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Annavajhula Venkatachellamayya v. Ramagirjee Neelakanta Girjee

Annavajhula Venkatachellamayya v. Ramagirjee Neelakanta Girjee

(High Court Of Judicature At Madras)

Letters Patent Appeal No. 42 Of 1917 | 26-10-1917

[The said C.M.A. No. 91 of 1916 came on for hearing on 7th February 1917 before their Lordships Oldfied and Bakewell, JJ.]

Old Field, J.

This appeal is against an order dismissing a petition by appellant, a decree-holder, under O. 21, R.

70. Full statement of the facts is necessary, because the sum at stake is large and this Court has never dealt fully with the law applicable.

Appellant in execution of a money decree brought to sale a taluk in the Kalahasti Zamindary; and the purchaser, here respondent, made the obligatory deposit, but failed to pay the balance of Rs. 5,17,500 within the fifteen days allowed by O. 21, R.

85. The property was again put up for sale and fetched only Rs. 1,01,000. Appellant claims the deficit of Rs. 5,89,000. These figures were not certified to the Lower Court, as R. 70 requires; and the absence of any certificate regarding them has been relied on in support of its order. But no objection to appellants claim was taken on this ground in the Lower Court, where the omission could have been repaired, or in the grounds of appeal here; and there is no dispute regarding the amount of the deficiency, which was ascertained by the Lower Court from the sale records. In these circumstances, whatever the legal inference from the reference to a certificate in the order, the objection based on the absence of one must in this case be disallowed.

The facts, on which the main argument has turned, are then firstly, that the property to be sold was a right in certain villages comprising the taluk, but that a larger number of villages was given in Exhibit A, the proclamation at the first sale than in Exhibit C, that at the second. This as reference to the details given in the proclamation shows, is due simply to the enumeration of hamlets as distinct villages and calls no further Consideration. The more important point is that the descriptions of th e right in the taluk in the two proclamations are different. Both proclamations refer to the same two documents Exhibits E and F, as constituting that right. But Exhibit A goes on to describe it has a right to a reconveyance, whilst Exhibit C, after giving abstracts of the two documents, of Exhibit E as a sale-deed to one Gyanagirji for six lakhs and of Exhibit F as an agreement of reconveyance by him entitling the judgment-debtor to regain the villages on repayment of that sum before the end of August 1914 then in another column describes the transaction as a mortgage, the implication being that the purchaser would be entitled to redeem it by payment at any time within the period of limitation.

There are, however, further complications. The sale was held on 25th August 1914, only six days before the date specified for payment in Exhibit F. If that date passed without the payment to Gyanagirji being made or tendered, the debtors right to the taluk was lost, unless its mortgage character could be sustained, Hence, when a second sale became necessary, the mention in Exhibit C of that character, to which reference has been made, and farther the insertion of a statement that when the debtor tried to tender Rs. 600,000 according to the conditions of Exhibits E and F within the time stipulated therein, Gyanagirji with evil intent evaded that tender. Respondent has denied the truth of this statement in his counter-petition; but there has been no enquiry regarding it. If it was true, the debtors right, apart from its alleged mortgage character, was after 31st August 1914 only to sue far specific performance of the contract for reconveyance; and, if it was untrue, he had no further right at all wh ich could be brought to sale.

I refer at this point to a question arising on these facts, not because it is in my opinion material, but because I have the misfortune to differ from my learned brother regarding it. It is whether respondent owing to his default is responsible for the change which the nature of the debtors right, so far as it was a bare right to reconveyance, underwent after 31st August 1914. It is argued that he was responsible for it, because he must have known that it would ensue naturally on his failure to pay the balance of the purchase money. This I am unable to follow since I do not see how respondent, when his purchase was never confirmed, had any duty to make a payment. The analogy between the position of a purchaser at a Court sale, such as respondent, and that of a purchaser at a private sale, on which my learned brother relies, is (with all respect) misleading. The right of the former do not accrue on the date of the sale but only on the expiration of thirty days from it; and he cannot curtail that period by paying, the balance of purchase money earlier, since it provided for in the interest of the debtor to enable him, if necessary, to apply under R. 89 or 90. The purchasers Eight is under Sect. 65 and O. 21 R. 94, to acquire title to the property on the date of confirmation of the sale; and such title will count from the date of sale, only if and when the sale is confirmed. It is true that, after confirmation has taken place, he can plead that he had an inchoate and equitable title before it. Adhur Chunder Banerjee v. Aghore Nath Aroo (2 C.W.N., 589) and Lanka Gopalam v. Lanka Ratnamma ([1915] M.W.N., 15). But there appears to be no authority and no reason for holding that, even in cases in which the sale is confirmed and a fortiori in others, he is subject to any corresponding duty or is bound to incur expenditure, such as is here in question in protecting the property or the title to it; and it would be clearly unreasonable to expect it of him when he is liable to lose his right in (Consequence of an application under R. 89 or 90 by the debtor within the thirty days period, which he could not foresee and for which he would be in no way responsible. In these circumstances, if it were necessary, I should hold that respondent is not answerable for any deficiency due to the determination of the right to reconveyance.

