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Rao Saheb Mohanlal Keshavji Kothari and ors. Vs. Rode theresa Gonslves and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Limitation
CourtMumbai High Court
Decided On
Case NumberSuit No. 432 of 1955
Judge
Reported in(1964)66BOMLR746
ActsBombay High Court (O.S.) Rules - Rules 466 and 523-525; Code of Civil Procedure (CPC), 1908 - Order 21, Rules 89, 90 and 91; Limitation Act - Articles 166 and 181
AppellantRao Saheb Mohanlal Keshavji Kothari and ors.
RespondentRode theresa Gonslves and ors.
Appellant AdvocateM.O. Chinoy, ;S.J. Sorabji and ;H.H. Dalal, Advs.
Respondent AdvocateR.V. Mehta and ;Mayank Mangaldas, Advs.
Excerpt:
execution proceedings - execution of mortgage decree--sale of land--misdescription of property in particulars and conditions of sale--whether purchaser entitled to have sale set aside--notice of motion to set aside such sale, maintainability of--civil procedure code (act v of 1908), order xxi, rules 89, 90, 91; section 47--rules 466, 523-525 of the bombay high court (o. s.).;at an auction sale, held by the commissioner for taking accounts, in execution of a mortgage decree, the applicant was declared purchaser of certain land which was represented to be available for building construction and which he wanted to use as such. from the description of the property in the particulars and conditions of sale the applicant had assumed that the property was wholly available for building.....(1-9) (facts of the case appear in the head note).(10) as regards the contention that the application is barred by the law of limitation, reliance has been placed by mr. mehta on art. 166 in the first schedule to the limitation act. under that article, for all applications under the code of civil procedure to set aside a sale in execution of a decree, 30 days time from the date of the sale is prescribed. his contention is that this application to set aside sale is under the code of civil procedure and that it would only be made within 30 days from april 6, 1962, being the date of the auction sale. this notice of motion has been taken out on july 18, 1962, and is obviously beyond 30 days from the above date of the auction sale. according to mr. mehta, therefore, this application must be.....
Judgment:

(1-9) (Facts of the case appear in the head note).

(10) As regards the contention that the application is barred by the Law of Limitation, reliance has been placed by Mr. Mehta on Art. 166 in the first Schedule to the Limitation Act. Under that Article, for all applications under the Code of Civil Procedure to set aside a sale in execution of a decree, 30 days time from the date of the sale is prescribed. His contention is that this application to set aside sale is under the Code of Civil Procedure and that it would only be made within 30 days from April 6, 1962, being the date of the auction sale. This Notice of Motion has been taken out on July 18, 1962, and is obviously beyond 30 days from the above date of the auction sale. According to Mr. Mehta, therefore, this application must be held to be barred by the Law of Limitation.

(11) In this connection, it is necessary to mention that the applications under the Code of Civil Procedure for setting aside sales in execution can only be made under the provisions of O. 21, Rr. 89, 90 and 91. Under R. 89, application can be made by and person owing property or holding an interest therein by virtue of a title acquired before such sale. This rule, therefore, cannot apply to the Applicant. Under R. 90, application can be made by the Decree-holders, or any person entitled to share in a rateable distribution of assets or whose interests are affected by the sale. This rule also, therefore, is not applicable to the Applicant. Under R. 91, the purchaser at sale in execution of a decree is entitled 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. The contention of the Applicant in this case is not that the judgment-debtor had no saleable interest in the property sold. His contention is that the agreement for sale concluded at the auction held by the Commissioner is vitiated, because 6,200 square yards out of the aggregate area of 10,406 square yards of the property agreed to be sold is reserved for playground and the fact had not been disclosed. According to the Applicant, the non-disclosure is such that it affects the consent given by the Applicant to purchase the property. The consent was given in ignorance of the facts which ought to have been disclosed. The contract, therefore, according to the Applicant, is altogether void. The application could not be made by the Applicant on the ground mentioned in R. 91.

