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Vishwanath Maharudra Matkari Vs. Jan Mohammed and anr. - Court Judgment

LegalCrystal Citation
SubjectContract;Civil
CourtMumbai High Court
Decided On
Case NumberA.F.A.D. No. 563 of 1973
Judge
Reported inAIR1982Bom30; ILR1981Bom1222
ActsCode of Civil Procedure (CPC), 1908 - Order 21, Rule 92; Indian Contract Act, 1872 - Sections 65 and 72
AppellantVishwanath Maharudra Matkari
RespondentJan Mohammed and anr.
Appellant AdvocateA.M. Dabir, Adv. for;A.H. Vaishnav, Adv.
Respondent AdvocateA.B. Naik and;A.G. Godhamgaonkar, Advs.
Excerpt:
the case debated over the scope of principle of money had and received where the auction sale was confirmed - it was found that the judgment debtor had no saleable interest in the property - in regard to this, a suit filed by the auction purchaser against the decree holder for the recovery of money to be paid by him for the purchase of auctioned property was not maintainable - hence, it was held that the principles under section 65 of the contract act, 1872 would not be applied to the said case - also, principle of money embodied in section 72 of the act of 1872 would not be applied - - 1. a very interesting and rather important question of law arises in this second appeal. 1. decree-holder as well. 1882, which had in effect given special right to the auction-purchaser to file a suti.....1. a very interesting and rather important question of law arises in this second appeal. the question relates to the right of an auction-purchaser in a court sale, who has purchased property but has found to the surprise that the judgment. debtor had no saleable interest in the property that he (auction-purchaser) purchased. the question is, whether he can proceed against the decree-holder and or judgment debtor for the recovery of the moneys paid by him for the purchase of the property in auction normally speaking it would have been enough for me to refer to the division bench the judgment of this court in santimmappuv. balbhim co-operative credit society, : air1950bom313 , and allow the appeal. however. i find that certain aspect of the question which did not fall for consideration of.....
Judgment:

1. A very interesting and rather important question of law arises in this Second Appeal. The question relates to the right of an auction-purchaser in a Court sale, who has purchased property but has found to the surprise that the judgment. Debtor had no saleable interest in the property that he (auction-purchaser) purchased. The question is, whether he can proceed against the decree-holder and or judgment debtor for the recovery of the moneys paid by him for the purchase of the property in auction Normally speaking it would have been enough for me to refer to the Division Bench the judgment of this Court in Santimmappuv. Balbhim Co-operative Credit Society, : AIR1950Bom313 , and allow the appeal. However. I find that certain aspect of the question which did not fall for consideration of the Division Bench remained undecided in the said decision presumably on account of the peculiar pleasing in tha case I find that without a decision being given on that aspect, the question falling for the consideration of the Court cannot realty be said to have been fully decided and this is what has propelled me to give a rather fulsome judgement on the case as a whole.

2. The facts of the case fall within a very narrow compass. For the sake of convenience I will refer to the parties, with reference to their position in the original execution proceedings, that is say, as judgement debtor, decree holder and auction-purchaser Sometime before the year 1965 one Vishwanath had obtained a money decree against Moiz Gayastiddin, the judgment-debtor. In execution of the decree, he filled Darkhast No.2 It was he who allowed to put the house for auction knowing or believing it ot know that it was of Mahmoodabt and not of his. In my opinion, the suit of the plaintiff is fit to be decreed against defendant No. 2 and hence issues Nos. 4 and 5 are decided into on the ?) affirmative. His suit is fit to be dismissed against the defendant No. 1 There is no need to go in details how much amount was withdrawn by such of the defendants from the Court. The defendant No. 2 is liable to pay the whole of the suit amount to the plaintiff.'

3. In the view taken by the learned trial Judge, he decreed the plaintiff's suit against the original judgment-debtor (defendant No. 2) to the extent of Rs. 4,025/- with costs. The suit against defendant No 1, the decree-holder, was dismissed with no order as to costs.

4. Against the said decree the plaintiff/auction-purchaser himself filed Appeal No. 357/71 to the District Court, Bhir, it is difficult to conjecture as to what motivated the plaintiff/action-purchaser to file the said appeal. He had already got decree for the entire amount which he had prayed for., We assume that he was faced with some difficulty in the wake of execution of the same against defendant No. 2 and probably that was what actuated him to prefer an appeal for the purpose of getting a decree against defendant No. 1. Decree-holder as well. Whatever that may be, the fact remains that such an appeal was filed. In the said appeal, the learned District Judge held that the auction-purchaser had a remedy by way of an independent suit even against the decree-holder on the principles analogous to Section 65 of the Contract Act, He, therefore, held that a suit by auction-purchaser for recovery of the purchase money from the decree-holder was maintainable. The learned District Judge held that the decree-holder in the present case had recovered a sum of Rs. 1,600/- from out of the amount of Rs. 4,025/- deposited by the auction-purchaser and that, hence, the said amount from the decree-holder. The learned District Judge therefore, allowed the appeal but the decretal order that be passed in the appeal is rather peculiar and of rather remarkable character. He set aside the portion of the judgment of the trial Court dismissing the suti against defendant No. 1 decree-holder and decreed the plaintiff's suit against the said decree-holder to the extent of Rs. 1,600/- It is evident from the decretal order that so far as the decree for Rs. 4,025/- passes against defendant No. 2 the judgment-debtor was concerned, he kept the same intact as it was we are thus faceted with a strange spectacle. The plaintiff auction-purchaser had filed a suit for Rs. 4,025/- as a result of the judgment of the appellate Court, the decree is passed in his favour totally for a sum of Rs. 4,025/- plus Rs. 1,6000/- that is to say. Rs. 5,625/-. The error contained in this part of the judgment, however is the evident result of a technical slip. Since I am setting aside the entire decree passed by the appellate Court and since the decree passed by the trial Court against defendant No 1 has gol to be restored because be had filed no appeal against the same. I need not efer to this part of the error. The technical error, committed by the learned District Judge. In this judgment any further.

