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Maddi Kutumbarao Vs. Solasa Ramachandra Rao and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtAndhra Pradesh High Court
Decided On
Case NumberA.A.O. No. 4 of 1960
Judge
Reported inAIR1964AP95
ActsCode of Civil Procedure (CPC) , 1908 - Order 21, Rule 89(1)
AppellantMaddi Kutumbarao
RespondentSolasa Ramachandra Rao and ors.
Appellant AdvocateB.V. Subrahmanyam, Adv.
Respondent AdvocateD.P. Narayanarao, ;D. Govinda Rao and ;D.V. Sastry, Advs.
DispositionAppeal allowed
Excerpt:
.....of decree debt - order 21 rule 89 (1) (b) of code of civil procedure, 1908 - law permits decree holder and judgment debtor to mutually cancel decree debt - cancellation can be done either by an adjustment or constructive payment or by waiver by decree holder - decree holder agreeing in scheme suit for management of trust does not amount payment of debt or its equivalent - arrangement amounts to postponing of payment - provisions of rule 89 (1) (b) are to be strictly complied with and sale cannot be set aside under above arrangement. - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears..........with the deposit of the amount specified in the proclamation of the sale for payment to the decree-holder. as required tinder clause (b) of rule 89 of order 21 c. p. c. and set aside the sale.this petition was resisted by the appellant herein on various grounds. the main ground was that the deposit of the amount mentioned in the proclamation being a condition precedent for setting aside the sale, and as no amount has been thus deposited, the petition is liable to be dismissed. it was also contended that the decree-holder being a minor as no permission under order 32, rule 7 c. p. c. was obtained, the agreement cannot be given effect to.2. the subordinate judge, gudivada, allowed the application and set aside the sale. he held that it isnot necessary that the decree should be fully.....
Judgment:

Ekbote, J.

1. This appeal raises a question of no little importance and the facts can be very shortly stated. Respondent No. 1 was appointed Receiver in O. S. 60/57 pending before the Sub-Court, Viyayawada for the sole purpose of getting the sale held in E. P. 37/56 in O. S. 116/49 pending in Sub-Court, Vijayawada, set aside. Thammana Tatayya and Narayana Murthy Annapurna Satram was managed by the trustees, respondents 2 and 3. Respondent No. 4 obtained a decree for money against the said Annapurna Satram (choultry) and put the same in execution in E. P. 37/56. The properties of this choultry were sold in the Court auction on 1-7-1957. The appellant was the purchaser. He purchased the properties for Rs. 24,600/-.

In the meanwhile O. S. 60/57 was instituted inthe Sub-Court, Vijayawada for the removal of the trustees,respondents 2 and 3 owing to their mismanagement. Oneof the reliefs claimed in that suit is for getting the saleheld as above set aside. The suit O. S. 60/57 was filedunder Section 92 C. P. C. Another relief which was claimedin the said suit is to make a provision to the effectthat the decree in the present suit should be paidunder the scheme settled in that suit. TheReceiver appointed in the said suit filed an applicationunder Order 21, Rule 89, C. P. C. on 31-7-1957 to set asidethe sale. He deposited a sum of Rs. 1,230/- representing5% of the purchase money for payment to the purchaserand Rs. 410-15-0 as the poundage and Rs. 123/- asinterest.

It was alleged inter alia, in the said petition that in O. S. 60/57 necessary provision for the discharge of the decree debt due to respondent No. 4 from the choultry is sought to be included and the mother of the 4th respondent who is the guardian showed her willingness for an adequate provision for the discharge of the decree debt being made in the said suit and has agreed 1o postpone realising the decree debt in O. S. 116/49. It was therefore prayed by the Receiver that the Court may dispense with the deposit of the amount specified in the proclamation of the sale for payment to the decree-holder. as required tinder Clause (b) of Rule 89 of Order 21 C. P. C. and set aside the sale.

This petition was resisted by the appellant herein on various grounds. The main ground was that the deposit of the amount mentioned in the proclamation being a condition precedent for setting aside the sale, and as no amount has been thus deposited, the petition is liable to be dismissed. It was also contended that the decree-holder being a minor as no permission under Order 32, Rule 7 C. P. C. was obtained, the agreement cannot be given effect to.

2. The Subordinate Judge, Gudivada, allowed the application and set aside the sale. He held that it isnot necessary that the decree should be fully satisfied and what is necessary is that there should be an arrangement between the decree-holder and the judgment-debtors. Dissatisfied with this order, the purchaser has filed this C. M. A.

