Nagendra Nath Ghosh v. Sambhu Nath Panday And Others

Nagendra Nath Ghosh v. Sambhu Nath Panday And Others

(High Court Of Judicature At Patna)

| 12-05-1924

Kulwant Sahay, J.The question for decision in the present appeal is as to the right of an auction-purchaser at an execution sale to bring a regular suit for realisation of the purchase money paid by him on the ground that the judgment-debtor had no saleable interest in the property. The question has bean decided against the plaintiff-appellant by the Court below and he comes up in appeal to this Court. (His Lordship then stated facts). In order to decide the point raised in this appeal, it is necessary to examine the law as it now stands after the various changes thereof by the Legislature from time to time in regard to the right of auction-purchasers at execution sales in this behalf.

2. Regulation VII of 1825, which provided for the first time for the sale of houses, gardens, orchards and small portions of land held exempt from public assessment by the civil Court instead of through the Collectors provided in Section 3(3) for setting aside the sale on the ground of material irregularity in the sale. Clause 4 of Section 3 provided that the purchaser at such sale was entitled to receive back the purchase money on restoring any property delivered to him if sale was set aside as invalid under Clause 3 or on any account whatsoever. Clause 7 provided that it should be clearly explained to the bidders that nothing was guaranteed to them in the land beyond the rights and interests therein of the individuals answerable for the amount of the decree.

3. It will be noticed that there was no provision in this Regulation of the auction-purchaser on the ground that the judgment-debtor had no saleable interest in the property sold, nor did the law provide for a refund of the purchase money to the auction-purchaser on the ground of there being no saleable interest in the judgment-debtor. The auction-purchaser was only entitled to a refund of the purchase money in case the sale was set aside on the ground of material irregularity and the purchaser was compelled to restore the property delivered to him as a result of setting aside the sale or on any other ground whatever. There was nothing in the law to bar a regular suit by the purchaser.

4. Then came the CPC (Act VIII of 1859.) Section 249 directed that the Sale Proclamation shall declare that the sale extends only to the right, title and interest of the defendants in the property specified therein. Section 256 provided for application for setting aside sales on the ground of material irregularity in publishing and conducting the sale, if the applicant proved that he had sustained substantial injury by reason of such irregularity. Section 267 empowered the Court to set aside a sale on the ground of material irregularity and substantial injury. Section 258 provided that:

Whenever sale of immovable property is set aside the purchaser shall be entitled to receive back his purchase money with or without interest in such manner as it may appear proper to the Court to direct in each instance.

5. With reference to this Section 258, it was decided by the Courts that a purchase at a sale in execution of a decree could not recover his purchase money if it was subsequently found that the judgment-debtor whose property he had purchased had no saleable interest therein, and that Section 258 applied only to cases in which a sale had been set aside for irregularities in publishing and conducting the same, vide Borah Ally Khan v. Khajah Moheeooddeen (1875) 1 Cal. 55, Framji Basanji Dustur v. Hormasji Pestanji Framji (1877) 2 Bom. 258 . Hiralal v. Karim-un-Nissa (1878) 2 All. 780; Ram Narain Singh v. Mahtab Bibi (1878) 2 All. 828. The auction purchaser under the Act of 1859 purchased at his own risk. All that the Court purported to sell under the distinct provision of Section 249 of the Code was the right, title and interest of the judgment-debtor and if it was subsequently found that the judgment-debtor had no interest, the purchaser could not obtain a refund of the purchase-money; there being no guarantee of title the purchaser took at his peril, and if he failed to obtain possession of the property or was dispossessed therefrom he had no remedy at law to get back his money.

6. Act X of 1877 by which the CPC of 1859 was repealed, contains provisions similar to those in Act XIV of 1882, and it will therefore be sufficient to examine the provisions relating to the point under consideration in the Act of 1882.

7. Section 235 of the Act of 1882 provided that the application for execution of a decree shall be in writing verified by the applicant or by some other person proved to the satisfaction of the Court to be acquainted with the facts of the case, and shall contain certain particulars set out therein in a tabular form. Section 237 provided that when an application is made for the attachment of immovable property belonging to the judgment-debtor it shall contain at the foot a description of the property sufficient to identify it, and also a specification of the judgment-debtors share or interest therein to the best of the belief of the applicant and so far as he has been able to ascertain the same. Section 287 provided that when any property was 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, and then it sets out the particulars which the proclamation shall contain. These particulars consist of the description of the property, the revenue assessed upon it, any incumbrance to which the property was subject, the amount for the recovery of which the sale was ordered, and Clause (e):

every other thing which the Court considers material for the purchaser to know in order to judge of the nature and value of the property.