5. Against the said decree passed by the learned District Judge, the original decree holder defendant No./ 1 in these proceedings, had filled the present second Appeal.

6. As stated hereinabove. 1 am referring the plaintiff herein as the auction-purchaser, defendant No 1 as the decree holder and defendant no. 2. As the judgment-debtor.

7. As regards the correctness of the judgment of the lower appellate Court. I am little unhappy to state that no pains appear to have been taken from the side of the Bar or the side of the Bench either ot look up the case law on the point or to examine the first principals upon which the real question falling for determination in the appeal arose. The learned District Judge has relied upon the judgment of the Rajasthan High Court n Thakkar Lal v. Nathulal. . To come to his ultimate decision. By following the said decision, he had held that the decree holder was liable to pay back the amount received by him to the auction-purchase under the provisions or S. 65 of the Contract Act, While relying upon the said decision attention of the binding authority of the been invited to the binding authority of the Court in Santimmppa's case (AIR 1950 Bom 131) (supra). The ratio decedent of the Bombay authority is in direct conflict with that of the Rajasthan authority and it is neediness to say that it is the Bombay authority which was binding upon the Court below. It is therefore a manifest error on the part of the learned District Judge to rely upon and follow the ratio of the Rajasthan indigent when the question in issue was finally decided by out own High Court while making this observation. I am sliver to the position that the Bombay judgment of the Division Bench might not have been nay must not have bee, brought of the notice of the learned District Judge. But the rather sorry state of affairs emerges not from the fact that the Bombay judgment was not referred to by the learned judge because pf the want of assistance from the Bar, but the fact is that the Rajasthan High Court judgment. Referred to above, itself refers to the Bombay indigent delivered by the Division Bench and the Rajasthan judgment mentions its disagreement with the Bombay view. When the attention of the learned Judge was invited to the Rajasthan judgment be could not have, or rather he should not have, lost sight of the important portion of the judgment where reference is made to the Bombay judgement I do not whish to go in the matter more decply, but earnestly hope that this observation will have its own effect for the guidance of the lower judiciary.

8. Coming to the question arising in this Second Appeal. The question really had got to be analysed as follows:-

(I) Whether the auction-purchaser had any right to recover the purchase money deposited by him in the Court for the purpose of purchase of the property brought for sale in the execution proceedings on account of the fact that the judgment-debtor had no saleable interest in the property after the confirmation of the sale.

(2) If he had any such right, who was the person, between the judgment-debtor and the decrer-holder, upon whom the corresponding liability could be fastened.

(3) Assuming that by virtue of the right in the auction-purchaser and the corresponding liability upon either of the judgment debtor of the decree-holder there arose a cause of action in favour of the auction-purchaser, what was his remedy? Whether his remedy lay only within the machinery provided by Order 21 of the Civil R. C. Or whether an independent suit was maintainable.

(4) What would be the nature of the result? That is to say, would if be founded in Torts, Contract, quasi-contract and so on?

9. As stated space, practicality all the above questions have been fully answered by the Division Bench of the Court while deciding the case of Santimmappa v. Balbhim Co-op. Credit Society. AIR 1950 Bm 131. As will be presently pointed out, for some reason of the offcer, the last aspect o the question remained undecided by the Court. Again, as will be presently pointed out be me, the real question in this dispute cannot be said to be fully answered and decided on less even the last mentioned aspect is decided upon. This father exhaustive judgment on my part is necessitated on account of this peculiar position

10. This leads me to the judgment of this Court in Santimappa's case : AIR1950Bom313 . The facts of the case were as follows: A co-operative credit society had obtained an Award against its judgment-debtor Basawwa for a sum, of Rs. 576/- In execution of the Award the property belonging to the judgment-debtor was brought to sold in Feb. 1934. There were some other creditors having enforceable rights against the same judgment debtor; but the facts relating to that aspect of the case are totally irrelevant for our purpose and hence I need not mention the same in the judgment. The relevant fact is that the Co-operative society brought the suit property belonging to the judgment-debtor for sale and the same was purchased by the auction-purchaser. The auction-purchaser also got possession of the property and the co-operative society got its moneys recovered from the amount paid by the auction-purchaser. Later on the adopted son of Basawwa filed a suit against the auction purchaser for the recovery of the self-same property contending that the original judgment debtor had no right, still and interest to alienate the property. His suit was decreed and as a result of the decree the auction-purchaser by him in the auction sale, In these circumstances the auction purchaser filed a suit against the decree-holder, viz. The co-operative society, for refund of the purchase money from the society. The basis of the suit was that the judgment-debtor had absolutely no saleable interest in the suit property and that, hence, the decree-holder was 1982 Bom/3 1 G-19 in equity liable to repay the moneys received from the auction-purchaser. The plaintiff auction-purchaser was non-suited by the trial Court and his appeal in the District Court met with the same fate. The auction-purchaser filled second Appeal which was referred to the Division Bench for consideration. Reference to the Division Bench was necessitated by virtue of the apparent conflict between the two previous judgment of this very Court, viz in in Rustomji Ardeshir v. Vinayak Gangadhar, (1911) 35 Bom lr 29 and in Balvant Raghumath v. Bala ILR 46 Bom 833 : AIR 1922 Bom 205.