3. The principal contention of Mr. B.V. Subrahmanyam, the learned Advocate for the appellant, is that the arrangement entered into between the decree-holder and the judgment-debtor in Ex. A-3 does not amount to payment within the meaning of Order 21, Rule 89 C. P. C. and the Subordinate Judge, therefore, was in error in setting aside the sale. In order to appreciate this contention, it is necessary to know what arrangement actually has taken place between the decree-holder and the judgment-debtors. We have already stated that a scheme suit under Section 92 C. P. C. has been filed. In that suit, a request is made that some provision should be made in the proposed scheme for the payment of the decree amount and a Receiver in that suit was appointed to get the sale set aside. The decree-holder seems to have agreed to this course. Thereupon, Ex. A-3 was entered into between the decree-holder and the judgment-debtors. The relevant portion of Ex, A-3 is as follows:

'The amount as per the decree in O. S. 116/49 of Sub-Court, Vijayawada, and subsequent interests and costs are amounts subsisting and due to the third respondent herein from the Tammana Tatayya and Narayanamurthy Annapurna Choultry of which the respondents 1 and 2 are the trustees.

As the plaintiffs in O/S. 60/1957 have filed that suit for framing a scheme for the management of the Choultry etc., and have asked in that suit for a provision to be made for the amount due to the third respondent in this petition, under the decree in O. S. 116/49, this third respondent agrees to the same.

Therefore, this 3rd respondent has no objection for allowing the petition that has been filed for setting aside the sale and for setting aside the sale held on 1-7-1.957 in this number (of suit), without the necessity of depositing the sale warrant amount.'

It is obvious from a plain reading of the document that the decree-holder has not been paid the decree-amount. The decree-holder neither has agreed to walve the decree amount nor certified that the decree either it adjusted or paid. What he has agreed to is that the request made in O. S. 60/57 for making a proper provision for the amount due to him under the decree should be allowed by the concerned Court. In other words, he has no objection if a provision is made in the scheme suit for the payment of his decree. Till then as a consequence he does not wish to continue the. execution of the decree and has no objection to set aside tha sale already held. What we have to consider is whether such an arrangement constitutes payment within the meaning of Order 21 Rule 89. The material portion of Rule 89 is In the following terms:

'89(1} Where immoveable property has been sold in execution of a decree, the judgment-debtor or any person deriving title from the judgment-debtor, or any person holding an interest in the property may apply to have the sale set aside on his depositing in Court-

(a) .....

(b) for payment to the decree-holder, the amount specified In the proclamation of sale as that far the recovery of which the sale was ordered, lessany amount which may, since the date of the proclamation of sale, have been received by the decree-holder.'

It is manifestly clear from the said provision that the amount specified in the proclamation of sale has to be deposited in Court for payment to the decree-holder. Any amount which may, since the date of the proclamation of sale, have been received by the decree-holder can, of course, be deducted. The question which naturally arises is: Does the arrangement-mentioned above amount to a deposit made in the Court for payment to the decree-holder, or does the arrangement result in the amount being received by the decree-holder? It is conceded that the said arrangement does not amount to a deposit made in the Court for the purposes of payment to the decree-holder. What is, however, contended is that the arrangement constitutes a receipt by the decree-holder since the proclamation was made. The question, therefore, is : What is the construction to be placed upon 'any amount which may have been received by the decree-holder'

4. In order to correctly appreciate the connotation of Rule 89(l)(b). It is to be remembered that this Rule is in the nature of an indulgence to the judgment-debtor it gives him a last chance of getting the sale set aside before confirmation upon the terms of satisfying the decretal debt and of paying compensation to the auction purchaser for the loss of bargain. It is clear that the object of the Rule is not merely or not specifically to preserve the immovable property in the hands of the judgment-debtor, but to ensure as far as may be possible that immovable properties shall not at Court sales be sold at inadequate prices. It is thus clear trial Clause (b) being intended to guard the interests of the decree-holder and to ensure the judgment-debtor locus penitential, and a final opportunity to recover his property sold at a Court auction, it must be strictly complied with before a sale is set aside under that provision. It is a rule which gives a very special indulgence to judgment-debtors or persons Interested in the property sold to satisfy the decree amount as stated in the proclamation which is due to the decree-holder in order that decree-holder can receive that amount and the sale could be set aside. The Court in such circumstances is bound, upon the conditions laid down in Rule 89 being satisfied, to set aside the sale. It is only therefore fair that when any decree-holder since the date of the proclamation receives something which satisfies his decree debt on application made by the judgment-debtor in that behalf the sale could be set aside.