(12) In this connection, reference was also made to the provisions of S. 47 of the Code of Civil Procedure. Under this section, all questions arising between the parties to the suit or their representatives and relating to the execution, discharge or satisfaction of the decree must be determined by the Court executing the decree and cannot be determined in a separate suit. It was sought to be contended that the application to set aside a sale in execution by an auction purchaser is covered by the provisions of this section. On that footing, it was contended that it must be held that the Applicant's application is under the Code of Civil Procedure.

(13) In this connection with these arguments, Mr. Chinoy has rightly relied upon the decision of the Supreme Court in case of Merla Ramanna v. Nallaparaju : [1955]2SCR938 . The Supreme Court has in that case clearly held that the Art. 166 in Schedule I to the Indian Limitations Act applies only when the sale is one which has under the law to be set aside under O. 21, Rr. 89, 90 and 91 of the Code of Civil Procedure and it has 'no application when the sale is inoperative and void'. The Supreme court also approved of the different previous decisions of various Courts where it was held that when a sale in execution is inoperative and void, an application by a judgment-debtor to have it declared void for appropriate reliefs was governed by Art. 181 in the Schedule 1 to the Limitation Act. The question is as to whether Art. 181 is applicable to the facts of this case. Art. 181 runs as follows :-

'181. Applications for which no period of limitation is provided elsewhere in Three When the right to this schedule or by section 48 of the Code of Civil Procedure, 1908 years

(V of 1908) apply accrues

(14) It must be stated that it is now well established that the provisions of this Article only apply to applications made under the Code of Civil Procedure. If at all this Article applies, the application must be held to be within time. The application is filed within 3 months and 12 days from the date of the auction sale. It must be mentioned that the right to apply for setting aside the sale accrued to the Applicant only upon his discovering the fact that 6,200 square yards of the property agreed to be sold at the auction sale was reserved for playground sometime after the sale and a little before the praecipe, dated April 30, 1962. Mr. Chinoy has also contended that the Applicant's right to apply for setting aside of the sale has not arisen under the Code of Civil Procedure. He has also pointed out that his application is made under the procedure prescribed by the Rules framed by this Court for the Original Side. He has relied upon the Rr. 466, 523, 524 and 525. The Rr. 523 to 525, inter alia, provide that disputed questions arising out of objections or requisitions by a purchase can be brought by any party before the Commissioner. The Commissioner has to decide such objections and certify his opinion regarding the objections or requisitions made. Under R. 524, all important questions of title in dispute may be referred to the Commissioner for enquiry as to whether a good title has been made out. Under R. 466, the Commissioner is authorised to make a special report concerning any matter or thing arising in or about matter referred to him, in order that the opinion of the Court may be taken therein or with respect thereto. It also provides that such special report shall be brought before the Court by such parties as the Commissioner shall direct by motion on notice and that such special report may be confirmed, discharged, or varied by order of the Court, or that any directions may be given thereon as shall appear to be necessary or expedient in that behalf. Obviously, special procedure has been prescribed by the Rules made by this Court for sale of properties by the Commissioner of this Court in pursuance of decrees passed in (mortgage) suits. The scheme that is provided in the Rules is altogether different from the scheme for sale of properties by Sheriff in execution of decrees. The procedure prescribed for sale by the Commissioner provides for a sale by auction in accordance with the terms and conditions settled by the Commissioner at a meeting of the parties. These conditions very often provide for making out a marketable title. These conditions always provide for delivery of abstract of title to the purchaser and for his right to make objections and requisitions on title. As I have already pointed out, the Rules provide for decision of such important objections on title by the Commissioner and ultimately by the Court. This scheme necessarily shows that at the date of the auction only an agreement for sale is made and a concluded sale does not take place. The sale is concluded by the Conveyance that must be executed in due course. The application of the Applicant must accordingly be held to have been made under the Rules framed by this Court and not under the Code of Civil Procedure. Even under Art. 166, the time commences only from the date of the sale, which in my view, must be a concluded sale. In this case, there has been no concluded sale at all. Even if the Article applies, the time never commenced to run against the Applicant.

(15) The contention that this application is barred by the Law of Limitation must accordingly be negatived.