8. Section 311 provided that the decree-holder or any parson whose immovable property has been sold may apply to the Court to set aside the sale on the ground of material irregularity in publishing or conducting the sale; but that no sale was to be set aside on the ground of irregularity unless the applicant proved to the satisfaction of the Court that he had sustained substantial injury by reason of such irregularity. Section 312 provided that if no application, such as one contemplated by Section 311 was made, or if such application be made and the objection be disallowed the Court shall pass an order confirming the sale as regards the parties to the suit and the purchaser. If such application be made, and if the objection be allowed, the Court shall pass an order setting aside the sale; and then the last clause of Section 312 provided

no suit to set aside an order passed under this section on the ground of such irregularity shall be brought by the party against whom such order has been made.

9. Section 313 authorised the purchaser at the execution sale to apply to the Court to set aside the sale on the ground that the person whose property purported to be sold had no saleable interest therein and the Court was upon such application to make such order as it thought fit. Section 315 provided as follows:

When sale of immovable property is set aside u/s 310(a), 312 or 313.

or when it is found that the judgment-debtor has no saleable interest in the property which purported to be sold and the purchaser is for that reason deprived of it.

The surchaser shall be entitled to receive back his purchase money (with or without interest as the Court may direct) from any person to whom the purchase money has been paid.

The repayment of the said purchase-money and of the interest (if any) allowed by the Court may be enforced against such person under the rules provided by this Code for the execution of a decree for money.

10. Now, these are the essential provisions relating to the point under consideration, in the Code of 1882. Provision was made for the purchaser to apply for setting aside the sale on the ground that the person whose property he had purchased had no saleable interest therein, and if the Court found that the person whose property it had purported to sell had no saleable interest in the property sold and that the purchaser was for that reason deprived of that property, then a declaration was to be made that the purchaser was entitled to receive back his purchase-money from any person to whom it had been paid, and that the repayment of such purchase-money could be enforced against such person under the rule provided by the Code for execution of a decree for money. Under this Code the Courts had held that a regular suit by the purchaser for a declaration that the judgment debtor whose property he had purchased had no saleable interest therein and for refund of the purchase money was not barred by the provisions of Section 315 of the Code. The leading case on the point is the Full Bench decision of the Allahabad High Court in Muna Singh v. Gajadhar Singh (1883)5 All. 557. This case was followed in a number of cases in the other Courts--vide: Kishun Lal v. Muhammad Safdar Ali Khan (1891) 13 All. 383; Pachayappan v. Narayana (1888) 11 Mad. 269; Kumar Saha v. Ram Gour Saha (1909) 37 Cal. 67; Hari Dayal Singh Roy v. Sheikh Samsuddin 5 C.W.N. 240; Nityanand Roy v. Juggat Chandra Guha 7 C.W.N. 105.

11. Then came the present CPC (Act V of 1908).

12. Order 21, Rule 66 of the present Code provides for the proclamation of the intended sale to be made by the Court ordering the sale. Sub-rule 2 of Rule 66 contains a provision for notice to be given to the decree-holder and the judgment-debtor before drawing up the last proclamation, and this is a new provision which is not to be found in the Act of 1882. The particulars required to be specified in the sale proclamation are the same as those under the Act of 1882. Sub-rule 2 provides that:

every application for an order for sale under this rule should be accompanied by a statement signed and verified containing the matters required by Sub-Rule 2 to be specified in the sale proclamation.

and this provision is also a new provision not to be found in the Code of 1882. This rule provided for a judicial enquiry in order to settle the particulars to be specified in the sale proclamation.

13. Order 21, Rule 89 provides for setting aside sales on deposit of the decretal amount and compensation 5 per centum to be paid to the auction-purchaser, if such deposit is made within 30 days of the sale. Rule 90 provides for application for setting aside sale on the ground of material irregularity or fraud in publishing or conducting the sale, provided the applicant has sustained substantial injury by reason of such irregularity or fraud. Rule 91 which corresponds with Section 313 of the Code of 1882, runs as follows:

The purchaser at any such sale in execution of a decree may apply to the Court to set aside the sale, on the ground that the judgment-debtor had no saleable interest in the property sold.

14. Rule 92 runs;

(1) Where no application is made under Rule 89, Rule 90 or Rule 91, or where such application is made and disallowed, the Court shall make an order confirming the sale, and thereupon the sale shall become absolute.

(2) Where such application is made and allowed, and where in the case of an application under Rule 89, the deposit required by that rule is made within 30 days from the date of sale, the Court shall make an order setting aside the sale:

Provided that no order shall be made unless notice of the application has been given to all persons affected thereby:

(3) no suit to set aside an order made under this rule shall be brought by any person against whom such an order is made.

15. It is noticeable that whereas Section 312 of the Code of 1882, referred only to application for setting aside a sale on the ground of irregularity and consequent injury as provided in Section 311 which corresponds with Rule 90 of the Code 1908, Rule 92 applies not only to applications referred to in Rule 90 but also to those referred to in Rules 89 and 91, and the effect of including applications under Rule 91 is that the provision contained in Sub-rule 3 and providing that "no suit to set aside an order made under this rule shall be brought by any person against whom such order is made" is now made applicable to applications by auction-purchasers under Rule 91 also.