The facts thus ascertained, it is possible to deal with the general argument that respondent cannot be held responsible or liable for the deficiency in price at the second sale in these proceedings and in particular that it was not a resale within the meaning of R. 71, because the property sold was not the same as or, as it has also been put, was not described in the same way as that sold at the first sale. How far is either form of the argument countenanced by the terms of the Rule Further do they authorise enquiry into the purchasers reasons for default or the decree-holders conduct as justifying it

The rule deals with any deficiency of price, which may happen on a resale by reason of the purchasers default and all expenses attending such resale and words by reason of the purchasers default must qualify resale , because (1) that view is consistent with the wording of form No. 31, Appendix E; (2) it is consistent with the obvious intention to exclude resales in other circumstances, those for instance held after a successful objection under R. 90 The procedure is then that such deficiency is to be certified to the Court and recovered from the defaulting purchaser. The whole is expressed very shortly and peremptorily, there being no provision for enquiry into the circumstances or the purchasers reasons for his conduct. The question whether such enquiry is legitimate has not been decided in Madras, the judgment in Amir Baksha Sahib v. Venkatachala Mudali (I.L.R., 18 Mad., 439) dealing only with the question whether an order under corresponding provision at its date was appealable, not with the grounds, on which it could be based. The extreme view was taken in Tapesri Lal v. Deoki Nandan Rai (I.L.R., 19 All., 22) by a Full Bench of the Allahabad High Court that the order for recovery was not judicial, but administrative, and that all questions as to its validity must be raised in a separate suit. But the point directly decided was that the executing Court did not lose its jurisdiction to pass an order because of the absence of any certificate by the selling officer; and nothing was said regarding the essential character of other conditions for its exercise of it, such as the one now in question, the holding of a resale. That condition was more directly in question in the remaining group of cases on the first of which, as enunciating the principles applicable, respondent particularly relies, Baijnath Sahai v. Moheep Narain Singh (I.L.R., 16 Cal., 535) [LQ/CalHC/1889/44] , Kali Kishore Deb Sarkar v. Guru Prosad Sugul (I.L.R., 25 Cal., 99) [LQ/CalHC/1897/85] and Gangadas Dayabhai v. Bai Suraj (I.L.R., 36 Bom., 329). In each of these cases the property to by sold was differently described in each of the two proclamations, which were made; and in each that fact was treated as decisive against the second sale being a resale. But in the Calcutta cases there was an alternative ground of decision that the decree-holder had incapacitated himself from recovering from the purchaser by his own conduct.

Neither of these grounds seem to me acceptable. But they must be carefully distinguished. The Second could usually be taken only after enquiry. For it would not be as clear and incontestable in every case as it presumably was in those referred to, either that the decree-holder had been negligent or fraudulent in connection with either description or that his being so in respect of the second had caused the deficiency of price. Such an enquiry would in many cases be most difficult and when (as in the present case) an estimate of the rights of a third party would be necessary, the decision might easily have no relation to the real fact. True, somewhat similar issues are investigated at the instance of the judgment-dector in proceedings under R. 92; but such investigation is expressly provided for and has only a negative result, the cancellation of a sale, not a positive award of damages. In fact the learned Judges in Baijnath Sahai v. Moheep Narain Singh (I.L.R., 16 Cal., 535) [LQ/CalHC/1889/44] recognised this in one part of their judgment observing that although the decree-holder may under certain circumstances be entitled to recover damages from the defaulter, that must be by a regular suit and not by an application. A claim to recover by way of compensation would involve inquiry into difficult questions, which must be decided before the proper amount of damages could be ascertained and then follow observations based on the reference in the statute to the selling officers certificate, which reinforce this conclusion. It is then impossible, and the learned Judges do not attempt, to determine at what point the complexity of the question raised would negative the right to its decision. The only practical and intelligible view is that enquiry into matters other than those affecting the Courts jurisdiction is not contemplated and that they must be adjudicated on in a suit. If therefore I agreed with my learned brothers conclusion as to respondents responsibility, I should still hold that it did not affect the result.

