Chandra Reddy, C.J.
(1) The question that calls for decision by this Full Bench is whether it is open to a Court auction-purchaser, on finding that the judgment-debtor has no saleable interest in the property sold, to sue for a refund of the purchase money on the ground of failure of consideration.
(2) The facts leading up to this litigation may be briefly stated. The appellant obtained a money decree against the second defendant on 3-3-1950 in the court of the District Munsif, Eluru, and in enforcement of the decree, brought Ac. 1-92 cents of land to sale in November 1950. The sale was recorded on 2-5-1951. Meanwhile, the defendant carried an appeal against that decree and succeeded in getting that judgment set aside and the matter remanded to the trial Court. Pending the re-trial of the suit, the judgment-debtor executed a registered gift deed of this property in favour of his daughter and son-in law.
(3) On re-trail, the suit was decreed and, in execution of the decree, this land was re-attached and was being brought to sale. At that stage, the donees intervened with a claim based upon the gift deed. The claim petition was dismissed as having been filed too late. On the same date, the sale was held. The respondent, who knew about this gift which was mentioned in the proclamation of sale and also of the claim proceedings, purchased the property for Rs. 4,275/- and the sale was confirmed on 19-2-1953. The sale certificate was issued in his favour. Shortly thereafter, the defeated claimants brought a suit to set aside the summary order. Notwithstanding the objection of the respondent and the appellant that the gift was a nominal transaction brought into existence to defeat the creditors the suit was decreed.
(4) Thereupon, the respondent filed petitions under Order 21, Rules 91 and 93 C. P. C., to set aside the sale and to refund the sale amount. These applications were dismissed inter alia on the ground that they were barred by time. This led the respondent to institute the suit out of which this reference arises.
(5) The suit was resisted inter alia on the plea that the suit was incompetent by virtue of the relevant provisions of the Civil procedure Code.
(6) The trial Court relying on a Judgment of the Full Bench of the Madras High Court in Macha Koundan v. Kottora Koundan, ILR 59 Mad 202 : (AIR 1936 Mad 50) (FB) which held that where a judgment-debtor was proved to have had no saleable interest in the land sold and for that reason lost it the auction purchaser could sue the decree-holder for return of the purchase-money, overruled the objection of the defendant and decreed the suit. This judgment was confirmed on appeal by the Subordinate Judge, Eluru. The decree-holder dissatisfied with this decision, brought the second appeal to this court.
(7) When the second appeal came up for hearing before Seshachalapati, J., he referred it to a Division Bench as the soundness of ILR 59 Mad 202 : (AIR 1936 Mad 50) (FB) was canvassed before him.
(8) Thereafter, it came up before a Division Bench of this Court consisting of Satyanarayana Raju, and one of us (Venkatesam J.) As they thought that an authoritative ruling of the High Court was to be given as to the correctness of the opinion contained in the Full Bench decision, they referred the matter to a Full Bench.
(9) The Full Bench, in its turn, placed the matter before the present Bench of five Judges as it was contended that the judgments of the Full Bench in ILR 59 Mad 202 : (AIR 1936 Mad 50) (FB) (supra) required reconsideration.
(10) This point has been the subject of judicial interpretation on many an occasion and there has been a sharp cleavage of judicial opinion on this controversy.
(11) Since the problem has to be solved with reference to certain provisions of the Civil procedure Code, it is convenient to see what the law was with regard to the right of an auction-purchaser to obtain a refund of the purchase money under the Civil Procedure Code of 1859 which, in several respects, was based on the provisions of Regulation VII of 1825, before we deal with the divergent views expressed in several of the decided cases.
(12) Section 258, which entitles the auction-purchaser to receive back his purchase money, provided:
'Whenever a sale of immovable property is set aside, the purchaser shall be entitled to receive back his purchase money, with or without interest, in such manner as it may appear proper to the Court to direct in each instance.'
(13) Reading that section in the light of the two preceding sections, viz., 256 and 257, which enumerated the circumstances under which the sale may be set aside in a summary manner, and Section 259 which said that if the sale was not set aside in a summary manner under those sections but was confirmed, a certificate should be granted to the purchaser to the effect that he had purchased the right, title and interest of the defendant in the property sold, it is clear that Section 258 applied only to those cases in which the sale was set aside for an irregularity in publishing and conducting the sale and it could not be extended to cases of subsequent discovery of want of saleable interest in the judgment-debtor.