(16) It remains to be stated that it has now been well established that an auction purchaser is not covered by the provisions off S. 47 of the Code of Civil Procedure. The auction purchaser is not a party to the suit or a representative' of such party. The contention that the auction purchaser cannot proceed by way of Notice of Motion is directly contrary to the provisions of R. 466 as also Rr. 523 to 525 which provide for the decision of all questions of objections and requisitions by the Commissioner. The Applicant was entitled to obtain the opinion of the Commissioner on the questions raised by him. He obtained the opinion as mentioned above. His Notice of Motion is for confirmation of the opinion of the Commissioner and setting aside of the sale accordingly. The contention of Mr. Dalal that the Notice of Motion is misconceived must accordingly be negatived.

(17-29) * * * *

(30) The other conditions, inter alia, provide for time for delivery of abstract of title by the plaintiffs' Attorneys and objections and requisitions on behalf of the purchaser for payment of purchase money and execution of conveyance and such incidental matters. Condition 12 runs as follows :-

'The descriptions of the properties including the areas contained in the Particulars of Sale are believed to be correct and shall be taken as correct. If any error or misstatement or omission shall appear to have been made in the Particulars or description of the property, such error or misstatement or omission shall not annul the sale, nor entitle the purchaser to be discharged from his purchase nor shall any compensation be made to the purchaser in respect thereof.'

(31) Mr. Chinoy for the Applicant has relied upon the description of the property along with the note above quoted and the Condition 20 (and the plan annexed to the M form Sanad) and contended that there was a clear representation in these conditions that permission to make non-agricultural use of the land had been given and that the property was available for building construction. Even though the Applicant's evidence that the plan had been shown to him at the date of the auction is not accepted, I have no doubt that the statements as contained in the above Note and Condition 20 contain clear unequivocal representation made on behalf of the parties to the suit to the intending bidders and purchasers that the property was available for non-agricultural use. This representation having been made for the property that was in residential zone within the limits of the Municipal Corporation of Bombay, meant that the property was available for building construction. This was made more clear by the plan annexed to the M. Form Sanad, which was one of the title deeds mentioned in the Conditions. The plan showed the property as divided into eleven plots with road alignments on sides of all the plots. Now, this representation, having regard to the evidence on record, must be held to be untrue. It is clearly established on evidence that having regard to the development plan that the Bombay Municipal Corporation had prepared and published in pursuance of the Bombay Town Planning Act, 1954, 6,200 square yards of the property was not available for building construction. There is also no difficulty in accepting the Applicant's evidence that he had agreed to purchase the property with intent to put up building construction. This he was entitled to do relying upon the representation that is contained in the Particulars and Conditions of Sale and the title deeds mentioned therein. The question is as to whether the Applicant is in law entitled to have the sale set aside on the ground that the representation was false and/or misrepresentation. Obviously, the representation relates to a matter of fact which, according to the Applicant, was essential to the agreement that he made for purchasing the property. The contention that Mr. Chinoy has in this connection made is as follows :-

The non-disclosure of the reservation of the extremely large portion of the property for the public purpose of playground amounts to such an error or misdescription of property that it entitles the Applicant to interference by the Court on the ground of equity that is always available to the auction-purchasers in Court sales. This was, according to him, such misdescription that in the absence thereof the purchaser would never have agreed to purchase the property.

(32) In support of this contention, Mr. Chinoy has relied upon the case of Ramlal Sen v. Siradhanisundaree Pal Chaudhurani ILR 63 Cal 124. He has also relied upon the case of Chimabai v. Dhula Kuppa 21 Bom LR 281 : : AIR1918Bom59 . As regards the Conditions of Sale to be prescribed at the sale held in execution or in pursuance of decrees passed by Court, in the above case reference is made to the opinion of the Privy Council announced in the case of Mahomed Kala Mea v. Harperink, 36 Ind App 32. Lord Maenaghtem in delivering the opinion of Their Lordships of the Privy Council in connection with a sale held in execution observed:

'Their Lordships regret to say that in their opinion there has been a lamentable miscarriage of justice in this case.'

He also observed :-

'The description would have stood if the question had arisen between outsiders and the Court had no concern in the matter beyond the duty of exercising its judicial functions. But over and above all this there is involved in this case a principle of supreme importance which the learned Judges of the Chief Court entirely disregarded.