The other alternative ground of decision above referred to may be accepted if it amounts only to the requirement that the second sale shall be a resale, since the occurrence of a resale is the condition on which the Court is entitled to proceed. It is the interpretation of a resale as the sale of the same property under the same description which is doubtful. There is no warrant for it in the word resale or in the language used in the order; or for more than insistence on the substantial identity of the property, however it be described. The fact that both sales are made under the same attachment will generally secure this. It is no doubt true that if a decree-holder described what he was bringing to sale in distinctly different terms on the two occasions, a difference in the property might be presumed. But that would not be so, if the difference corresponded merely with a change in the quality or condition of the property, due for instance, to a cyclone or diluvion, the latter being the case put by the learned Judges of the Calcutta High Court. Cases can of course be conceived, in which natural changes have so confused or destroyed the identity of the property, especially if it is moveable, that even in the absence of a fresh attachment, it cannot be said to be the same at the second sale as at the first. But the crucial test must be the identity of the property itself, not of its descriptions, the latter being merely one ground of decision as to the former.

This conclusion is easily applicable to the present case, so far as the right sold at the second sale is alleged to differ from that sold at the first in consequence of the mention of its mortgage character. The right on both occasions was that conferred by and was described as that conferred by Exhibits E and F, of which and of the contents of which intending bidders had notice. There is no warranty of title at Court sales and the statements in the proclamations as to the nature of the right to be sold are not alleged to have been fraudulent and were no more than expressions of the decree-holders opinion as to it. The right was in each case the same; and so far there is no difficulty in holding that the second sale was a resale.

The question is next whether the expiration of the term mentioned in Exhibit F before the second sale, even taken with allegations of a previous tender by the debtor, made a difference, the contention being that, the right being to redeem a mortgage, not to obtain specific performance of a contract for reconveyance, it did not. The answer, it seems to me, is that a would-be purchaser at each sale was entitled to have regard to the possibility of enforcing either of these rights in the alternative, the right to redeem as contingent of his establishing it and the right to enforce reconveyance as that which Exhibit F certainly conferred; and at the second sale the latter right had become uncertain. It was dependent, no longer only on the making of a payment, but on the possibility of proving that one had been made. Shortly an option was sold at the first sale and a litigation at the second; and this difference is fundamental. The conclusion must be that the second sale was not a resale.

The result is that the Lower Court had no power to make an order under O. 21, R. 71, and was right in refusing to do so. The appeal should therefore in my opinion be dismissed with costs.

Bakewell, J.

In execution of a decree certain villages were attached and proclaimed for sale by the Court. The proclamation of sate, dated 4th July 1914, apparently followed Form No. 29 of Appendix E of the first schedule of the Code of Civil Procedure which states that the property will be put up for sale in the lots specified in the schedule. The sale will be of the property of the judgment-debtors above named as mentioned in the schedule below, and the liabilities and claims attaching to the said property, so far as they have been ascertained, are those specified in the schedule against each lot. The schedule consists of five columns in which are to be set out the numbers of the lots, the description of the property, the assessment thereon, any encumbrances thereon, and the claims, if any, which have been put forward to the property, and any other known particulars bearing on its nature and value. (See also O. 21, R. 66). The form also contains a condition that in default of payment of the balance of purchase-money within the period allowed the property shall be resold after the issue of a fresh notification of sale.

Rr. 86 and 87 of O. 21, also provide for the resale of immoveable property in default of payment, and R. 71, which relates to all sales by the Court and must therefore be read together with these rules, provides a summary remedy against the defaulting purchaser. The proclamation sets out several documents which had been found to be registered in respect of the property and the last column contains this statement, the defendant has the right to the reconveyance of the said property according to the document No. 3.

There is a question whether the last mentioned document contains merely an option for the repurchase of the property before the 31st August 1914, or should be read together with an earlier sale-deed and construed as a mortgage.

The property was put for sale on the 25th August 1914 and bought by the respondent, who failed to pay the balance of his purchase-money on the due date, 9th September 1914, and a fresh sale was held on the 16th January 1915 at which a much smaller price was obtained.

Upon an application under O. 21, R. 71, the respondent pleaded that at the second sale the proclamation differed in material respects from that made at the first sate, and accordingly there had not been a resale of the same property and that the application did not He.

The second proclamation sets out the documents already mentioned in greater detail and alleges a tender of the amount payable under the option of repurchase within the stipulated time, and states that this property should be sold by auction subject to the said right according to the said documents.

There is no doubt that the title to the property was different at the second sale, because the period of the option had expired and the alleged tender had then become a material park of it, an essential part if the interest was merely an option, but still a very material fact with respect to interest and costs if the documents created a mortgage.

A proclamation of safe is settled by the Court after notice to the decree-holder and judgment-debtor and is, intended to give all the information available so as to enable a purchaser to judge of the nature and value of the property (O. 21, R. 66). If he is misled by it he can repudiate the sale, see Kala Mea v. Harperink (I.L.R., 36 Cal., 323) but by bidding at the sale he agrees to purchase such right, title and interest in the property as belongs to the judgment-debtor, and he cannot raise objections to title such as might avail a purchaser at a private sale, but can only object that the debtor had no saleable interest (O. 21, R. 91), that is, that nothing was attached and nothing sold.