11. The Division Bench consisting of Bavdekar and Dixit, JJ. Considered practically the entire case faw on this point. It firstly came to the conclusion that there was no real conflict between the above mentioned two Bombay authorities. The Division Bench held that the first authority. The Division Bench held that the first authority which was decided as early as in the year 1911, reported in (1911) 35 Bom lr29. Was really based upon the old Civil P. C.1882, which had in effect given special right to the auction-purchaser to file a suti against a decree-holder for recovery of his purchase money in the event of the failure of the consideration. The Division Bench found that the subsequent Civil P, C., 1908. Had made a sharp departure from this legal procedure. The decision of this Court reported in LJR 46 Bom 833 : AIR 1932 Bom 205 was based upon the new Code of the year 1908. In the latter Bombay authority the Court came to the conslusion that the suit contemplated by the old Code was itself the result of the statute and not the result of any common law right. Further, the Division Bench came to the conclusion that the right to sue, facilitated by the old Code, was taken away by the Civil P. C. Of 1908. The Division Bench deciding the question in the year 1550 in Santimmappa's case thus found that there was no real conflict between the two authorities as such.

12. This Court in Santimmappa's case AIR 1950 Bom 3131 proceeded further to consider the question regarding the right of the auction-purchaser in fullness. It considered the various aspect of the question and it held that the judgment of this Court in BalavantRaghunath v. Bala. ILR 46 Bom 833 : AIR 1922 Bom 205 was a correct judgment. By the said judgment it was held that the auction -purchaser had no right to file an independent suit against the decree-holder after the confirmation of the sald for the recovery of the purchase money from him on the ground that the original decree-holder judgment-debtor? Ed.) had no sale able interest in the property in question.

13. But while upholding the said judgment of this Court reported in Balvant Raghunath v. Bala 24 Bom LR 308: ILR 46 Bom 833: AIR Bom 205, the Division Bench deciding sentimmappa's case AIR 1959 Bom 313 went further and discussed the various decisions upon which the correct view was based. Whiled doing so this Court had also examined the judgments of the various other High Courts, the conclusions arrived at by whom were at variance with each other. This Court also referred to the judgment of the Privy Council in support of its findings. It is not necessary for the to refer to each of the aspect examined, discussed and adjudicated upon by the Division Bench. Suffice it here to say that the Division Bench has specifically held in Santimmappa's case that neither the judgment debtor nor the decree-holder gave warranty of title of any kind whatsoever at any time during the course of the auction-sale. Further this Court held that prior to the advent of 1908 Civil P. C. There existed a right available to the auction-purchaser to demand back the purchase money paid by him from the decree-holder. If the judgment-debtor was found to be having no saleable interest in the property) not only before the confirmation of the sale but even thereafter. That it emanated from the 1882 Code and that in view of the peculiar provisions of the 1882 Code be could do so even by resort to a suit. This Court held that this right was the creature of the specific statute. Viz. Civil P. C. 1882. That this right was taken away by the subsequent Code of 1908 and that there ended the right of an auction-purchaser to file a result for recovering back the purchase moneys paid by him in the given circumstances.

14. It was argued before the Division Bench that a suit would lie upon equitable consideration. Viz. That a purchaser who had been misted because of the action of decree-holder in bringing to sale the property in which the judgment-debtor had no saleable interest is entitled to hold the decree holder responsible for the loss caused to him. The argument was two-fold. In the first instance it was argued that there was a misrepresentation by the decree-holder and, secondly, it was contended that even otherwise the auction-purchaser was entitled to rescind the sale on the ground of mistake. This Court held that once it is held that no question of the decree-holder giving a warranty of little arose, no question of misrepresentation could arises. An regards the plea of mistake, this Court observed to para 7, of the judgment (AIR series) as follows.

'7. Now there is some authority (or saying that where it is found subsequent to the auction sale that the judgment -debtor had no saleable interest in the propety a suit for money had and received on the ground of total failure or consideration would lie. That such a suit would lie when the officer who held the sale had on authority to do so was pointed out by their Lordships of the Privy Council in the case mentioned above. Dorab Ally Khan v. Abdui Azeez. (1878) 5 Ind App 116. We must not go, however, into that question to this case because the action which the plaintiff brought in this case was certainly not an action for money had and recerved.'

The question regarding the auction-purchaser's right 16 sue on the principle of money had and received was thus left unconsidered and undecided by this Court, Presumably, parties pleadings in the said case left no scope for the Court to consider the effect of the equitable principal of moneys had and received. But whatever the position may be in that case, so far as the present appeal is concerned, I find no justification to refrain from deciding the right of the auction-purchaser, if any, based upon the principle of moneys had and received. The facts and pleadings obtaining in the present case and the contentions advanced in all the three Courts including this Court compel me to decide this aspect of the case.