It has been laid down again and again that in sales under the direction of the Court it is incumbent of the Court to be scrupulous in the extreme and very careful to see that no taint or touch or fraud or deceit or mis-representation is found in the conduct of its ministers. The Court, it is said, must at any rate not fall below the Standard of honesty which it exacts from those on whom it has to pass judgment. The slightest suspicion of trickery or unfairness must affect the honour of the Court and impair its usefulness. It would be disastrous, it would be absolutely shocking, if the Court were to enforce against a purchaser misled by its duty accredited agents a bargain so illusory and son unconscientiously as this.'

(33) Needless to state that having regard to the above strong observations of the Privy Council, it is the duty of all Courts to see that representations made in Conditions of Sale announced by its ministers or officers are true. If perchance such representations are found to be untrue or misleading, an equity arises in favour of such auction purchaser requiring the Court to intervene and set aside the matter right by striking off the sale as not binding. In the case of 21 Bom LR 281 : (AIR 1918 Bom 59), a mortgage decree was passed. Sale was held in pursuance of the mortgage decree. The Conditions of Sale failed to refer to other two existing mortgages of the property in suit. After the property was knocked down at the auction sale the purchaser discovered the existence of the other two mortgages and refused to pay price and complete the sale. On the application made on behalf of the mortgagees, the Commissioner of this Court issued a certificate to the effect that the sale was not a nullity. As the purchaser still refused to pay the balance of the price, a chamber summons was taken out on behalf of the mortgagees to show cause why he should not pay the balance. On considering the Conditions of Sale, Marten, J., held that the sale must be set aside as the Conditions of Sale were misleading and the parties were never ad idem he found that the vendors thought that they were selling one thing and the purchaser thought that he was buying another thing. The purchaser, who was not aware of the other two mortgages, had thought that he was buying the entire property free from encumbrances. This had resulted from the misleading Conditions of Sale. The sale was accordingly held to be not binding on the purchaser and set aside.

(34) It is important to notice that in this case Marten, J. proceeded on the footing that even in a matter of sale by the Commissioner of this Court in pursuance of decree for sale passed in a mortgagee's suit, the sale may not be binding on the purchaser if the parties were not ad idem as regards the property sold. This has bearing on the contention made by Mr. Dalal that the sales in pursuance of mortgage decrees do not result into contracts of purchases. His argument was that the principles on which contracts are set aside (cancelled and rescinded) by reason of the provisions in the Contract Act or the Specific Relief Act cannot be applicable to a sale by the Commissioner in pursuance of decrees for sale passed in mortgage suits. Now, it is true that he has by relying upon several reported cases pointed out that in sales by Sheriff in execution in pursuance of the provisions of the Code of Civil Procedure it has been repeatedly decided that there is no warranty of title in respect of the property sold by the Sheriff. Even so, it is to be noticed that it has been repeatedly held by diverse authorities that a sale in execution of a decree may be set aside on grounds which are all available for rescission and cancellation of contracts under the Specific Relief Act and grounds which arise under the provisions of the Contract Act such as misrepresentation, fraud, mistake and parties not being ad idem as to the property sold. In my view, therefore, the authorities which hold that there is no warranty of title in a sale in execution are no obstruction to decide that a sale even in execution can be set aside on the grounds which I have just enumerated above. One authority, wherein sale is set aside on the ground of misleading conditions, i.e., conditions involving misrepresentation, being a good ground, is the case of 21 Bom LR 281 : : AIR1918Bom59 . Even in the latest authority of this Court cited before me in the case of Santimmappa v. Balbhim Co-op. Society : AIR1950Bom313 , the right of an auction purchaser to have an execution sale set aside is recognised. In the observations made at pages 119 to 122, the Court found that a suit by an auction purchaser at a Court sale for refund of purchase money by the judgment-creditor on the ground that the judgment-debtor had no saleable interest in the property sold did no lie unless the procedure prescribed by in O. 21, Rr. 91, 92 and 93 was followed. That was the finding made having regard to the provisions in O. 21, R. 93 which corresponded to S. 315 of the Old Code. Even so, whilst considering the contention that the sale in that case ought to be set aside on the ground of misrepresentation and on the ground of mistake, it was observed as follows:-

