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Thippiah Manjappa Vs. Huvinakuli Ramiah and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKarnataka High Court
Decided On
Case NumberCivil Revn. Petn. No. 703 of 1959
Judge
Reported inAIR1963Mys210; (1963)1MysLJ61
ActsCode of Civil Procedure (CPC) , 1908 - Order 21, Rules 65 and 84
AppellantThippiah Manjappa
RespondentHuvinakuli Ramiah and ors.
Appellant AdvocateM.P. Someshekar Rao, Adv.
Respondent AdvocateG.K. Govind Bhat and ; T.S. Rama Chandra, Advs.
Excerpt:
.....in the manner he has done he should not be understood as committing himself to the position that in no case does the sale take place on the date on which the officer conducting the sale accepts the bid. ' now, the sale which was the subject-matter of the case decided by his lordship as well as the sale which was the subject-matter of the kerala case were both sales held not in execution of a decree but by a receiver appointed by the court specially for the purpose of conducting that sale. even on the assumption that the appellate order was an incompetent one, to set aside that order which 1 hold to be correct would be to restore the order of the munsiff which, in my opinion, is wrong, and that is a strong reason why i should decline to interfere with the order of the appellate judge......the 14th, the entry in the order sheet opens with the following office note:'d. mr. by sri k. m. sale held and one item is sold for rs. 3500-0-0 and purchased by one khandikada huvinakuli ramaiah. 1/4 s. a. of rs. 875-00 recovered and credited to the bank. other two items not sold as the more than d. a. is realised. sale list filed.' immediately below that, the order of the munsiff reads as follows:-'bid is too low. sale not accepted. fresh sale on 8/9-8-1957.' 5. it appears that the auction-purchaser-first respondent also deposited into the court the balance of the bid amount within fifteen clays from the date of the sale. alleging that he was unaware of the order of the munsiff dated 14-6-1957 mentioned above until he went to the court to find out the date fixed by the court for.....
Judgment:
ORDER

A. Narayana Pai, J.

1. In execution of a decree obtained by the second respondent in this Revision Petition in Original Suit No. 123 of 1948-49 on the file of the Court of the Munsiff at Sagar, certain items of immovable property were brought to sale on 13-6-1957 and one of the items was purchased by the first respondent in this Revision Petition. The sale was ordered on 22-3-1957. The entry in the order sheet of that date reads as follows:

'Decree-holder by Sri K. M. Judgment-debtors 1 to 4 and 5 absent. V.S.T. and S.F. paid and filed with the decree copy. Sell on 13/14-6-57.'

2. The proclamation of sale is in Form No. 29 set out in Appendix 'E' to the Code of Civil Procedure, translated into Kannada. The sale was held by the Nazir of the Munsiff's Court.

3. By the sale of the item purchased by the first respondent, the entire decree amount was realised. Hence the sale of the rest was not conducted. The report of the Nazir which is in Kannada is as follows : (Omitted: the office note in the next para gives the purport thereof in English -- Ed.)

4. On the 14th, the entry in the order sheet opens with the following office note:

'D. Mr. by Sri K. M. Sale held and one item is sold for Rs. 3500-0-0 and purchased by one Khandikada Huvinakuli Ramaiah. 1/4 S. A. of Rs. 875-00 recovered and credited to the Bank. Other two items not sold as the more than D. A. is realised. Sale list filed.'

Immediately below that, the order of the Munsiff reads as follows:-

'Bid is too low. Sale not accepted. Fresh sale on 8/9-8-1957.'

5. It appears that the auction-purchaser-first respondent also deposited into the Court the balance of the bid amount within fifteen clays from the date of the sale. Alleging that he was unaware of the order of the Munsiff dated 14-6-1957 mentioned above until he went to the Court to find out the date fixed by the Court for confirmation, he preferred an appeal against the Munsiffs order to the Court of the Civil Judge, Shimoga. The learned Civil Judge, following the decisions of the erstwhile High Court of Mysore reported! in Nanjayya Setty v. Sharadamma, 3 Mys LJ 52 and S. Mahamed Sadick v. Seethamma, 12 Mys L J 25, allowed the appeal and set aside the order of the Munsiff.

6. In the lower Appellate Court the decree-holder as well as the judgment-debtors who had been impleaded as respondents to the appeal had remained ex parte. The first judgment-debtor has filed this Revision Petition impleading the auction-purchaser as the first respondent and the other judgment-debtors as respondents 2 to 7. Only the auction-purchaser first respondent has appeared to contest this Revision Petition. The judgment-debtors-respondents have remained ex parte.

7. The principal contention on the merits put forward by the learned counsel for the petitioner is that the lower Appellate Court was wrong in thinking that the Munsiff did not have the power or the jurisdiction of refusing to accept the bid. It is also alternatively contended that the appeal to the Civil judge was incompetent, because the order of the Munsiff was not appealable under any of the provisions of the Code of Civil Procedure.