(14) Under Regulation VII of 1825 also, the right of the auction purchaser was confirmed only to cases in which the sale was set aside for an irregularity or the like by the summary proceedings which might he held under that Section. There was no other provision under the old law which enabled the auction-purchaser to get back his purchase money if subsequently it turned out that the judgment-debtor had no title to the property. This proposition emerges from the case of Sowdaminee Chowdarain v. Kishen Kishore, 121 Suth WR 8 (FB) and from Ram Tuhul Singh v. Biseswar Lall Sahoo 2 Ind Application 131 (PC) and Durgaprasad v. Ramcharan, ILR 2 All 785.
(15) In 12 Suth WR 8 (FB), it was laid down that a purchaser at an auction sale, in enforcement of his decree either under Regulation VII of 1825 or under Act VII of 1859, could recover back his purchase money only when the sale was set aside summarily for an irregularity but not when a third party succeeded in establishing his title to the property on the ground that the sale did not affect the property and when there was no allegation of fraud or misrepresentation on the part of the decree-holder.
(16) There, a suit was filed by the auction-purchaser after confirmation of the sale for recovery of the auction price when it was discovered that the property did not belong to the judgment-debtor. In disallowing the claim of the auction-purchaser, Peacock C. J., observed as follows:
'It appears to me to be clear that the plaintiff is not entitled to recover back his purchase money. When he purchased under the execution, no title was guaranteed to him. All that was guaranteed to him under Clause 7, Section 3, Regulation VII of 1825 was that he should have the rights and interest in the lands, whatever they might be, which belonged to the judgment-debtor. In other words, he guaranteed that the judgment-debtor should not recover back the lands.'
Lower down in the judgment, His Lordship added:
' A purchaser at a sale in execution knows that all that he purchases is the right and title of the judgment-debtor . He knows that no one guarantees to him that the judgment-debtor has a good title, and the judgment-debtor has a good title, and he purchases the property with his eyes open, and he regulates the price he bids for the land with reference to the circumstances under which he is purchasing and the risk he runs.'
(17) This case was cited with approval in 2 Ind Application 131 (PC). The appellant there was a registered share-holder of an estate which was sold for arrears of Government revenue and the surplus remained in the hands of the Collector. This sale was impeached by him as being irregular in a Civil Court and that sale was set aside and the estate was restored to him. Prior to against him, attached his interest in the surplus, which was sold by auction to the representative of the respondent for Rs. 8,000/- this sale was confirmed and notwithstanding the objection of the appellant, his decree-holder withdrew some of the money and the other decree-holders divided the balance. After the success of the judgment-debtor in the litigation, the auction-purchaser instituted a suit for recovery of the purchase price against the appellant. This suit was ultimately dismissed by the Privy Council by accepting the appeal of the execution debtor.
(18) It is true that the action was laid against the judgment-debtor and not against the judgment creditor and their Lordships observed that they expressed no opinion whether the auction-purchaser could have any remedy against the execution creditors by a suit for setting aside the sale or otherwise and whether in such cases the right of the judgment creditor would not have been revived against the appellant. But it should be remembered that it was stated there that the case before the Privy Council seemed to fall within the principle of 12 Suth WR 8 (FB) which related to a claim against the judgment creditor. They added:
'The fact that in this case the worthlessness of the subject purchased was a consequence of the success of the judgment-debtor in his own suit, and not of a recovery by a third party under a superior title, does not appear to them in the circumstances of this case to afford a distinction which ought to prevent the application of that principle.'
Further, Sir James W. Colville, who delivered the opinion of the Judicial committee, referred to the real nature of the purchase at execution sales at page 142 in these terms:
'They bought the Appellant's interest in the surplus proceeds, subject to the contingency of his succeeding in his suit to set aside the revenue sale, in which event that interest would become nil. They did this with their eyes open, since, at least before the sale was confirmed, they had notice that his suit had been commenced. There was no warranty or contact on his part. The sale was had under proceedings invitum, and indeed against his express protest.'
(19) We will now go to Dorab Ally Khan v. Executors of Khajah Moheeoodeen, ILR 3 Cal 806 (PC) which sated at some length the principles governing sales in invitum. The facts on which the decision was given by their Lordships were these. One Khaja Mohideen obtained a decree against two persons in the Supreme Court at Calcutta. In execution of this decree, the Sheriff of Calcutta to whom a writ of fieri facias was issued by the High Court, seized and sold landed property in a province not within the territorial jurisdiction of the said Court and handed over the proceeds of the sale to the judgment-creditor. This sale was set aside by the Court having jurisdiction in that Province and, consequently, the auction-purchaser was deprived of his purchase price. Thereupon, the purchaser brought an action for money had and received against the judgment-creditor under whose authority and by whose express direction he alleged that the sheriff had acted. The High Court decided that the plaintiff had no cause of action and no remedy against the decree-holder. On appeal, their Lordships of the Privy Council distinguishing the case before them from the sale by the sheriff of property within his jurisdiction, reversed the decree of the High Court and remained it for trail on the other issue, namely, whether there was a total failure of consideration or not.