'Now, the case of misrepresentation obviously fails immediately we hold that when a judgment-creditor brings to sale property, he does not give any warranty that the judgment-debtor had any interest in the property. It is only if it could be said that he guarantees that there is some interest in the judgment-debtor that we could say that there is some misrepresentations when the property is brought to sale. It may undoubtedly be a case of mistake because it is obvious that when the judgment-creditor is not fraudulently or honestly misrepresenting the facts, he must be under a mistake as to the judgment-debtor having an interest in the property.'

The further observations are :-

'Now, there is some authority for saying that where it is found subsequent to the auction sale that the judgment-debtor had no saleable interest in the property a suit for money had and received on the ground of total failure of consideration would lie. That such a suit would lie when the officer who held the sale had no authority to do so was pointed out by their Lordships of the Privy Council in the case mentioned above, Derab Ally Khan v. Abdool Azeez and Ahmedoolah, 5 Ind App 116.' The Court refused to go into discussing this question in detail on the ground that the question did not arise in the case before it. The relevant further observations are :-

'Mr. Gokhale argues, however, that a suit would lie upon the equity which has been mentioned in Hitchcock v. Giddings, (1817) 4 Price 135, irrespective of the question of the consideration having totally failed. Now, undoubtedly, suits upon equities frequently lie. As a matter of fact a suit for money had and received is also a suit which is base upon the equity recognized by law Courts in certain cases. But we find no authority whatsoever for the proposition that a suit for return of the purchase money by an auction purchaser will lie even without his showing that as a matter of fact there has been a total failure of consideration. It is true that a defence was recognized in (1817) 4 Price 135.'

Reference is then made to the facts involved in the case of (1817) 4 Price 135, and it is further observed;

'The matter was, therefore, in the stage of a contract, and it was because it was at the stage of a contract that when subsequently it was found that both the vendor as well as the vendee were mistaken about a matter of fact, viz., the judgment-debtor's interest in the property, it was held that the purchaser was entitled to avoid the contract upon which the suit was filed. We do not think that when the matter has gone beyond the stage of a contract when the purchaser has purchased property with the result that he has got the whole of the interest of the judgment-debtor he can come and say that he should be allowed to file a suit upon an alleged equity deducible from (1817) 4 Price 135...................'

In my view, the observations in the case of : AIR1950Bom313 , also go to show that a suit by an auction purchaser in execution sale would always lie in equity Courts on grounds of fraud, coercion, mistake, misrepresentation, etc. It appears to me that it was on that very ground that the Privy Council in the case of 36 Ind App 32, and this Court in the case of 21 Bom LR 281 : : AIR1918Bom59 , which I have referred to above, set aside sales in execution.