A purchaser must be deemed to have made his offer upon the terms set out in the proclamation and conditions of sale and subject to the rules of the Court, and the eighth condition provides for the issue of a fresh notification of sale, and R. 87 directs the issue of a fresh proclamation in the manner and for the period hereinbefore prescribed for the sale, in case of default of payment of his purchase-money.

There is no provision for an application for an order of the Court for resale, upon which the purchaser might appear, and R. 66 contains no provision for notice to him of the setting of the fresh proclamation, as in the English Chancery Practice (Daniells Chancery Practice, 8th Edition, Volume I, page 968), but the Court should, I think, consider whether summons should go to him under paragraph (4; of that rule.

I agree with my learned brother that the words by reason of the purchasers default in R. 71 qualify the word resale, and think that this rule, which applies to sales generally, must be read immediately after R. 87, which applies to sales of immoveable property only. The rules thus provide that any deficiency at a resale held under a fresh proclamation must be paid by the purchaser at the previous sale, and they contain no provision for an inquiry as to how far this deficiency has been caused by the default of the purchaser, or has resulted from any difference between the two proclamations or alteration in the description of the property or in the title thereto. The scheme of R. 71 is that the liability of the purchaser arises automatically upon the certificate of the officer holding the sale, and it follows the Chancery Practice in this respect, under which execution may be issued against a purchaser under the order for resale when completed by the Masters certificate of the result of the sale (Daniells Chancery Practice, Vol. I, pages 968 and 724).

This procedure may sometimes cause hardship to a purchaser, but it forms part of his contract, and in the present case I fail to see what ground he has for complaint. He must be taken to have known from the documents of title disclosed in the proclamation, and was in fact fully aware that a large sum of money fell to be paid prior to the confirmation of the sale, and he should have applied for leave to pay this money into Court and for its application in accordance with the option for repurchase. If this was in fact impossible, he was fully aware of this defect of title, and was in no way justified in refusing to complete his contract; or if the result of the defect was that the debtor had no saleable interest, he should have applied under R. 91 to set aside the sale.

He cannot have any better right than a purchaser under a private contract of sale with notice of the state of the title, who would be taken to have known that if he failed to pay the amount due under the option he would have to rely upon a title as mortgagor, and that if he repudiated his contract the parties would be damnified by the lapse of the option.

It was obligatory upon the parties and the Court to set out in the second proclamation the events which had happened subsequently to the first proclamation. The difference in title at the second sale is therefore the natural and probable consequence of the respondents breach of contract and is also one which he knew to be likely to result from that breach, and there is no doubt but that in a suit for damages and in the absence of further evidence the price at the resale would be taken to be the market value of the property and the deficiency would be attributed to the defects of title resulting from the respondents default.

My learned brother has discussed the authorities cited to us, but I may point out that in the Bombay and Calcutta cases the defaulting purchaser seems to have been misled by the first proclamation of sale and the learned Judges appear to have considered that the contract was not enforceable against him, and that he could set up this defence without taking proceedings to set aside the sale. That is not the present case but I am inclined to accept the view of the Allahabad High Court that an application under R. 71 is for execution, and that the certificate of the officer of Court is in the nature of a decree and cannot be challenged in those proceedings.

I would allow the appeal with costs.

The Court. The result is the appeal is dismissed with costs.

John Wallis, CJ.

[1] Under Order XXI, Rules 84--86 of the Code of Civil Procedure on the default of a purchaser at a Court auction either in making the deposit or paying the balance of purchase-money within the specified period the property is to be re-sold; and under Order XXI, Rule 71, any deficiency in price which may occur at the re-sale together with the expenses attending the re-sale, as certified to the Court, are recoverable at the instance of the decree-holder or the judgment-debtor under the provisions relating to the execution of a decree for the payment of money. By his failure to complete his purchase the purchaser commits a breach of contract and is answerable in damages to the Court or the persons on whose behalf it sells, viz., the decree-holder and the judgment-debtor. These damages estimated by the ordinary rule consist of the deficiency, if any, in the price obtained at the re-sale as compared with the price at the first sale together with the expenses of the re-sale; and the rule provides a summary method of recovering these damages in execution by the Court at the instance of either of the parties interested, the decree-holder or the judgment-debtor. This is a salutary provision intended to minimise the hardship resulting from the purchaser s default, and I see no reason why the Court should refuse to give effect to it unless the defaulting purchaser would be substantially prejudiced. This was the case in Baijnath Sahai v. Moheep Narain Singh (1889) I.L.R., 16 Calc., 535, where he had been induced to bid for the property as unencumbered by the fact that the incumbrances were not mentioned in the proclamation of sale and the re-sale was on a proclamation in which the incumbrances were mentioned. In such a case the difference between the two prices could not be regarded as a fair measure of damages, as the purchaser who afterwards defaulted must obviously have made a higher bid than he would have done if he had known of the incumbrances. If the learned Judges in Baijnath Sahai v. Moheep Narain Singh (1889) I.L.R., 16 Calc., 535 and Kali Kishore Deb Sarkar v. Guru Prosad Sukul (1898) I.L.R., 25 Calc., 99 intended to lay down a more stringent rule, I am with great respect unable to agree with them.