8. It is seen that so far as the selling Officer, the Process Nazir, himself is concerned, he has not only accepted the bid of the first respondent as the highest bid made before him and closed the auction-sale but also received from the auction-purchaser twenty five percent of the bid amount. As already stated, the sale proclamation was in Form No. 29 of Appendix 'E' to the Code of Civil Procedure. The Third condition, among the conditions of sale set out therein, which is relevant to the case, reads as follows:

'The highest bidder shall be declared to be the purchaser of any lot, provided always that he is legally qualified to bid, and provided that it shall be in the discretion of the Court or officer holding the sale to decline acceptance of the highest bid when the price offered appears so clearly inadequate as to make it advisable to do so.'

9. In the case reported in 12 Mys. LJ 25, it was held, that in a sale held by a Court in execution of a decree, it becomes complete when the officer of the Court Knocks down the property to the highest bidder and receives the deposit of 25 per cent of the price and that thereupon such a bidder should be deemed to be the purchaser of the property. In taking that view, Mahadevayya, Officiating Chief justice, who decided that case, applied an earlier Bench decision of the erstwhile High Court of Mysore reported in Mohomed Fakrudin v. Hayath Bi, 28 Mys. C C R 125. The relevant paragraph in the judgment of that case reads as follows:-

'The conditions of sale mentioned in the proclamation of sale. ..... lay down that the highest bidder shall be declared to be the purchaser provided that the Court or the officer conducting the sale shall have the discretion to decline acceptance of the highest bid when the price offered is so clearly inadequate as to make it advisable to do so. But this discretion should be exercised before the bidder is declared to be the purchaser and the deposit of 25 per cent of the price is accepted. After the deposit is received the sale becomes complete .... ..... Though under Order XXI, Rule 69 the officer conducting the sale is required to take the per-mission of the Court to adjourn it if it is held within the precincts of the Court we find no warrant for holding that he should take the leave of the Court for concluding the sale.'

10. It appears, therefore, that the view taken by the learned Civil Judge in this case is in accordance with the rulings of the erstwhile High Court of Mysore referred to above.

11. Among the cases relied upon by the learned counsel for the petitioner before me is a Bench decision of the erstwhile High Court of Mysore reported in Racha v. Narasimhachar, 9 Mys L J 160. In that case, the Court while granting permission to the decree-holder to bid at the sale in execution of his decree directed that the purchase by the decree-holder should be subject to the acceptance of the bid by the Court on 31-5-1928 which was the date fix-ed for the next hearing of the execution case. The sale itself was held on 18-5-1928 by an officer of the Court. The decree-holder offered a bid of Rs. 300/- but the bid was not closed as it had to be accepted by the Court. In accordance with the order of the Court it was placed before the Court on 31-5-1928 on which date the Court accepted the bid. On those facts it was held that for the purpose of computing the period of thirty days either under Article 166 of the Limitation Regulation or Order XXI, Rule 92 (2) of the Code of Civil Procedure, the date of the sale must be deemed to be not the date on which the sale was held by the officer of the Court but the date on which the bid was accepted by the Court. The observations on which the learned counsel for the petitioner relies occur at page 162 of the Report and read! as follows:

'Moreover, in para 3 of the conditions of sale prescribed in Form No. 29 (proclamation of sale), there is a proviso to the effect that it shall be in the discretion of the court or officer holding the sale to decline acceptance of the highest bid, when the price offered appears so clearly inadequate as to make it advisable to do so, and this power the Court can exercise only when the papers are submitted to it, on the date fixed for the purpose. Generally it is exercised on the date fixed for the return of the warrant of sale, but there may be cases, in which the Court may fix a date specially as it has done in the present case, for the acceptance of the bid. It appears to us therefore, that the date on which the bid of the decree holder was accepted by the Court must be deemed to be the date of the sale.'

12. It cannot be and is not disputed that there is one distinguishing feature in this case which does not exist in the other two cases already referred to. Whereas in those cases the Court does not appear to have reserved to itself the discretion of accepting the bid taking away the discretion of the selling officer to accept or decline to accept the bid, ire this case in 9 Mys. LJ 160, the Court did expressly reserve that discretion to itself. But the learned counsel for the petitioner says that the observations last cited must be so read as to suggest that whenever the executing court fixes two dates, one for the sale and the other for making the return of the sale warrant, the Court must be deemed to have so reserved the discretion to itself especially in the case like the present one where the return is required to be made on the very next day after the sale and the sale is held within the precincts of the Court between 11 A.M. and 5 P.M. which are the hours fixed for the sittings of the Court. It is pointed out that that was how those observations were understood by Somnath Iyer, J., in the unreported decision in Syed Nabi Sab v. Sheik Hyeder, Civil Revn. Petn. No. 261 of 1959, D/- 18-1-1961 (Mys). In that decision, however, his Lordship clearly states that what the date of the sale is must depend upon the circumstances of each case and' that by virtue of his deciding the case in the manner he has done he should not be understood as committing himself to the position that in no case does the sale take place on the date on which the officer conducting the sale accepts the bid.