15. Moreover, it would be useful referring to the observations of this court in paragraph 11 of the judgment in Santimmappa's case : AIR1950Bom313 (supra). Those observations have been made with reference to the decision of the Full Bench of the Lahore High Court (AIR 1932 Lah 401), which decision was based upon section 65 of the contract Act. While dealing with the view of the Lahore High Court this Court observed as follows:

'11. It is true that their Lordships of the Labor High Court in the Full Bench case which I have mentioned above referred to this section, but they referred to this section as well as to other sections of the contract Act merely by way of analogy. The ground upon which they based their conclusion, viz. That the auction purchaser was entiled to file a suit for refund of the purchase money, was two-fold; (1) there was a representation by the judgment-creditor when he brought the property to sale that the judgment-debtor had some interest in the properly. They said consequently that there was a misrepresentation by the judgment-debtor for which subsequently the action purchaser was entiled to avoid the transfer. In the second instance they said that there was also mistake by both the parties and an action for money had and the parties and an action for money had and received would therefore lie. Immediately we hold that there is no representation by the judgment-creditor that the judgment-debtor has some interest in the properly,the argument that the sale can be avoided because of misrepresentation fails. In our view, therefore it is not possible to accept the view that an auction purchaser who has not come to Court to set aside the sale in time had either independently or under the present code a right of suit other than a suit for money had and received.'

16. It will be noticed that even while considering the view of the Lahore High Court, the Division Bench has expressed no opinion on the question of the right of the auction-purchaser to sue on the basis of moneys had and received. It is this aspect of the judgment of Division Bench that has propelled me, with infinite deference to the Bench, to give this rather fulsome judgment expressing my views regarding the right of the auction-purchaser arising out of the doctrine of moneys had and received. To my mind, it cannot be said that the auction-purchaser's claim is fully adjudicated upon unless his right under the said doctrine of moneys had and received is fully examined, and hence have devoted some time and space to this aspect of the case in spite of the fact that ultimate conclusion that I have arrived at is the same to which the Division Bench had arrived while deciding santimmappa's case : AIR1950Bom313

17. There is another reason why I feel that the examination of the various manifestations of the doctrine of moneys had and received is necessary in the context of the facts of the present case. After the judgment in Santimmappa's case there has been a well considered judgment of the Division Bench of the Rajasthan High Court reliance upon which has been placed by the lower Appellate Court has given relief to the auction-purchaser against the decree-holder in identical circumstances by resorting to the principle of moneys had and received. I have no doubt expressed my disapproval of the fact that while following the authority of the Rajasthan High Court , the learned District Judge had overlooked the judgment of the Division Bench of this Court in Santimmappa's case AIR 1950 313. That was because, evidently , the Rajasthan judgment could have only a persuasive effect whereas the judgment of this Court in Santimmappa's case was a binding authority so far as the lower appellate court was cncerned. But that fact does not obviate the necessity of this court's considering the correctness of the judgment delivered by the Division Bench of the Rajasthan High Court . This is so for two reasons in particluar. Firstly, the decision in santimmappa's case was examined and followed by a learned single Judge (Jagat Narayan, J.) of the Rajasthan High Court in Thakar Lal v. Nathulal. . But this decision was overruled and the Division Bench ruling of this court in santimmappa's case was dissented from by the Division Bench of he Rajasthan High Court in the case of Thakar Lal v. Nathulal, . Secondly, because, I must say with great respect, their Lordships of the Divisions Bench of the Rajasthan High Court have summarised the previous case law in a very happy manner. It is stated by thier Lordships of the Rajasthan High Court in paragraphs 4,5,6 of their judgment (AIR serles) as follows :

'4 The principal question which thus emerges for determination in this appeal is whether an auction purchaser is entitled to recover back the purchase money from the decree-holder after the confirmation of the sale in his favour if it is held in a suit brought by a third party that the judgment-debtor had no saleable interest in the properly purchased by the auction-purchaser,and, thereafter he is deprived of the possession of such property.

5.As rightly observed by the learned single Judge, there is a divergence of judicial opinion on this point among the various High courts in India, and if we ,may say so, this divergence is further to be found in some cases between the decisions of the same High Court. One view is that an auction-purchaser ata Court-sale is not entitled to maintain a suit for the recovery of the purchase money paid by him in the event of the judgment debtor being proved not to have any title to the property sold after a sale has been confirmed. This view is based on the ratio decidendi that there is nop warranty of title in an auction-sale, and the auction-purchaser has, therfore, no right either in law or in equity to recover the purchase price from the decree-holder in case it subsequently turns out that what he has purchased does not belong to the judgment-debtor. Reliance has also been placed in support of this view on the theory that a statutory right was granted by S. 325 of the C.P. Codes of 1877 and 1882 by which an auction-purchaser was entiled to sue to recover the purchase price under those codes; but with the repeal of that section in the code of 1908 , that statutory right came to an end, and Rr.91 to 93 of O.21 of the present code do not permit any such thing to be done.