(35) In the case of ILR 63 Cal 124, in pursuance of a decree for sale passed in a mortgage suit, the Registrar of the Court had sold an immoveable property situate at Calcutta. The sale was by auction under the procedure prescribed by the Rules of the High Court of Calcutta which are all similar to the Rules on the Original Side of this Court for sale by the Commissioner of mortgaged properties. The purchaser discovered after the sale that the frontage of the property extending back 12 feet from the then existing front of the building was subject to what is described in the case as rules for street alignment. These rules are similar to the rules which are described in Bombay as set back line rules. These rules impose restrictions on the liability of a property in respect of street alignment and at the hearing were found to be a very material burden or liability on the property. The purchaser's contention was that the existence of the street alignment was undisclosed in the Conditions of Sale and the purchaser had in the absence of a notice of the street alignment believed that he had bought an unrestricted freehold. What he was in fact getting was not the property without the above burden and liability and that he was not bound to complete the sale and the sale must be set aside. In deciding the above contention, the Court referred first to the case of Nursing Dass Kothari v. Chuttoo Lall Misser ILR 50 Cal 615 : AIR 1923 Cal 641. In that case also the property that was sold at auction held by the Court was subsequently discovered to be subject to a plan for a proposed public street. About half the property bought was affected by the alignment notice. The purchaser refused to complete the sale and brought suit for refund of the earnest money paid. The Court found in the previous case of ILR 50 Cal 615 : (AIR 1923 Cal 641) that notice issued under the Calcutta Improvement Act for road alignment and the consequent liability to restriction upon the use of the premises constituted a matter of fact essential to the agreement and that in the circumstances the case fell within the provisions of S. 20 of the Indian Contract Act and the Plaintiff was entitled to succeed. In the case of ILR 63 Cal 124 the Court held that the subjection of ' he whole of the frontage of the property extending back 12 feet from then existing front of the building to the restrictions and liabilities imposed by the alignment was a very material burden or liability on the property. At any time the owner and the occupier might find their premises cut down at the instance of the Calcutta Corporation and all the time until then they were under fear of the property being cut down and were restricted in their use and development of the property by the alignment. The Court held that the purchaser was a doctor who had bought the premises for his own use and that the removal of the two front rooms might be a serious handicap to him in his professional duties. Reference is thereafter made to several English decisions. The Court cited with approval the case of Flight v. Booth, (1834) 1 Bing NC 370 at p. 377, where it was held as follows :-

'In this state of discrepancy between the decided cases, we think it is, at all events, a safe rule to adopt, that where the misdescription, although not proceeding from fraud, is in a material and substantial point, so far affecting the subject-matter of the contract that it may reasonably be supposed, that, but for such misdescriptioin, the purchaser might never have entered into the contract at all, in such case the contract is avoided altogether, and the purchaser is not bound to resort to the clause of compensation. Following the above observations, the Court found that the alignment was a material and substantial disadvantage to the property so far affecting the subject-matter that the purchaser would never have entered into the contract had he known of it. The Court also found that the existence of the alignment was disclosed by the vendor; the purchaser, in the absence of a notice of alignment, believed that he was buying an unrestricted freehold. Actually, he was buying a freehold subject to a substantial and material disadvantage by reason of the alignment. The nondisclosure of the alignment, in the view which the Court took, amounted to such an error or misdescription that it might reasonably be supposed that, but for that error or misdescription, the purchaser would never have entered into the contract at all. On these grounds the Court set aside the sale.

(36) Apart from the above authority, there are several other authorities, the result whereof is that when the property agreed to be sold is under disability of being acquired by a Municipal body or Government unknown to the intending purchaser and the liability is not disclosed by the seller, the contract of sale must be set aside on the ground that the parties were not ad idem as regards the property agreed to be sold. The property must be held to be so misdescribed that the purchaser would not enter into the contract of purchase but for such misdescription.

(37) In the present case, the plan of the property showed that it was divided into 13 plots with road alignment shown for approaches to adjacent properties. The property is situate within the limits of Greater Bombay and it was represented to be available for building construction. The evidence of the applicant is that he had purchased the property for building construction. He had assumed from the description of the property in the Particulars and Conditions of Sale that the property was wholly available for building construction. The effect of the evidence is that both sides were unaware of the development plan declared and published by the Corporation in connection with the area in question. Both parties have subsequent to the sale discovered that 6200 square yards of the property was not available for building construction. This area was liable to be acquired and was fixed for acquisition by the Corporation for the public purpose of a playground. On these facts, it is clear that the applicant had become purchaser of the property on the clearest understanding that the whole of the property was available to him for building construction. The mortgagees plaintiffs had put up the property for sale through the Commissioner also on the clearest representation that the property was wholly available for building construction. The property, however, in fact is subject to the restrictions and liabilities and burden of acquisition to the extent of 6200 square yards. Under these circumstances, it is difficult for me not to apply the principles which are discussed in detail in the case of ILR 63 Cal 124. In my view, in this case also, the non-disclosure of the reservation of 6200 square yards of the property for the public purpose of a playground amounts to such an error or misdescription that but for such misdescription the applicant would never have become purchaser of the property. the parties must be held to have been under mutual mistake as regards the fact essential to the sale of the property. The sale must accordingly be set aside.