The question, however is: is it necessary that the decree-holder 'must receive the amount in cash? The position seems to be clear now that the sum referred to in Order 21 Rule 89 need not be received through the Court, nor need it have been received in cash; it can also be in kind and the receipt can even be constructive. In our opinion the said provision permits the decree-holder and Judgment-debtor to mutually cancel the decree debt and that In law would amount to payment by the Judgment-debtor to the decree-holder. The cancellation of the debt, In our judgment, may be either by an adjustment or a constructive payment or by waiver by the decree-holder. In such circumstances it will be pointless if we insist that the judgment-debtor should again go through 1h& farce of making a deposit of the amount mentioned in the Bale proclamation in order only to get back theamount himself, as he had already satisfied the decree. If the decree-holder testifies that the decree has been paid or otherwise adjusted, it can be taken as I receipt by him under the provisions of Order 21 Rule 89 (1) (b).

It follows therefore that the words 'any amount which may have been received by the decree-holder' do not mean that the decree-Holder should nave received the amount in cash; the decree-holder can receive anything which to him is adequate equivalent of the amount which is owing to him by the judgment-debtor under the decree or even waive the whole of the amount. In such cam the judgment-debtor need pay nothing in Court in respect of the claim. This conclusion of ours Is supported by the following decisions:

Subbayya v. Venkata Subba Reddy, AIR 1935 Mad 1050; Muthuvenkatapathy Reddi v. Kuppu Reddi, (1940) 1 Mad U 629 (AIR 1940 Mad 427) (F8).

5. Mr. B.V. Subrahmanyam, the learned advocate for the appellant placed great reliance on the decision of the Privy Council in Nanhelal v. Umrao Singh, 58 Ind App 50 (AIR 1931 PC 33). We do not think that decision has any relevancy to the facts of this case. That decision undoubtedly decides:

'.....Order 21 Rule 2 which provides forcertification of an adjustment come to out of Court clearly contemplates a stage in the execution proceedings when the matter lies only between the Judgment-debtor and the decree-holder, and when no other interests have come into being. When once a sale has been effected, a third party interest intervenes and there is nothing In this rule to suggest that it is to be disregarded. The only means by which the judgment-debtor can rid of a sale, which has been duly carried out, are those embodied in Rule 89 ...... namely, by depositing In Courtthe amount for the recovery of which the property was sold, together with 5% on the purchase money, which goes to the purchaser as statutory compensation, and this remedy can only be pursued within 30 days of the sale. That this is so is.....clear under thewording of Rule 92, which provides that in such a case (i.e. where the sale has been duly carried out), If no application is made under Rule 89 the Court shall make an order confirming the sale and thereupon the sale shall become absolute.'

It is however perfectly clear that their Lordships were not dealing with the position which has arrived after an application has been made by the Judgment-debtor under Order 21 Rule 89 C. P. C. for setting aside the sale. In fact It is observed by their Lordships that is the only remedy to be pursued where a sale has been held which the judgment-debtor seeks to set aside. It Is obvious, therefore, that their Lordships did not consider the question whether 0rder 21 Rule 89 requires payment by the judgment-debtor to the decree-holder in cash or its equivalent. The question did not arise in that case and the questions which were under their Lordships' consideration admittedly did not arise in the present case. We are therefore unable to see how that judgment can be called in aid for the purposes of our enquiry.

6. That being the position of law, we have to see whether the above said arrangement arrived at between the decree-holder and the judgment-debtor amounts to a payment by the judgment-debtor to the dectee-holder, or a receipt, of amount by the decree-holder from the judg-ment-debtor, or is the arrangement adequate equivalent of the amount which is owing to the decree-holder by the judgment-debtor under the decree. It is not disputed that the said arrangement does not amount to a waiver of the decree debt on the part of the decree-holder. It is also conceded that no payment, actual or constructive has been made to the decree-holder by the judgment-debtor. What is contended is that when the decree-holder has agreed to the making of a provision in the scheme suit, whereby he will be paid his decretal amount, we should hold such an arrangement amounts to art adequate equivalent of payment within the meaning of 0rder 21, Rule 89.