This view is forcefully pounded in a full Bench decision of the Allahabad High ourt in Amarnath v. Firm chotelal : AIR1938All593 , and a Bench decision of the Bombay High Court in santimmappa v. Balbhim co-op. Credit society, : AIR1950Bom313 To indicate the actress of the conflict which has existed on this subject it may be permissible to point out at this place that in an earlier full Bench decision of the Allahabad High Court in Bindeshri parshad Tewari v. Badal singh AIR 1923 All 394 it was held that an auction-purchaser under a decree which had been set aside after the confirmation of the sale as a result of a separate suit was entiled to recover his purchase money from decree-holder. It was further held in this case that his remedy lay by an application under S. 47, C.P. C. As other instances on this side of the line, we may refer to Kameshwas singh v. Bansidhar Marwari AIR 1937 Cal 310 and Abinash Chandra v. Motilal, : AIR1961Cal172 .

6. On the other side of the line are the Full Bench decisions of the Oudh Chief Court and the High Courts of Lahore, Madras and Rangoon in Bahadure singh v. Ram Phal Mehar Chand v. Milkhi Ram AIR 1932 Lah 401 Machkoundan v.Kottora Koundan AIR 1936 Mad 50 , and Aye Mung Maung v. A. Scott and Co. AIR 1940 Rang 1 respectively, and the High court of Travancore Cochin in State v. Padmanabhan pillai AIR 1956 tc.216 and Andhra pradesh in p. Malliah v. Brahmaya, : AIR1960AP89 , have v. Bhahmaya, : AIR1960AP89 , have also taken the same view. The view taken in these cases, broadly speaking, is that the purchaser of an immovable property at an auction held by the court in execution of a decree entitled to maintain a suit for recovery of the price paid by him , if he is deprived of the property subsequent to the confirmation of the sale in his favour, the judgment-debtor having been found to have had no saleable interest in it, inasmuch as the sale in such a case is founded on a mutual mistake of fact between the decree-holder and the auction-purchaser or there is a total failure of consideration, or such a claim is accepted to be maintainable on the basis of money had and received or a like equitable ground./ It has been further held in these cases that the object of the Legislature in enacting R. 93 of O.21. C.P.C. by which an auction -purchaser is entitled to an order an for he repayment of the purchase money on the setting aside of a sale before it is confirmed was not to deprive the auction-purchaser of any rights which he otherwise may have had in that connection but was merely to provide him with an unconditional right.capable of being enforced summarily to get back the purchase money if and when the sale is set aside under R. 92 and it is maintained that in other cases, his right to have recourse to the ordinary remedy of instituting a suit for refund and to bring his case within the ambit of the rules of equity or what may be called the general principles of law cannot be held to have been adversely affected.'

I do say with great respect that no fault can be found with the summary of the case law regarding both the schools of thought propounded by the various High High Courts. After giving the summary of the view expressed by the two schools of thought, the learned judges observed in para 7 of the report as follows :

'.. ... ... with respect, we believe that in a matter attended with such divergence of opinion, the best course should be to deal with the controversy on first principles and this is therefore the course which we think fit to adopt. The more so, as we are unable to agree with all the reasons which have been given by even those courts which favour the view which has commended itself to us. '

18. However, after expressing their determination to decide the case on first principles all that their Lordships of the Rajasthan High Court say in this behalf is that there was no cogent reason on the whole, as to why an auction-purchaser who has been deprived of the property purchased by him as a result of a suit filed by third party against him ... .. ... should not have the right to recover the purchase money paid by him, on the broad consideration that a purchaser should not be made to lose the property as well as the price the he paid for it for no fault of his . I emphasise the words 'for no fault of his' because , to my mind, those are the words which make the view of the Rajasthan High Court a vulnerable one. This position becomes clear from what is stated by thier Lordships of the Rajasthan High court in paras 10 and 11 of their judgment. As for instance their lord-ships have specifically repelled the view that there was some misrepresentation or fraud there was some misrepresentation or fraud practised by the judgment-debtor upon the auction-purchaser. The learned judges have thus, in effect, found that no right accrued to the action-purchaser either under the law of Torts or of contract to claim back the purchase money, however, after having found that there was was no justification or assuming any such right in favour of the auction-purchaser on the basis of implied warranty of title or fraud or misrepresentation, their Lordships of the Rajasthan High court still proceeded to hold that there did vest some kind of right in the auction-purchaser to recover back the moneys. Evidently this view is arrived at by the court on the lone belief that auction-purchaser was not at fault . Fault could be legitimately imputed ti the decree -holder or judgment-debtor if either of them was guilty of misrepresentation or fraud; but we have seen that that ground is not sustainable at all and even the Rajasthan High Court has wholly exonerated the decree-holder as well as the judgment-debtor of that charge. Morever, it may not be wholly correct to say that the auction-purchaser was at no fault at all. I will deal with another aspect of the reasoning of the learned Judges of the Rajasthan High court. Another basis of their reasoning is that the auction-purchaser 'should not be made to lose the property as well as the price he paid for it for no fault of his '. If that was so, why should the decree-holder be made to lose the fruits of the decree as well as the sale proceeds received from the court in satisfaction of the decree?