13. In this view, the observations contained in the judgment reported in 9 Mys L J 160 to the effect that the discretion of the Court whether or not to accept a bid is generally exercised on the date fixed for the return of the warrant of sale should be taken to apply to cases where the Court expressly reserves to itself the exercise of such discretion.

14. Hence it is clear that the view taken by the erstwhile High Court of Mysore is that unless the executing Court reserves to itself the discretion under condition No. 3 of the sale proclamation in Form No. 29 of Appendix 'E' to the Code of Civil Procedure whether or not to accept the bid made at the auction sale held under its orders, the officer of the Court conducting the sale has himself, without the need of having to make a separate reference to the Court, the discretion of either accepting or not accepting a bid made at the auction held by him, that such discretion must be exercised by him before the bidder is declared to be the purchaser and the deposit of 25 per cent of the price accepted by him and that when he knocks down the property to the highest bidder and receives such deposit, the bidder must be deemed to have become the purchaser.

15. If, therefore, this principle is applied, it has to be held that the sale in favour of the first respondent became complete on the date of the sale itself when the process Nazir declared him the highest bidder, closed the auction and accepted from him the deposit of 25 per cent of the bid amount, that the Munsiff was wrong in purporting not to accept the bid and ordering a resale of the property and that therefore the order of the lower Appellate Court is correct.

16. That is the view contended for on behalf of the first respondent. His learned counsel Mr. G. K. Govinda Bhat supports the view taken by the erstwhile High Court of Mysore as the correct one in law and points out that the same view has been taken by the High Courts of Rangoon, Lahore, Nagpur and Allahabad in Lokman Chhabilal Jain v. Motilal Tulsiram Agarwala, AIR 1939 Nag 269 : Maung Ohn, Tin v. P.R.M.P.S.R.M. Chettyar Firm, AIR 1929 Rang 311; Hoshnak Ram v. Punjab National Bank Ltd., AIR 1936 Lah 555; and Ebadullah Khan v. Municipal Board, : AIR1950All450 .

17. It is not necessary to make a detailed reference to these cases because the reasoning on which they proceed is based on the provisions of Rules 65 and 84 of Order XXI of the Code of Civil Procedure and may be briefly summarised as follows:

18. According to Rule 65 of Order XXI, save as other-wise prescribed, every sale in execution of a decree shall be conducted by an officer of the Court or by such other person as the Court may appoint in that behalf. Rule 84 states that--

'On every sale of immovable property the person declared to be the purchaser shall pay immediately after such declaration a deposit of twenty-five per cent on the amount of his purchase money to the officer or other person conducting the sale, and in default of such deposit, the property shall forthwith be resold.' Though Rule 84 does not state by whom it shall be declared that a particular person has become the purchaser, the Court itself or the officer conducting the sale, the direction contained in the rule to hold a resale forthwith in default of the declared purchaser making the deposit of twenty-five per cent of the purchase money would indicate that the declaration is expected to be made by the selling officer himself. This rule does not require that the declaration should take any particular form or should be made in any selected prescribed words. When the officer finds no bid forthcoming by any person higher than the bid already made and knocks the property down to the person who has made that bid in the way it is usually done at auctions, viz., by calling out the bid thrice, that very action of knocking down the property should, in my opinion, be held to amount such a declaration. 'Having regard to the fact that the rule places the obligation of making the deposit of twenty-five per cent of the purchase money on a person who is declared to be the purchaser, the receipt of such deposit from him by the selling officer necessarily leads to the inevitable conclusion that he had declared the said person to be the purchaser.

19. In view of this clear consequence flowing from the language employed in the relevant rules and the logic of events pertaining to an auction held under those rules as summarised above, I am not persuaded that the view taken by the erstwhile High Court of Mysore is not in accordance with the true effect of the provisions of the Code.

20. Mr. Somasekhara Rao, the learned counsel for the petitioner, however, contended that the said view may require reconsideration by this Court and cited decisions of the High Courts of Calcutta and Patna reported in Fazil Meah v. Prosanna Kumar, AIR 1923 Cal 316 (1); Ram Sakhi v. Radha Nath, AIR 1926 Cal 827; Surendra Mohan v. Manmathanath, : AIR1931Cal583 and Jai Bahadar Jha v. Matukdhari Jha, ILR 2 Pat 548 : (AIR 1923 Pat 525). These rulings seem to proceed on the basis that the Court must always be held to reserve to itself the discretion under paragraph 3 of the prescribed Form for the proclamation of sale even though the Court does not appear to have expressly reserved the same to itself while ordering the sale or at any time before the sale is actually held by the officer of the Court. An observation in Mohomed Yacoob v. P.L.R.M. Firm, AIR 1932 Rang 17, describes this power of the Court as in the nature of a quasi revisional jurisdiction. In certain other cases it is described as an inherent power or jurisdiction of the Court.