We are afraid we cannot give effect to this argument. The arrangement cannot by any stretch of imagination be construed as a constructive payment, or its adequate equivalent. The decree has not been adjusted or satisfied. Merely because the parties agreed to the postponement of the payment of the amount, or agreed to receive the decretal amount through the scheme suit, it does not, in our opinion, mean that the decree is satisfied or adjusted. It is evident from Ex. A-3 that the decree-holder specifically mentions that the decree amount is still due. It is not necessary to look for other evidence when the petition itself asks for exemption from depositing the amount mentioned in the sale proclamation. If the decree is alive and the payment is postponed although the payment may have been agreed to be made by a provision made in the scheme suit, it cannot be said that the decree-holder has received the amount since the proclamation of the sale for the purpose of Order 21Rule 89.

Mr. O.P. Narayana Rao, the learned Advocate for the respondent invited our attention to the case in AIR 1935 Mad 1050. Relying on that decision the learned Advocate submits that that was a case where the decree-holder had merely agreed to accept a mortgage in satisfaction of the amount owing to him under the decree. His contention is that such an agreement to accept the mortgage was considered as an adequate equivalent to the payment of the decree. We are not persuaded to agree with this contention. It is true that, in the earlier part of the judgment, it is mentioned by Sir Beasley C.J. that the decree-holder agreed to accept a mortgage in satisfaction of the amount owing to him under the decree. But from the reading of the whole judgment, it is obvious that a mortgage was executed in favour of the decree-holder. It was not merely a case of an executory contract, but the execution of the mortgage appears to have been completed. It is obvious from the last portion of the judgment, wherein the learn' ed Chief Justice observed;

'With regard to the mortgage, which was accepted by fhe decree-holder in satisfaction of his decree, in my opinion, that can be taken as something which the decree holder regarded as a reasonable equivalent for the amount owing to him by the judgment-debtor under the decree.' That judgment therefore, does not assist the learned Advocate in any manner. We have therefore no hesitation in reaching the conclusion that the arrangement as arrived at between the decree-holder and the judgment-debtors as per Ex. A-3 does not amount to either payment or its equivalent within the meaning of Order 21 Rule 89(l)(1). We are fortified in the conclusion to which we have reached by two decisions of the Bombay HighCourt. In Manaji v. Aramita, AIR 1922 Bom 193, Macleod C.J., who spoke for the Court, observed in reference to the facts of that case, wherein it was contended that a part of the amount due to the decree-holder, with an undertaking to pay the balance, amounted to a deposit within the meaning of Rule 89 of Order 21, thus:

'Now an undertaking to pay a certain amount is riot payment, and, as has been laid down in previous decisions, the provisions of Rule 89 are a concession allowed to judgment-debtors, and they must be strictly complied with in order to enable the judgment-debtor to obtain the advantage of the concession. If part payment coupled with an undertaking to pay the balance were to be considered as payment in full, then the provisions of the rule would not be complied with.'

This decision was considered in a subsequent case by another Bench of the Bombay High Court. In Dattatreya v. Jagannath, AIR 1929 Bom 215 the question which posed for their Lordships' consideration was when the plaintiff and the defendant were negotiating for a compromise for the remaining sum which is due and when the plaintiff does not wish to claim that sum for the present does that arrangement amount to a payment or its equivalent within the meaning of Order 21 Rule 89? Relying upon the abovesaid previous decision of the Bombay High Court Marten, C.J., who gave the opinion for the Bench held that the provisions of the Rule have not been complied with and what is required to be deposited for payment to the decree-holder is the amount mentioned in that rule, the learned Chief Justice proceeded:

'in fact what we are asked to hold is that the difference between the two sums, that paid in and that mentioned in the proclamation of sale, was received by the decree-holder; while all that she admitted was that she did not wish to proceed any further with this particular darkhast to recover it. The requirement of Rule 39 is a statutory one, and we think that it cannot be satisfied in the manner in which it has been held to have been done in this case by the learned District Judge.' For the reasons given above our concluded opinion is that the learned Subordinate Judge was in error when he held that the arrangement between the decree-holder and the judgment-debtors attracts the provisions of Order 21, Rule 89 C. P. C. and that it is not necessary that the decree should be fully satisfied. It follows that as the requirements of Rule 89 of Order 21 have not been complied with, the petition to set aside the sale must necessarily be rejected.

7. In view of our conclusion in regard to the construction of Order 21 Rule 89, it does not seem to be necessary to go into the question whether the provisions of Order 32 Rule 7 C. P. C. vitiate the arrangement arrived at between the decree-holder end the judgment-debtors when permission to enter into that agreement was not obtained by the guardian of the decree-holder, who was a minor, from the Court. In the result, for the reasons we have endeavoured to give this appeal must be allowed, and the order of the Subordinate Judge is set aside with costs. The appellant will deposit the money subject to any objection which the other parties may have.


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