[2] There was no circumstance of this kind in the present case. The efforts, in which the legislature joined, to save the ancient Zamindari of Kalahasti from being sold in execution having finally failed, a taluk of the North Arcot district, was attached and brought to sale at the instance of a judgment-creditor. The taluk had been conveyed to a Mahant for six lakhs of rupees with an agreement for reconveyance if the money was repaid before a stipulated date, the 31st August 1914. The sale in execution to the respondent took place on the 25th August 1914 only a few days before the stipulated time for repayment to the Mahant, and the respondent was no doubt aware of this when he bid, as he would not have bid more than five lakhs for the judgment-debtor s interest without satisfying himself of the terms of the agreement for reconveyance mentioned in the sale proclamation, and in any case he must be taken to have had notice of it. The case for the appellant is that the respondent was a man of straw employed by the Mahant to get the property knocked down to him as the highest bidder and make the necessary deposit with the money supplied by the Mahant in order to keep out genuine purchasers and to ensure that the specified date should be allowed to go by without repayment and the right to a reconveyance be lost; but all this has not been gone into and it is unnecessary to rely on it. On the 25th of August, the date of the sale, the respondent made the necessary deposit of Rs. 1,72,500 which entitled him to a delay of fifteen days to complete the purchase, vide Order XXI, Rule

85. On the completion of the fifteen days ho defaulted, and it became necessary to re-sell. By that time the 31st August 1914 had gone by, and the purchaser would no longer have a clear right to a reconveyance from the Mahant on payment of six lakhs, and could only rely on the positions that the transaction was really a mortgage or that the tender had been made before the specified date and refused. Now it is quite clear that what was put up to sale and purchased by the respondent on the 25th August included the right to get back this taluk from the Mahant on payment of six lakhs before 31st August, and if he chose to purchase the judgment-debtor s interest and let the day go by, I am clearly of opinion that he is the person to bear the resulting loss. The other view as regards this part of the case appears to be that the judgment-debtor s right to a reconveyance on payment of a fixed sum before a stipulated day, which might be a most valuable right and in this case is said to have been worth much more than the five lakhs which the respondent agreed to pay for it, cannot be made the subject of an effective sale in execution, if the sale takes place less than fifteen days before the stipulated date, as under Order XXI, Rule 85, the purchaser has fifteen days to pay the balance and the sale is not final until confirmed after not less than thirty days. These provisions, in my opinion, were made alio intuitu and were not intended to have that effect. The respondent could, if necessary, have procured the concurrence of the judgment-debtor in making the tender to the Mahant without prejudice to the question of the confirmation of the sale, and in that case would have been entitled to a charge on the property so released. In any view he got what he bargained for, and I can see no reason why he should not incur the ordinary consequences of failing to complete his bargain.

[3] It is quite clear, and has not been disputed before us, that at the re-sale consequent on the respondent s default, the judgment-debtor s right, title and interest in the same properties was brought to sale. It was, however, no longer possible to put up a right to reconveyance on payment before the 31st August 1914 as that date had gone by; but the nature of the judgment-debtor s interest was represented as favourably as possible in the proclamation as it alleged that the transaction with the Mahant was a mortgage and also that the agreement for the reconveyance still subsisted because, it alleged, the Mahant had fraudulently gone away from his residence to avoid receiving the tender of six lakhs which the judgment-debtor made before the stipulated date. In this case the sale and the re-sale were both duly held and were of the judgment-debtor s interest as it existed at the date of the sale and re-sale respectively, and the depreciation which occurred in the meantime was one for which the respondent was exclusively responsible. In these circumstances I see no reason why the deficiency should not be recovered from him under the Code. It was scarcely disputed before us that he would have no answer to a suit for damages, and I see no reason for refusing to give effect to the plain language of the Code. I concur in the order proposed by Kumaraswami Sastriyar, J.

Ayling, J.

[4] I concur.

Kumaraswami Sastriyar, J.