(20) It was found in that case that the sheriff had no right to execute the writ upon property which was beyond his jurisdiction and that of the High Court and, consequently, the sale was null and void. Since the sheriff had acted ultra vires at the request of and under the authority and express directions of the decree-holder, it was opined by their Lordships that the evicted purchaser had a remedy against the latter if it from the purchase. But their Lordships made it clear that if the property sold by the sheriff was within his jurisdiction, the purchaser could not have any redress against the execution creditor even if he was deprived of his purchase money since the principle of caveat emptor applied to such cases. At page 813 Sir J. W. Colvile observed :
'Now it is of course perfectly clear that when the property has been sold under a regular execution, and the purchaser is afterwards evicted under a title paramount to that of the judgment-debtor, he had no remedy against either the Sheriff or the judgment-creditor. This, however, is because the Sheriff is authorised by the writ to seize the property of the execution debtor which lies within his territorial jurisdiction, and to pass the debtor's title to it without warranting that title to be good.'
The reason given by their Lordships for this is that all that was sold and bought was the right, title and interest of the judgment-debtor with all defects and the Sheriff who sold and executed the bill of sale did not execute any covenant of title.
(21) It is true that the said case dealt with the execution by the Sheriff of the High Court of Original Jurisdiction but still the doctrine stated by their Lordships is of general nature and is applicable to execution by ordinary Civil Courts, as the decision rested on the general principles that there is no covenant of title in Court sales and the purchaser takes the property with all its risks and defects. In this context, the statements of law at page 815 of the report is apposite :
'Their Lordships think that, upon a similar principle, the Sheriff may be held to undertake by his conduct that he has seized and put up for sale the property sold in the exercise of his jurisdiction; although when he has jurisdiction he does not in any way warrant that the judgment-debtor had a good title to it, or guarantee that the purchaser shall not be turned out of possession by some person other than the judgment-debtor.
In the present case, the subject-matter of the sale was the estate of the execution-debtor, so that if the Sheriff had had jurisdiction his conveyance would have passed the title. It was solely because he was acting beyond his territorial jurisdiction that the sale became inoperative, and wholly ineffectual.'
(22) It is thus clear that the law declared in that case is equally applicable to execution sales under the Civil Procedure code.
(23) To a like effect is the judgment of the Allahabad High Court in Hira Lall v. Karim-un-Nisa, ILR 2 All 780. There, certain immovable property was sold in execution of a decree on the application of a decree-holder, overruling the objection of a third party that it belonged to him and not to the judgment-debtor. The third party subsequently established his title to the property and had the sale set aside. The auction-purchaser sued to recover the purchase price alleging failure of consideration. His claim was negatived since the sale was set aside only on the ground of absence of title in the judgment-debtor but not on the ground of want of jurisdiction or other illegality or irregularity in the conduct of the sale or fraud or mis-representation on the part of the creditor.
(24) It is clear from the relevant provisions of the Code of 1859 and the pronouncements cited above that the purchaser at a court-auction sale had no redress against either the debtor or the execution creditors when he lost the property bought by him consequent upon want of title in the judgment-debtor.
(25) while the law stood thus, the Code of 1877 was enacted introducing some provisions giving a right of recovery to the purchaser of the auction price in the event of it being found that the judgment-debtor had no title to the property sold, and they were re-produced in Act IV of 1882.
(26) Section 311 of the code provided for an application to set aside a sale on the ground of material irregularity in publishing or conducting the sale, while Section 310-A gave a right to the judgment-debtor to have the sale set aside on his depositing in Court the amounts specified therein.
(27) Section 312 recited :
'if no such application as is mentioned in the last preceding section be made, or if such application be made and the objection be disallowed, the Court shall pass an order confirming the sale as regards the parties to the suit and the purchaser.
If such application be made, and if the objection be allowed, the court shall pass an order setting aside the sale.
No suit to set aside, On the ground of such irregularity, an order passed under this section shall be brought by the party against whom such order has been made.'
(28) thus, this latter part of the section forbade a suit to set aside an order of confirmation.
(29) By Section 313, the purchaser was enabled to apply to the Court to set aside the sale on the ground that the person whose property to be sold had no saleable interest therein and the Court was authorised to make such order as it thought fit.
(30) It is not unworthy of remark here that there was no corresponding provision in the Code of 1859 which, as already observed, authorised the Court to set aside the sale only on the ground of an irregularity in the conduct of the sale.
