there will be no inducement to the intending purchasers to buy at
execution sale and consequently the property would not fetch its proper price
at such sales, and the net result would be that the judgment-debtor would be
the ultimate sufferer. This wise policy of protecting the title of the stranger
purchaser, even though in any individual case it may work some hardship, is
clearly conceived in the interests of the general body of judgmentdebtors so
that purchasers will freely bid at the auction without any fear of later
objection. But in the case of a decree-holder-purchaser the rule is different
and in that case the purchase is subject to the final result of the litigation
between the decree-holder and the judgment-debtor." In Lalji Sah v. Sat
Narain(2) the Patna High Court held that auction sale of property belonging to
a minor for grossly inadequate price due to gross negligence of the guardian
would not affect the auction purchaser for value who was not a creature of the
decree-holder and a suit to set aside such sale did not lie.
In Mani Lal v. Ganga Prasad(3) it was held
that the mere fact that the auction purchaser knew that the judgmentdebtor had
filed an appeal against the decree in which the sale was held would not affect
the bonafide nature of his purchase even if the decree was ultimately reversed.
In Abdul Rahim v. Abdul Haq(4) which was a
decision of a single Judge of the Lahore High Court, it was held that the sale
in execution of a decree could not be set aside merely on the ground that after
the date of the sale but before its confirmation, the judgment-debtor was
declared to be a member of an agricultural tribe entitled to protection under
the provisions of the Punjab Alienation of Land Act.
All the judgments so far noticed are against
the contention of the respondent. Our attention was however drawn to a judgment
of the Calcutta High Court in Baburam Lal v. Debdas Lala(5).
(1) A.I.R. 1964 Madras 404. (2) A.I.R. 1962
Patna 182.
(3) A.I.R. 1951 Allahabad 832. (4) A.I.R.
1936 Lahore 191.
(5) A.I.R. 1959 Calcutta 73.
86 There is an observation to the effect that
where the lower Court's decree has been reversed in appeal, the execution
proceedings cannot go on. In that case, there was no sale in execution and the
question before the court was, whether the plaintiff should be allowed to
proceed with the execution of a decree for Rs. 1,493-1-6 when as the result of
the final decree it was found that the defendant was entitled to Rs. 1,589-0-8
as owelty money from the decree holder.
The decision in Ariatullah v. Seshi Bhusan
(1) cited by the respondent is really of no help. There a sale was held in
execution of a decree for an amount in respect of which there was no decree
existing at the time. It was observed that the fact that subsequently to the
sale the decree holder obtained a decree entitling him to the amount for which
the sale was held would not validate the sale.
For the reasons already given and the
decisions noticed, it must be held that the appellant-auction purchaser was
entitled to a confirmation of the sale notwithstanding the fact that after the
holding of the sale the decree had been set aside. The policy of the
Legislature seems to be that unless a stranger auction-purchaser is protected
against the vicissitudes of the fortunes of the suit, sales in execution would
not attract customers and it would be to the detriment of the interest of the
borrower and the creditor alike if sales were allowed to be impugned merely
because the decree was ultimately set aside or modified. The Code of Civil
Procedure of 1908 makes ample provision for the protection of the interest of
the judgment-debtor who feels that the decree ought not to have been passed
against him. On the facts of this case, it is difficult to see why the judgment
debtor did not take resort to the provisions of O.XXI r. 89.
The decree was for a small amount and he
could have easily deposited the decretal amount besides 5 per cent of the
purchase money and thus have the sale set aside. For reasons which are not
known to us he did not do so.
Lastly, it was contended that the amendment
of s. 47 of the Code of Civil Procedure altered the whole situation inasmuch as
by the Amending Act of 1956 auction purchasers are to be treated as parties to
the suit. We are not here concerned with the question as to whether restitution
can be asked for against a stranger auction-purchaser at a sale in execution of
a decree under s. 144 of the Code of Civil Procedure and express no opinion
thereon. In our opinion, on the facts of this case, the sale must be confirmed.
Although we have noticed some decisions where
the right of the auction-purchaser decree-holder in circumstances similar to
the (i)A.I.R. 1920 Calcutta 99.
87 case before us was discussed or the right
of a purchaser in regard to a sale held after the setting aside of the decree
was touched upon, our judgment must not be taken as adjudication upon any of
these points.
In the result, the appeal is allowed. The
order of the High Court is set aside and that of the executing court affirmed.
The appellant is entitled to the costs of
this appeal.
V.P.S. Appeal allowed..
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