[5] This appeal arises out of an application by the decree-holder to recover from the auction purchaser the loss arising from a re-sale held in consequence of his default. Certain villages forming part of the Kalahasti Zamindari were brought to sale in execution of a decree against the Zamindar. The villages had been conveyed by the Zamindar to one Raja Bahadur Narasingar Gyangirji of Hyderabad for six lakhs of rupees by a deed dated 4th August 1908. The Zamindar got an agreement to reconvey bearing the same date if the sum of six lakhs was re-paid by the 31st August 1914. The sale proclamation specified the two documents as also other documents not material for the purpose of this Appeal. The Zamindar s interest in the property conveyed was described as "the right of obtaining a reconveyance under the reconveyance agreement dated 4th August 1908 executed and given to the defendant by Raja Narasingar Gyangirji Garu residing at Hyderabad and all the other rights and interest possessed by the defendant in these villages." The sale took place on the 25th August 1914 and the respondent, who was the highest bidder, was declared the purchaser for six lakhs and ninety-thousand rupees. He paid Rs. 1,72,500, the deposit required by Order XXI, Rule 84, of the Code of Civil Procedure. Rule 85 gave him fifteen days for the payment of the balance, but he failed to pay the sum and complete the purchase.

[6] There was so far as I can see no excuse for his not paying the balance. It is not shown that there was any irregularity in the proceedings that led up to the sale or that any circumstances existed on the date of sale which would justify the purchaser in refusing to complete the purchase. He knew perfectly well what he was purchasing and the risks he ran. There is no warranty of title in sales by Court in execution of decrees and as Order XXI, Rule 91, only applies to cases where there is no saleable interest. So long as the judgment-debtor has any interest however small in the property the purchaser cannot except in cases where he would have the right to set aside the sale on the ground of material irregularity under Order XXI, Rule 90, avoid his purchase.

[7] Order XXI, Rule 86, provides for a re-sale in case the purchaser makes default in paying the balance of the purchase money within the time limited by Rule

85. The defaulting purchaser is under Rule 71 liable to pay the deficiency in price, if any, and the same on being certified by the officer holding the sale is recoverable from the defaulting purchaser under the provisions relating to the execution of a decree for the payment of money.

[8] Owing to the respondent s default the property was put up for resale. Both Mr. Justice Oldfield and Mr. Justice Bakewell agree in holding that the same villages were put up for sale the second time and this is not disputed before us. When the property was purchased by the respondent at the first sale there were only six days within which six lakhs had to be paid in pursuance of the agreement to reconvey dated 4th August 1908. This period elapsed within the fifteen days allowed to the respondent to pay the balance of purchase money and it is clear that no re-sale was possible within the period when the six lakhs was payable. At the date of the fresh proclamation rendered necessary by role 87 before re-sale the position of the Zamindar, the judgment-debtor, in relation to the villages advertised for sale became altered. Whereas prior to the 31st August 1914 he was entitled to a reconveyance on tender or payment of six lakhs, he could after that date in the absence of proof of tender in time only get a reconveyance if he was able to show that the transaction evidenced by the sale deed and agreement to re-convey of the same date was in law a mortgage and not a mere sale with an agreement to repurchase. It was alleged by the Zamindar that he did make a tender within the 31st August which was improperly refused, but as this allegation has not been enquired into by the District Judge, I shall proceed on the footing that no such tender was made.

[9] The proclamation for re-sale had to mention the state of facts as they stood on the date when it was settled by the Court There is nothing in the Code requiring that the proclamations of sale and re-sale should in all respects be identical and having regard to the duty of the Court to give intending purchasers correct information, it is difficult to see how mention of a material alteration in the circumstances between the first and second proclamations could be avoided. The second proclamation therefore contained a statement to the effect that tender of six lakhs was made and was improperly refused, that the transaction evidenced by the deed of sale and agreement to repurchase dated 4th August 1908 was a mortgage, that Gyangirji has only the right to recover six lakhs of rupees and that the property was sold subject to the right.

[10] It is difficult to see how these statements could be prejudicial to the first purchaser. Their tendency was, if anything, to induce persons to purchase for a higher price, as a bald statement after the 31st August 1914 that the property was agreed to be reconveyed if six lakhs were paid before the 31st August 1914 would be useless. The only person to complain would be the second purchaser if the allegation as to the tender and the effect of the sale and agreement to reconvey were not correct, but he has raised no objection and the sale to him has been confirmed.