16. Then Rule 93 provides that

where a sale of immovable property is set aside under Rule 92 the purchaser shall be entitled to an order for repayment of his purchase-money, with or without interest as the Court may direct, against any person to whom it has been paid.

17. It will be noticed that the provision in Section 315 of the Coda of 1882, to the effect that:

when it is found that the judgment-debtor had no saleable interest in the property which purported to be sold and the purchaser is for that reason deprived of it

is omitted, and the provision that

the repayment of the purchase-money and of interest allowed by the Court may be enforced against such person under the rules provided by this Code for the execution of a decree for money

has also been omitted, and in lieu of the words:

shall be entitled to receive back

in Section 315, Rule 93 contains the words:

shall be entitled to an order for repayment.

18. Therefore, under the present Code an auction-purchaser may apply under Rule 91 to set aside a sale on the ground that the person whose property was sold bad no saleable interest therein; and if the sale is set aside upon such application, he may apply under Rule 93 for an order for repayment of his purchase money. If his application is disallowed, the Court has under Rule 92 to make an order confirming the sale, whereupon the sale becomes absolute; and when an order confirming the sale is made, then under Sub-rule 3 of Rule 92 no suit can be maintained to set aside that order. To my mind the present CPC makes a material alteration in the provisions of the Code of 1882, and it is, under the present Code, no longer open to an auction-purchaser to maintain a regular suit for a declaration that the judgment-debtor had no saleable interest in the property which amounts to a declaration that the order confirming the sale was bad and for setting aside the same and for a refund of the purchase money. Whereas u/s 315 of the Code of 1882 it was optional to enforce repayment of the purchase money upon setting aside of a sale by having recourse to the procedure provided for execution of a decree for money and the auction-purchaser was not limited to that remedy which was not an exclusive remedy but the could, if he so chose; bring a regular suit to enforce payment of the purchase money, under the present Code no such option is left to the auction-purchaser and his only remedy is by way of an application under Order 21, Rule 91 of the Code.

19. This view has been held in a number of recent cases of the different High Courts--vide: Ramsarup v. Dalpat Rai AIR 1921 All. 377, Balwant Raghunath v. Bala AIR 1922 Bom. 205 ; Tirumalaisami Naidu v. Subramanyan Chettiar (1917) 40 Mad. 1009; Jurau Mohamad v. Jathi Mahamad 22 C.W.N. 760, Banka Behary Das Vs. Gurdas Dhar and Another, . A contrary view has been taken by a Division Bench of the Lahore High Court in Asadullah Khan v. Karam Chand AIR 1924 Lah. 115, but with very great respect to the learned Judges I am unable to agree with them. A comparison of the provisions in the Code of 1908 with those in the previous Codes leaves no doubt in my mind that under the present Code a regular suit is not maintainable. I am therefore of opinion that the decision of the learned Subordinate Judge on the point that the suit was not maintainable is correct.

20. It has been argued by the learned Vakil for the appellant that the provision in the present Code contained in Order 21, Rule 66 as regards the settlement of the sale proclamation shows that in execution sales held by Court under the present Code there is a warranty of title and that the auction purchaser, if he is subsequently deprived of the property, will be entitled to maintain a suit on the ground of this warranty. To my mind there is no distinction in the provisions of the present Code from those in the earlier Codes on this point. All that is sold and is proclaimed for sale is the interest of the judgment-debtor in the property advertised for sale. The only innovation in the present Code is that in order to settle the sale proclamation the Court has to make some sort of judicial enquiry; but it has been held that the result of such enquiry made for the purpose of settling the sale proclamations will not operate as a bar to any party in a subsequent proceeding relating to the settling aside of the sale.

21. For instance, it has been held that the valuation of the property proclaimed to be sold as given in the sale proclamation which is arrived at after a judicial enquiry can be re-opened in a proceeding for setting aside the sale, and it is open to the judgment-debtor to prove that the value of the property was more than what was stated in the sale proclamation.

22. There is therefore no substance in the argument of the learned Vakil that Order 21, Rule 66, has made any such change in the law as regards warranty and the position of an auction-purchaser is to my mind no better in this respect under the present Code than what it was under the old Code.

23. Next it has to be noticed that assuming that the present suit was maintainable nothing has been shown as to why the sale should be set aside, and how the plaintiff is entitled to recover the purchase-money. It will be remembered that the plaintiff is one of the sub-lessees of the under-ground rights. He is in possession as such sub-lessee, he has obtained a sale certificate in pursuance of his purchase, and there is no allegation, much less proof, that his title or possession has been disturbed by the purchaser at the previous sale of the 15th of September, 1919. Indeed the allegation of the contesting defendants is that the purchaser at previous sale, namely, the defendant No. 10 is merely a benamidar for the present plaintiff, and the evidence adduced in the case lends support to such contention.