(38) Mr. Dalal has, however, strongly relied upon Condition 20 and argued that as regards the availability of the property for non-agricultural use, the purchaser was not entitled to make any requisition at all. He was only entitled to delivery of certified copy of the writing dated April 30, 1955, being permission to make non-agricultural use of the land and the M. Form Sanad executed on July 9, 1958 in that connection. In Condition 20 it is provided that 'the purchaser shall accept the certified copy of the said writing and of the said Sanad as conclusive evidence of the land in the lot No. 2 having been permitted for non-agricultural use and shall not be entitled to raise any objection, make any requisition in respect thereof or to require the production of any other deed or document.' According to Mr. Dalal, this condition must be considered as taking out the matters provided therein from an essential matter between the parties. In this connection, he has relied upon the observations made in the case of Sada Kavaur v. Tadepally Basaviah, ILR 30 Mad 284. In that case, a mortgagee having filed a suit for recovering the amount due on mortgage, assigned for valuable consideration all his claims under the mortgage deed and in the suit to the plaintiff. The assignment contained a convenant that the mortgage-assignor 'shall not be liable for any defect in the claim transferred and assigned or for any sums of money that may not be recovered.' The assignee thereafter became party co-plaintiff in the suit of the mortgagee. The mortgage was found out to be attested by only one witness and not binding. The suit, therefore, had to be withdrawn. The assignee thereafter filed the suit against the assignor-defendant for a declaration that the contract of assignment was void and for return of consideration. The assignee-plaintiff's case was that the existence of valid mortgage was a fact essential to the agreement of assignment between the parties. As that fact was found to be untrue, he was entitled to the relief claimed in the suit. The findings of the Court was that the convenant mentioned above was complete defence to the suit. As regards the first Court overlooking the convenant, the observations of the Court are as follows :

'How this came to be passed over by the learned Judge is not apparent. It may be that the convenant was treated as immaterial in consequence of his finding that the mistake as to the existence of a valid mortgage was common to both the parties, and on the supposition that the transaction was therefore void, an inference which seems to be supported by the circumstance that the learned Judge relies on section 20 of the Contract Act in decreeing the recovery of the consideration found by him to have been actually paid by the plaintiff for the assignment.

If this inference be correct then the supposition that that section applied to the case and that the assignment was void, was clearly wrong, for whether a particular affirmation as to the quality of a specific thing sold is conditional and the transaction is to be null if the affirmation is incorrect, is only a question of intention of the parties to be decided by the circumstances of each case. Where in addition to the affirmation there is a separate warranty also in the agreement, the existence of such separate warranty shows that the matter of the warranty is not a condition or essential part of the contract, but the intention of the parties was to transfer the property in the subject of the sale at all events. In such cases, if the sale is made in good faith and there is a breach of the warranty, the purchaser is entitled only to compensation for the breach of the warranty, and the sale is not even voidable..................The present is an a fortiori case inasmuch as the vendee has chosen to contract to take the claim with all its defects and to hold the vendor not responsible for the consequences.'

(39) Relying upon the above observations the argument advanced by Mr. Dalal is that Condition 20 clearly provides that as regards non-agricultural use of the land the purchaser agreed to accept the writing dated April 30, 1955, granting permission for non-agricultural use and the M. Form Sanad as conclusive evidence of that fact. The purchaser agreed not to make any further requisitions in that connection. According to Mr. Dalal, the result of the condition is that the fact of the property being available for non-agricultural use was agreed to be not essential to the sale of the property. According to Mr. Dalal, the existence of the above two documents was the only fact which must be considered as essential and not the availability of the property for non-agricultural use. The construction contended for by Mr. Dalal appears to me to be farfetched. The only effect of Conditions 20 is that the above two documents were clear proof that permission had been granted by the appropriate authorities to make non-agricultural use of the property. It is not the contention of the purchaser that these documents are not conclusive evidence of the fact of such permission. The applicant is not making any requisition for proof of the fact that permission had been granted for non-agricultural use of the property. The complaint of the applicant is that the description of the property and this condition as also the plan annexed to the Sanad were all representations to the applicant that there was no obstruction in putting up building construction on the property. The complaint of the applicant is that 6200 square yards of the property was liable to be acquired for the public purpose of playground and this fact was negligently not disclosed in the particulars and conditions of sale. That liability was a material latent defect in the property and in the description of the property. By the negligent non-disclosure of that material latent defect in the Particulars and Conditions of Sale, the purchaser was led into making the contract of purchase. I do not accept the contention of Mr. Dalal that by reason of Condition 20 the fact regarding the availability of the property for building construction was agreed to be taken out from the essential matter relating to the property.