[11] The chief contention raised by the learned Advocate-General for the respondent is that in order to attract the provisions of Order XXI, Rule 71, what is sold at the re-sale should be in all respects the identical property that was sold the first time, identical not only with reference to the description and area of the property sold but also with respect to the interest of the judgment-debtor therein, and that consequently the sale at which his client purchased being the right of the judgment-debtor to get a reconveyance on tender of six lakhs without reference to the nature of the transaction evidenced by the sale deed and agreement to reconvey (which was a clear and good title), the re-sale of the properties in which the judgment-debtor s interest was only the right to obtain a reconveyance on proof that the transaction was only a mortgage--a fact which the subsequent purchaser had to prove at his risk, was not a re-sale contemplated by Rule

71. Reference has been made to Baijnath Sahai v. Moheep Narain Singh (1889) I.L.R., 16 Calc., 535, Kali Kishore Deb Sarkar v. Guru Prasad Sukul (1898) I.L.R., 25 Calc., 99 and Gangadas Dayabhai v. Bai Suraj (1912) I.L.R., 36 Bom.,329.

[12] In Baijnath Sahai v. Moheep Narain Singh (1889) I.L.R., 16 Calc., 535 the first proclamation of sale contained no statement as to the encumbrances on the property put up for sale while the proclamation for re-sale set out the encumbrances. It was therefore clear that the purchaser at re-sale would have paid considerably less than the first purchaser who purchased the property on the assumption that it was unencumbered, and the deficiency of price was attributable not to the first purchaser s default but to the mis-description in the first proclamation. In Kali Kishore Deb Sarkar v. Guru Prasad Sukul (1898) I.L.R., 26 Calc., 99, the defaulting purchaser had applied to set aside the sale under Section 313 of the Civil Procedure Code and the finding was that there was a material misdescription in the sale proclamation. In the first case the learned Judges observe that a change in the nature of the property by diluvion and the like causes beyond the control of anybody might not relieve the defaulting purchaser from liability. Their observations as to the effect that Section 293 of the Act of 1882 applied only to cases when the same property was sold under the same description at both sales must be read in the light of the later observations as to the change in the property by causes beyond the control of the parties.

[13] I do not think that it was intended to lay down as an inflexible rule that if a few trees on the land fell down or a portion was washed away between the dates of sale and re-sale there could be no re-sale so as to make the defaulting purchaser liable for the deficiency. The observations in Kali Kishore Deb Sariar v. Guru Prosad Sukul (1898) I.L.R., 26 Calc., 99 as to the effect of correctly stating in the proclamation of re-sale what was incorrectly set out in the first proclamation are obiter and with all respect I fail to see why the correction of errors at least of such as would in the ordinary course enhance the value of the property at the second sale should be a valid ground of objection.

[14] The general rule no doubt is that it is the property which was sold on the first occasion that must be put up for sale but this is subject to the property remaining identical. If owing to natural onuses or causes attributable to the defaulter, there should be any change either in the property or the wording of the sale proclamation, there is nothing in the Code to release the defaulting purchaser from his liability under Rule 71.

[15] Gangadas Dayabhai v. Bai Suraj (1912) I.L.R., 86 Bom., 329 was a case where it was admitted that the first proclamation did not state either fairly or accurately the properly to be sold. The property was described as that of A in the first sale and as that of B in the second.

[16] Sooruj Buksh Singh v. Sree Kishen Doss (1866) 6 W.R. Mis., 126 cited by the vakil for the appellant is more in point. In that case a purchaser at a Court sale declined to complete the purchase on the ground that the property had been sold the next day in execution of another decree by a party who had a previous mortgage on the estate. The property was subsequently re-sold and he was asked to pay the difference. The Sudder Ameen held that the first purchaser was not liable under Section 254 of Act VIII of 1859 which is substantially the same as Order XXI, Rule 71, of the Act of 1908, but his decision was reversed by the High Court on the ground that he had purchased something though perhaps less than what he had expected and that if he chose to bid he was bound to complete his purchase. From the facts as set out in the judgment it appears that the decree obtained by the mortgagee was in force at the date of sale which, unless discharged before the sale fixed for the day after the first sale, would entail the consequences that the property would pass under a title paramount to that of the first purchaser and that the re-sale was after the sale in execution of the mortgage decree when no title remained in the judgment-debtor.

[17] Time runs and with it follows change. The provisions of Order XXI of the Code of Civil Procedure as to re-sale in case the balance of purchase money is not paid necessitate a delay of at least one and a half months from the date of the first sale. The reasonable construction to place on Rule 71 is that the re-sale should be within a reasonable time after the first sale and property re-sold should be substantially the same and that any difference will not matter if the difference in the condition of the property or the title thereto is one which would occur in the ordinary course of things having regard either to the nature of the property or the transactions in respect thereof having legal force at the date of sale or was brought about by the first purchaser s default.