21. Mr. Somasekhara Rao urges that this view is more acceptable both on principle and on the wording of paragraph 3 of the prescribed form of sale proclamation itself.

22. The principle relied upon by him is the one stated in Subbaraya v. K. Sundararajan, : AIR1951Mad986 and Kutti Enuri v. Union Timber Traders, : AIR1960Ker69 . That principle in the words of Rajamannar, C. J., of the Madras High Court, who delivered the judgment in the former case, is that --

'a sale conducted by an officer of Court would become a farce if the Court is obliged to accept the highest bid at such a sale, though the Court is convinced that the bid does not represent adequately, the real price of the property.'

Now, the sale which was the subject-matter of the case decided by his Lordship as well as the sale which was the subject-matter of the Kerala case were both sales held not in execution of a decree but by a receiver appointed by the Court specially for the purpose of conducting that sale. In both the cases under the orders of the Court directing the sale express provision was made in the conditions of sale to the effect that the sale was subject to confirmation by the Court. In that view, Rajamannar, C. J., held -- and the learned counsel for the highest bidder actually conceded -- that the said bidder had not obtained any enforceable right to the property by virtue of his having made that bid. It is no doubt true that in an earlier case in Madras reported in Ratnasami Piliai v. Sabapathy Pillai, : AIR1925Mad318 and relied upon in both these cases, it does not appear that there was any such express condition stipulated when the sale by the receiver was directed by the Court. The Bench in that case stated the principle to be that the receiver being an officer of the Court whatever powers he exercises are those delegated to him by the Court and that therefore the exercise of such delegated powers by him is on principles subject to the control of the Court.

I do not think that an officer of the Court conducting a sale under Order XXI of the Code of Civil Procedure would in all respects be in the position of a delegate of the Court in the same way as an ordinary receiver or commissioner appointed for sale may be. On the contrary, the express provisions of Rule 65 to the effect that every sale held in execution of a decree shall be conducted by an officer of the Court or by such other person as the Court may appoint in that behalf, would make out that while conducting the sale he is exercising the powers of the Court itself in the manner prescribed by the relevant rules under Order XXI of the Code of Civil Procedure.

23. The interpretation of paragraph 3 of Form 29 in Appendix 'E' to the Code of Civil Procedure suggested by Mr. Somasekhara Rao is that when both the Court and the officer conducting the sale have been given the discretion of accepting or declining to accept a bid, it must be held that the exercise of discretion by the officer conducting the sale at the time of the auction should not be held to take away the discretion undoubtedly conferred on the Court and that therefore such discretion of the Court, when exercised subsequent to the exercise of his discretion by the officer conducting the sale, can and should be exercised in the nature of a veto by the Court in the event of it coming to entertain an opinion different from the one entertained by the selling officer. Such an interpretation, in my opinion, can be accepted only if one ignores the provisions of Rule 84 of Order 21. The discretion, whether exercised by the Court or by the selling officer, must, for the reasons already stated, necessarily be exercised before a bidder is declared the purchaser of the property, because the moment such declaration is made the bidder immediately becomes liable to make the deposit of twenty-five per cent of the purchase money and in default of his making such a deposit, the selling officer is obliged to resell the property forthwith.

Hence, as pointed out by the decisions of the erstwhile High Court of Mysore, if the Court wishes to exercise its discretion, it should forbid its selling officer from accepting the bid by an express order made before the sale is actually conducted and directing him to place the bids before it, before any one of them is accepted and one of the bidders declared to be the purchaser. If the Court makes no such reservation, the exercise of discretion by the selling officer will have the same effect as the exercise of discretion by the Court itself.

24. I am therefore not persuaded that the view taken by the erstwhile High Court of Mysore requires or calls for any reconsideration by this Court.

25. The result is that the order of the Munsiff in this case must be held to be one not in accordance with the law and that of the Civil Judge correct in law.

26. in this view, the objection that the appeal to the Civil Judge was incompetent ceases to be material for the decision in this Revision Petition. Even on the assumption that the appellate order was an incompetent one, to set aside that order which 1 hold to be correct would be to restore the order of the Munsiff which, in my opinion, is wrong, and that is a strong reason why I should decline to interfere with the order of the Appellate Judge. In the alternative, should I set aside the order of the Appellate Judge as incompetent, I should interfere suo motu with the order of the Munsiff which will thus stand restored, and set it aside as one made without jurisdiction.

27. I therefore dismiss this revision petition.


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