19. It is necessary to analyse this theory of loss being caused to the caused to the Auction purchaser 'for no fault of this' as also the theory of double loss to him. If we analyse this aspect we shall have to note that there is a basic difference between a transaction of voluntary sale between two willing parties and transaction to compulsory sale like a court sale between two willing parties one of whom is an unwilling party and the other is a party hoping to get some advantages from the fact that the sale was a compulsory sale. In the normal voluntary sale there is the warranty of title but the raison de'etre for the warranty itself is that the purchaser has paid full amount that the vendor expects from his property This is not so in the case of any compulsory sale, such as the auction sale. It is well known that in the case of an auction sale the auction-purchaser expects and hopes to purchase the property at the price much lower or at least somewhat lower than its market price. This is the principal advantage which the auction-purchaser gets in the compulsory sale such as the court sale and this is something of which the court is entiled to and must take judicial notice. This is the reason why the auction- purchaser has got the corresponding disadvantage of subjecting himself to a risk, viz. That, perhaps he might not get anything whatsover for the moneys paid by him. The theory that he loses both the moneys and property for no fault of his is, therefore, not quite correct.

20.Bmoreover, such a position is not unusual even vis-a-vis a private sale. Sec. 55(2) of the Transfer of property Act ensures warranty of title to the purchase of immovable property, but even such statutory warranty is subject to a contract to the contrary. A purchaser purchasing any property subject to such a contract to the contrary can never be heard to complain that his vendor has not saleable interest in the property in question. It could be readily seen that the position of a purchaser at court sale is no better than that of a private purchaser such as the above who purchases the property subject to a contract to the contrary. Such private purchaser could not be heard to complain that he was deprived of his purchase money for no fault of his.

21. After formulating the question that fell for their consideration the learned Judges of the Rajasthan High Court have observed as follows (at p. 145) :

'... .. ... and we see no reason why such wrong should be allowed to go altogether unredressed. The right to recover money that has been paid for a certain consideration, which has absolutely failed, and which is the sale of the property of which the auction-purchaser has been completely dispossessed is, in our opinion, a right of a civil nature .. ... ..'

22. The above reasoning of the Division Bench of the Rajasthan High Court assumes, (a) that there was a right vesting in the auction-purchaser to recover back the purchase money if the consideration paid by him absolutely failed; (b) consequently there was a wrong done to him.

23. The question then arose as to what is the source of the said right vesting in the auction-purchaser. The learned Judges therefore proceeded to and find out the source of this right form (I) the doctrine of frustration finding place in s. 65 of the contract Act, (ii) doctrine of moneys had and received obtaining in the English law.

24. So far as the revisions of s. 65 of the contract Act are concerned, that aspect of the question is already considered and disposed of by the Division Bench of this Court in santimmappa's case : AIR1950Bom313 (supra) and hence it is not necessary for me to re-examine that aspect of the case. It us sufficient for me to say with great respect that I am fully in agreement with what is expressed by thier Lordships. Viz. That the principles underlying section 65 of the contract Act can have no application whatsoever to the kind of transaction, such as the instant one.

25. It is the second source of the auction-purchaser's right, doctrine of moneys had and received relied upon by the Rajasthan High Court, that necessitates closer examination. This question is detail with in para 18 onwards in the judgment. But I am somewhat surprised that instead of examine the same with reference to the basic principles of common law or equity, the learned Judges have examined the same mainly with reference to and have decided the same mainly by reliance upon the provisions of Article 62 of the limitation Act. This is what they observe:-

'18. We should also like to mention that a right like this may also be founded on the principle of money had and received which has been recognised under the English law and to which effect has been given under the Indian Law also as would appear from the language of Art .62 of the Indian Limitation Act. It has been observed that when this article speaks of suit for money received by the defendant for the plaintiff's use. It points to the well -known English action in that form and consequently it applies where the defendant has received money which in justice and equity belongs to the plaintiff under circumstances which in law renders the receipt of it a receipt by the defendant to the use of the plaintiff. Thus where money is paid by the plaintiff to the defendant under an agreement which is void or which is discovered to be void, the money would be money received within the meaning of this article. We have had occasion to consider the scope and ambit of Article 62 of the Limitation Act in Jain Brothers and co., Bundi v. State of Rajasthan (Civil Reference No. 64 of 1961 , D/ - 19-8-1963 : to which both of us were parties) and what we held there may be briefly reproduced in the following extract (at PP. 20-21) : : ' Our conclusion, therefore, on a most careful and earnest consideration that we are able to give to this vexed matter is that we able to give to this vexed matter is that we find it difficult to escape the view. On the whole, that the correct interpretation to be put on the key words in Art. 62 is the one which should conform to the meaning of these words in the English cases and that a simple or literal interpretation of these words which appear to us to be clearly technical as discussed above would not be correct. That suits for money had and received, not only where the defendant may have actually received money for the use of the plaintiff as his agent or in a like capacity but it also governs suits for money whereof it can be rightly postulated that the defendant has received money which he had no right to receive and the receipt whereof by the defendant therefore amounts in law or by a legal fiction to a receipt by him for the plaintiff's use.''