[18] It has been argued that the provisions of Rule 71 are summary in their nature and so should receive a very strict interpretation. Rule 71 only enacts the rule that the measure of damages in cases when a purchaser commits default is the difference between the price at which he agreed to purchase and the price realized at a re-sale. I do not think the rule prevents the defaulting purchaser from raising such objections as are competent to him under Order XXI of the Civil Procedure Code to raise. It is a principle of natural justice that a person should be given an opportunity of showing cause before an order adverse to him is passed and though Rule 71 does not expressly provide for the issue of a notice to the defaulting purchaser it is the duty of the Court to give him notice and to hear and decide on his objections before it orders execution to issue against him. In all the cases decided under the old and new Code the defaulting purchaser did appear and raise objections which were adjudicated upon by the Court and he was held by the Calcutta and Madras High Courts to have a right of appeal. I need only refer to Sooruj Buksh Singh v. Sree Kishen Doss (1866) 6 W.R. Mis., 126, Baijnath Sahai v. Moheep Narain Singh (1889) I.L.R., 16 Calc., 535, Kali Kishore Deb Sarkar v. Guru Prosad Sukul (1898) I.L.R., 25 Calc., 99, and Amir Baksha Sahib v. Venkatachala Mudali (1895) I.L.R., 18 Mad., 439.

[19] I do not, therefore, see any good reason for placing an unduly restricted interpretation on Order XXI, Rule

71. Having regard to the fact that there is no warranty of title in the case of sales by Court the maxim caveat emptor applying, and that the purchaser cannot avoid the sale so long as the judgment-debtor has some interest however small in the property, the objections which the defaulting purchaser can urge are practically confined to those which can be urged in an application to set aside a sale under Order XXI and proceedings under Rule 71 are neither more nor less summary than proceedings under Order XXI to set aside a sale.

[20] It was also argued that it was the duty of the judgment-debtor or the decree-holder to keep the title alive between the period of sale and confirmation and that as no tender was made of six lakhs the defaulting purchaser is not liable. As the sale was only of the right, title, and interest of the judgment-debtor subject to the conditions in the agreement to reconvey on repayment of six lakhs, it is clear that the person to pay the six lakhs was the purchaser, the price he pays being estimated with reference to the existing liability on the property. There was under the terms of the proclamation no duty On the decree-holder or judgment-debtor to pay six lakhs.

[21] With reference to the argument that the defaulting purchaser had no legal right to tender six lakhs as he acquired no title on the 31st of August, the last date for the tender, I think the auction purchaser has an interest in the property which would make any tender by him valid. The position of a person between the date of sale and the date of confirmation is not that of a person who has only an agreement to sell in his favour. Section 65 of the present Code unlike Section 316 of the old Code vests title in him from the date when the property is sold and not from the time the sale becomes absolute. It is no doubt true that the sale is liable to be set aside either by payment under Order XXI, Rule 89, or for irregularity or want of title under Order XXI, Rules 90 and 91, but it does not follow that a person who under Order XXI, Rule 84, has been "declared to be the purchaser" by the officer conducting the sale has no interest in the property sufficient to prevent a forfeiture or preserve the title from destruction. The observations of their Lordships of the Privy Council in Bhavani Kumar v. Mathura Prasad Singh (1913) I.L.R., 40 Calc., 89 at p. 103. (P.C.) as to the rights and duties of an auction purchaser as from the date of sale are in point.

[22] I am of opinion that no valid grounds exist in the present case for not making the defaulting purchaser liable for the loss arising from the re-sale. I would allow the Letters Patent Appeal and set aside the order of the District Judge with costs in this and the lower Court. The District Judge will dispose of the application of the appellant with regard to the deposit paid by the respondent according to law.

Advocate List
  • For the Appellant S. Varadachariar, Advocate. For the Respondent Advocate-General.
Bench
  • HON'BLE CHIEF JUSTICE MR. JOHN WALLIS
  • HON'BLE MR. JUSTICE AYLING
  • HON'BLE MR. JUSTICE KUMARASWAMI SASTRIYAR
Eq Citations
  • (1918) ILR 41 MAD 474
  • 43 IND. CAS. 685
  • LQ/MadHC/1917/304
Head Note

Income Tax — Non-residents — Tax Deducted at Source (TDS) — Question of limitation if survived — TDS held to be deductible on foreign salary as a component of total salary paid in India, in Eli case, (2009) 15 SCC 1 — Hence, held, question whether orders under Ss. 201(1) & (1-A) were beyond limitation purely academic in these circumstances as question would still be whether assessee(s) could be declared as assessee(s) in default under S. 192 read with S. 201 of the Income Tax Act, 1961.\n 4. Further, we are informed that the assessee(s) have paid the differential tax. They have paid the interest and they further undertake not to claim refund for the amounts paid. Before concluding, we may also state that, in Eli Lilly & Co. (India) (P) Ltd.1 vide para 21, this Court has clarified that the law laid down in the said case was only applicable to the provisions of Section 192 of the Income Tax Act, 1961.\n 5. Leaving the question of law open on limitation, these civil appeals filed by the Department are disposed of with no order as to costs.