(40) Mr. Dalal also relied upon the case of Balvant Ranganath v. Bala Malu, 24 Bom LR 308; (AIR 1922 Bom 205). In that case, in a mortgagee's suit decree for sale was passed. The property was sold to the plaintiff. After the sale all his attempts to get possession failed. In suits filed by him it was held that third parties who were in possession had acquired good title to the property by adverse possession. In the plaintiff's suit for possession that was dismissed the Court of first instance passed a decree against the mortgagee for refund of the price paid by the plaintiff. In appeal that decree was set aside and the matter was brought in second appeal before this Court. The Court found that an auction purchaser, at a Court sale, should be get nothing from his purchase, must get the sale set aside under Order 21 Rule 91 of the Code of Civil Procedure before he can obtain the right to ask for refund of the purchase money. Whilst making such a finding, Macleod C.J. observed as follows :-

'He can undoubtedly maintain a suit against the judgment-debtor on any ground which is open to him in law such as fraud or misrepresentation; but such a claim would depend on different evidence, and would depend on different evidence, and would be entirely of a different character to the present suit. No fraud or misrepresentation was alleged in the plaint, and the only ground on which the plaintiff sought relief was that after he purchased the property he discovered that other persons were entitled to it. Therefore the decision of the District Judge is right and the appeal must be dismissed with costs.'

It is difficult to see how the decision in this case supports Mr. Dalal's contention. As regards the purchasers in execution sales, Orders 21 Rule 91 of the Code of Civil Procedure is abundantly clear. Whilst selling attached properties, the Sheriff or the Court does not warrant title to the property. What is sold is right, title and interest of the judgment-debtor in the property attached. Even so, it is provided in Rule 19 that if the purchaser finds that there was no saleable interest of any kind of the judgment-debtor in the property, the purchase can have the sale set aside on that ground. What is sold in decrees in suits filed by mortgagees is not merely right, title and interest. The mortgaged property is directed to be sold. If the mortgaged property is not available for sale the Court would make such a finding before making any decree. If in that connection, by fraud, mistake or similar reasons, decrees are passed, the sales in pursuance of such decrees to third parties would be liable to be set aside on the ground of fraud, mistake or similar grounds. This situation has been discussed in greater details by Marten J. in the case of 21 Bom LR 281 : (AIR 1918 Bom 59). As I have pointed out, in the sale by the Commissioner of this Court in pursuance of a decree for sale passed in a mortgage suit, the scheme of the Rules of this Court is that the particulars and Conditions of Sale must be published and announced. Those conditions must always be fair to the purchaser as pointed out by the Privy Council in the case of 36 Ind App 32.

(41) I have found it difficult to accept Mr. Dalal's contention that the auction sale held by the Commissioner does not result into an agreement of purchase by the Purchaser and is not a contract. It is true that it is difficult to find as to who is the seller. It is, however, not difficult to find that the auction sale by the Commissioner always result into a contract. In my view, the terms and conditions of sale published by the Commissioner are an invitation to make offers for agreement for purchase on those terms by giving bids at the auction. The acceptance of the highest bid by the Commissioner results into an agreement for sale of the property on the terms and conditions announced by the Commissioner in favour of the purchaser. The resulting agreement for sale is enforceable by and against the purchaser. It can be also avoided by him on usual grounds. It appears to me that it is for this reason that one finds numerous authorities where sales held in pursuance of mortgage decrees are set aside on the grounds which are already referred to by me above.

(42) Under the circumstances, the Notice of Motion must be made absolute in terms of prayer (a).

(43-46) X X X X

Order accordingly.


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