26. In this connection I must state at the very outset that the Limitation Act (Art.27 thereof - corresponding to Art.28 of the old Act) does not create any substantive right in favour of any party. The right of the plaintiff/ auction-purchaser could not, therefore, be said to be following from any of the provisions if the Limitation Act. It is true that the Limiatation Act. Does not give an indication of certain substantive law. But the Limitation Act by itself does not create any new right from which a cause of action stems. That Act hardly be considered as a source of right

27. All the same, let us examine the provisions of Article 62 of the old Limitation Act. Which provided as follows :

----------------------------------------------------------------------------------------------------------------Description of suit period of limitation. Time from which period begins to run----------------------------------------------------------------------------------------------------62. For money pay - able three years. When the money is received,by the defendant to theplaintiff for money received by the defendant for the plaintiff's use.----------------------------------------------------------------------------------------------------------

Let us now examine whether the cause of action for the plaintiff's present suit can be said to be governed by the said Article 62. In order that the Article may so govern the plaintiff's cause of section. It must be shown that the decree-holder received moneys from the auction-purchaser and the moneys were received by him for the auction-purchasers use. It is difficult to see how the cause of action of the plaintiff-auction-purchaser's suit in the instant case could be said to be of the description given in column 1 of the said Article 62. The decree-holder did not receive moneys from thecourt where the auction-purchaser had deposited the same. There was absolutely no privity between the decree-holder and the auction-purchaser Further, it is difficult to see as to by what principle of common law or equity the decree-holder could be said to have received the same to the auction -purchaser's 'use'. This is one of the aspect of the matter. Which shows that the plaintiff cannot be said to be having any conveyable cause of action against. The decree-holder.

28. I would like to probe the matter a little deeper. Does Article 62 enact any sub-sanative law? No. It provides only a period of limitation in respect of a cause of action which is the result of a cause of action which is the result of the substantive law. The substantive law as such is to be found else where. In the instant case it will be found principally in S. 72 of the contract Act. Unfortunately the attention of the .learned Judges of the Rajasthan High Court was not invited to the said S. 72 of contract Act. To my mind, the correct legal position is that the said S. 72 of the contract Act exhausts all the categories of cases of moneys had and received so far as the law in force in India is concerned. Section 72 of the contract Act may, therefore, be set out verbatim :

'72. A person to whom money has been paid or anything delivered by mistake or under coercion , must repay or return it.'

Since, to my mind, the said S. 72 embraces all the aspects of the doctrine of moneys had and so far received as the law applicable in India is concerned, I will first analyse this section and see whether the plaintiffs suit could be said to be governed by this section. I will thereafter proceed to give my reasons for holding that this section is exhaustive as regards the suit based on the doctrine of money had and received.

29. Coming to the analysis of this section vis-a-vis the facts of the present case , what the section provides is that the person who receives money from another person must pay back to himself. One cannot read the section as follows :

' A person who has paid money or has delivered anything by mistake or under coercion , receive the same'

I'am stressing this aspect of the case because it must be seen that in cases such as the instant case the auction purchaser has not paid moneys to the decree holder at all. The moneys were deposited by him in the court. The moneys were received by the decree-holder from the court . On a plain analysis of the section 72 , therefore, the principle underlying the section can have no application to the supposed rights of auction-purchaser to recover back his money on account of failure of consideration. If this section does not apply, it follows that Art, 62 of the Limitation Act would be equally inapplicable. Reliance upon the said article for spelling out the liability of the decree-holder towards the auction-purchaser is , therefore, not justified.

30. Let us now consider the question whether S. 72 of the Contract Act is exhaustive in its character . It is well known that the principle embodied in the said section 72 is equitable principle, although it has become the part of the English Common Law. It may be that the principle has received more amplification and is of wider amplitude in English Law. But the framers of the Indian Contract Act have chosen to give the same statutory shape in the form of S. 72 of the Contract Act. It is well known that when a principle of common law is embodied in a statute it is not open for the court to rely upon the principle of common law merely because the provision of the statute does not cover or govern the case before them. ( See : [1959]1SCR1350 head notes (c) and (d) ).

31. But assuming that I am not right in holding that S. 72 of the contract Act is exhaustive in this behalf and even assuming that the principle of moneys had and received has some other source as well on the general principles of English Law. I must point out that even applying the principles of English Law the auction- purchaser could not be said to be having any equity in his favour.

32. Reference in this behalf may be made to most relevant principle that equity cannot come to the rescue of any person who suffers any detriment to himself with open eyes. Reference in this behalf may be made to Dutton v. Thompson (1883) 23 Ch D 278 , where it is held :

' It is not the province of a court of justice to decide on what terms or conditions a man of competent understanding may choose to dispose of his property. If he thoroughly understands what he is about, it is not the duty of the court of justice to set aside a settlement which he chooses to execute on the ground that it contains clauses which are not proper.'

( Cited with approval by Snell's Principles of Equity at page 126, 27th edition)

Reference may also be equally made of the recognised principle of equity , viz. That equity does not save people from consequences of their own folly , but will save them from being victimised by other people (see (1887) 36 Ch D 145 and (1952) 2 TLR 516. ( see Snell's Principles of Equity page 546).

33. If we appreciate the fact that the auction-purchaser has exposed himself to a risk with open eyes it can bbe safely said that there can be no equity in his favour and hence not even any independent principle analogous to the one embodied in Section 72 of the Contract Act can be invoked by the plaintiff/auction-purchaser. Assuming therefore that S. 72 of the Contract Act is not exhaustive, still I find there s no cause of action accruing to the plaintiff/auction-purchaser for refund of purchase money.