24. Moreover, the decree in the execution of which the plaintiff made his purchase was a mortgage decree and the mortgaged property was ordered to be sold therein. The decree in execution of which the defendant No. 10 made his purchase was also a mortgage decree; but his purchase must be held to be subject to the mortgage in favour of the defendants 1 to 3, and even if the defendant No. 10 is a real purchaser and not a benamidar for the plaintiff he cannot disturb the position of the plaintiff and his purchase was subject to the mortgage decree of the defendants 1 to 3. Under these circumstances, even if the present suit was maintainable, the plaintiff has made out no case for a refund of the purchase-money.

25. The result is that the decree of the Subordinate Judge is confirmed and the appeal is dismissed with costs. (His Lordship here recounted the facts relating to Appeal No. 245 of 1921.) The stipulations contained in the lease clearly contemplate a charge on the entire lease-hold interest in respect of the royalty and commission due to each of three branches of the lessors. This view was held by this Court when the suit, of the defendants 6 to 8 and the defendants 9 to 11 of the present suit, namely, the two other branches of the Pandeys who had got a 5 annas 3 pice and 6 annas share in the property came up in appeal to this Court. It is only in accordance with this view that the decree could be passed in those two suits directing the sale of the entire leasehold interest for the shares of the royalty and commission due to each branch of the family of the lessor.

26. After a careful consideration of the various terms of the lease, I am clearly of opinion that the charge created by Clause 17 of the lease must be read along with the stipulations in Clause 24 thereof and that the entire leasehold interest was made liable for the share due to each branch of the family.

27. Then having regard to the compromise entered into between the lessee and the first defendant, a clear charge was created over the entire leasehold interest for the dues of the first defendant which was one half of the share of one branch of the Pandey family and the decree passed in accordance with the compromise must be treated as a valid decree creating such a charge.

28. As to the question whether the plaintiff is bound by that compromise decree it will be remembered that the compromise decree was passed on the 23rd of April, 1919, and the plaintiffs purchase took place on the 15th September, 1919, about five months after the compromise decree. At the time plaintiff made his purchase, the lessee whose interest he had purchased had agreed to a splitting up of the charge; and, to my mind, the plaintiff who had purchased the interest of that lessee is bound by that compromise decree. That the purchaser at an auction sale in execution of a decree of a Civil Court purchases the property subject to all the equities affecting the judgments debtor has been recognised in a number of cases, some of which have been referred to by the learned Subordinate Judge. It is only necessary to refer to the Privy Council decision in Mohammad Mazaffar Hoosain v. Kishori Mohan Rai (1895) 22 Cal. 909 wherein their Lordships referred to and followed the equitable principle of estoppel laid down in the case of Ram Kumar Kundu v. Macqueen (1874) 11 B.L.R. 46 which principle has also been followed in the Full Bench decision of the Calcutta High Court in Ishan Chandra Sarkar v. Beni Madhab Sarkar (1897) 24 Cal. 62.

29. In this view of the case the decision of the learned Subordinate Judge to the effect that the plaintiff who is the representative of the original lessor is debarred from questioning the validity of the compromise decree obtained before his auction-purchase is correct and must be affirmed.

30. No other point was raised in this Court and the appeal is accordingly dismissed with costs.

Jwala Prasad, J.:

31. I agree.

Advocate List
Bench
  • HON'BLE JUSTICE Kulwant Sahay, J
  • HON'BLE JUSTICE Jwala Prasad, J
Eq Citations
  • AIR 1925 PAT 106
  • LQ/PatHC/1924/82
Head Note

Civil Procedure Code — Order 21, Rule 92 — Suit in Civil Court by auction-purchaser to enforce repayment of purchase money on the ground that the judgment-debtor had no saleable interest is not maintainable — He can apply to the Court executing the decree for the repayment — Remedy provided under Order 21, Rules 91 and 93 of the Code is exhaustive — Order 21, Rule 92(3) bars a suit — Held, that the provisions of Order 21, Rule 92(3) make it clear that a suit to set aside an order passed under the rule shall not be maintainable and the remedy of auction-purchaser is only by way of an application under Order 21, Rule 91 of the Code. Section 315 of the CPC, 1882, provided that the auction-purchaser was entitled to receive back his purchase-money from any person to whom the same had been paid, whereas Order 21, Rule 93, CPC, 1908, only provides that the auction-purchaser shall be entitled to an order for repayment and the provision to the effect that the repayment of the purchase money may be enforced against such person has been omitted — Held, that under the present Code, an auction-purchaser may apply under Order 21, Rule 91, to set aside