34. In any event no cause of action can be said to have accrued to the plaintiff as against decree-holder. I set out this position particularly to point out that even assuming that the auction-purchaser has got some kind of equity in him, at least he has no equity higher that the one had by the decree-holder. In the case before us the decree-holder has as much equity as the auction-purchaser has, if not more. After all it is he who has parted with the moneys in favour of the judgment-debtor, had wasted his time, money and energy for instituting the litigation and had obtained a decree against the hudgment-debtor. It is not, as if he had given any invitation to the auction-purchaser to purchase the property. It has been held by this Court and even by the Rajasthan High Court that he gave no warranty of title to the auction-purchaser when the auction-purchaser paid for the purchase of the property in auction. The equities are, therefore, at least equal in this case, if not higher as against the auction-purchaser. It is well-known that when equities are equal the first in time shall prevail. In the present case the equity in favour of the decree-holder is undoubtedly first in point of time and, therefore, it must prevail and therefore the auction-purchaser cannot be said to be having any right against the decree-holder at all.

35. The Division Bench of the Rajasthan High Court has also observed and held that right of the plaintiff is of a a civil nature contemplated by S. 6 of the Civil Procedure Code. But to my mind this approach rests upon a basically erroneous postulate, section 9 of the Civil Procedure Code. Does not create any right in favour of any party at all. All that S. 9 of the said Code says is that if any person has a right of civil character he can enforce it in a Court of civil law unless the same is barred by any statute of otherwise. For finding out as to whether the plaintiff has got any cause of action or not, one has to turn not to Section 9 of the Civil Procedure Code but to the substantive law and the substantive law does not seem to have devised any right for an auction-purchaser. In the case such as the present one. While making this observation I am ignoring the cases where the auction purchaser's claim is founded upon fraud or misrepresentation. The claim of the auction-purchaser such as that would be clearly governed by the law of (torts. But I find that there is no right in the auction-purchaser against the decree-holder and liense sec a of the Civil Procedure Code cannot be he invoked at all.

36. In this connection I may very briefly analyse the various sources of substantive rights of persons which may give them cause of actio for filing suits against other persons. Under the common law, a right can be founded either in torts or contract. Thereafter there come rights arising out of the various statutes. It is well-known that equity stepped in thereafter and rights which were not recongnised by common law were recongnised and enforced in Courts of Equity, It is thus that we find rights arising out of the provisions of the Constitution of the various countries which may fall in a class of their own. I have pointed out that the plaintiff/auction-purchaser can have no right in contract. He cannot fasten any tortious liability upon the decree-holder. By the stretch of imagination it can be conceived that a decree=-holds moneys in trust for the auction-purchaser. This is for the very simple reason that there cannot be conceived any relationship between the plaintiff/auction-purchaser and decree-holder. All that we are left with, then is right under the statute. A brief examination of the history of Civil Procedure Code in this behalf would show that the plaintiff/auction.purchaser's rights are extended by the provisions of the Code and they have no place outside the Code. This Court had considered this aspect of the question while considering santimmappa's case. This Court had come ti the conclusion that 1882 Code created a right in favour of auction-purchaser lay even in an independent suit and that too even after the confirmation of the amendment brought about in his position by the 1908 Code did away with this extra right of the auction-purchaser to file a suit for refund of money even after the question open whether an independent suit on money had and received was maintainable or not. But this court has specifically overruled any contention regarding maintainability of an independent suit under any provisions or principles of law. I have held here that the principle of money has and received cannot be invoked by the auction-purchaser in the context of the facts of the present case.

37. It would be somewhat enlightening and illuminating to have a look at the course that Civil Procedure Code has now adopted by virtue of the latest amendement. From the latest amendment it is clear that the procedure under O.21 of the Code is an extensive and self contained Code for the purpose of rights of the auction-purchaser for recovering back of his purchase moneys .

38. Reference may be made be made in this connection to the old provisions of the unamended Civil Procedure Code contained in O. 2. R. 103. These provisions specifically provided for independent suit, but even that suit related to the title of the judgment-debtor to the property in question. An auction-purchaser could not file a suit against either the judgment-debtor or a decree-holder for recovery of the purchase money deposited by him in Court. Under the amended Civil Procedure Code, which is in force at present, the entire provision for in independent suit is done away with and a self-contained machinery is provided whereby, if a judgment-debtor has no saleable interest in the property sought to be purchased by the autction-ourchaser, he can recover back the purchaser money deposited by him in the Court. Having regard to this scheme of these various Codes, I find no reason for holding that the unamended Civil Procedure Code, 1908 envisaged a suit being filed by the auction-purchaser against the decreeholder for refund of purchase money deposited by him in the Court.

39. I may mention here that I have considered the question of the right of the auction-purchaser only against the decreeholder. I have not expressed any problem as regards the auction purchaser's right against the judgment-debtor, as such. Prima facie it appears to me that since it is not a voluntary sale by the judgment-debtor, the same principle should hold the field; but I same principle should hold the opinion on that point since the same does not arise in this appeal.

40. However, in the present case the trial court has passed a decree against the judgment debtor for the full amount claimed by the auction-purchaser and he had filed no apeal against the same. The decree passed against him has therefore become final. The decision in the present appeal can have no effect upon the said decree obtained by the decree-holder against the original judgment-debtor.

41.I have delivered rather a fulsome judgment in this case because I find that this question arises with too much of frequency before the Courts and because the important aspect of the case was undecided by this Court in Samimmappa's case : AIR1950Bom313 .

42. In view of position discussed by me above. The appeal filed by the decree-holder must be allowed. The decree passed by the lower Court is set aside and the one passed by the trial Court is restored. The appeal is allowed with costs against the plaintiff.

43. Appeal Allowed.


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