(31)We must now refer to Section 315 which is very important from the stand-point of the auction-purchasers. That section (omitting the unnecessary portions) is in these terms :
'When a sale of immovable property is set aside under Section 310-A, 312 or 313,
or when it is found that the judgment-debtor had no saleable interest in the property which purported to be sold, and the purchaser is for that reason deprived of it,
the purchaser shall be entitled to receive back his purchaser shall be entitled to receive back his purchase money with without interest as the court may direct from any person to whom the purchase-money has been paid.'
(32) It is manifest, that this section conferred a right on the purchaser to get back his purchase money not only when the sale was set aside under Section 310-A, 312 or 313 but also when it was discovered that the judgment-debtor had no saleable interest in the property brought to sale.
(33) Thus, under this section, the purchaser who lost possession of the property bought by him at the court-auction by reason of the absence of title to it in the judgment-debtor, was clothed with a right to obtain a refund of the purchase money either by getting the sale set aside or by establishing the judgment-debtor had no saleable interest in the property. The second paragraph of that section gave arise to a controversy as to whether a suit could be maintained for recovery of the amount or whether the remedy was limited to the one indicated in Section 313.
(34) The Allahabad High Court in Munna Singh v. Gajadhar Singh, ILR 5 All 577 (FB) favoured the view that a suit was competent and the auction-purchaser was not limited to his remedy to recover the purchase money in the execution department. It was stated there that there was nothing in Section 315 to show that the purchase money could only be recovered by an order of the Court executing the decree and when a suit was not expressly barred, it must be held to be maintainable, with reference to the provisions of Section 11 of that Code (which corresponds to Section 9 of the present Code). That conclusion was primarily based upon the words 'may be enforced' occurring in the last paragraph of that section. This ruling was followed by almost all the High Courts. Our attention was not drawn to any decided case which had taken a contrary view. However, the question whether a suit could be sustained under this section is no longer a live one, having regard to the legislative changes effected in the present Code.
(35) The moot question is whether the right to claim a return of the purchase price was conferred for the first time by the Code of 1882 or whether such a right existed de hors that Act. in his referring order, straight J., in ILR 5 All 577 (FB) observed as follows:
It is to be observed that an unusual course has been adopted in this latter paragraph of introducing into a Code regulating the procedure a novel and somewhat startling declaration of substantive law.'
(36) Before we proceed to discuss the decisions which embody the two lines of thought on this point, namely, whether this right was independent of the Code or was a creature of it, we have to extract the relevant provisions of the present code. We do not propose to quote here Rules 89 and 90 of Order 21 of the present Code, the predecessors of which are Sections 310-A and 311 of the Civil Procedure Code of 1882, as there is no material change and as they are not relevant in the present context. Order 21, Rule 91, which is the successor of Section 311, recites :
'the purchaser at any such sale in execution of a decree may supply to the Court to set aside the sale on the ground that the judgment-debtor had no saleable interest in the property sold.'
(37) It is seen that this rule retains the right given to the purchaser in Section 313. By virtue of this rule, the auction-purchaser can maintain an application for setting aside the sale on the ground that the judgment-debtor had no saleable interest in the property sold. But, Order 21, Rule 92 necessitates this application being filed before the confirmation of sale.
Rule 92 (omitting the unnecessary portions) says :
1. Where no application is made under Rule 89, Rule 90 or 91, or where such application is made and disallowed, the Court shall application is made and disallowed, the court shall make an order confirming the sale, and thereupon the sale shall become absolute.
3. No suit to set aside an order made under this rule shall be brought by any person against whom such order is made.
(38) The import of this rule is that after the sale is confirmed and it had become absolute, an application under Rule 91 does not lie. Under sub-rule (3) the auction-purchaser is precluded from bringing a suit to set aside the order confirming the sale. This sub-rule attaches a finality to the confirmation of sale.
(39) Order 21, Rule 93, runs as follows :
'Where a sale of immovable property is set aside under Rule 92, the purchaser shall be entitled to an order for repayment of his purchase- money, with or without interest as the Court may direct, against any person to whom it has been paid.'
This rule empowers the purchaser to apply for repayment only in cases where the sales are set aside under Rule 92, unlike Section 315 of the Code of 1882, its predecessor, which contained the provision that even when it was found that the judgment-debtor had not saleable interest in the property sold the purchaser could receive back his purchase money and which was omitted in Rule 93. We have already stated that this paragraph was judicially interpreted as bestowing a right of suit upon the purchaser for the first time.
(40) When then is the impact of this omission upon the right of the purchaser in this regard? Does this alteration affect his right to maintain a suit/ If a right inhered in the purchaser apart from the material provisions of the Codes of 1877 and 1882, the change in law does not deprive the purchaser of the right was a creature of the statute, that right has to be worked out in the manner provided by the present Code.
(41) It is on this question that there is a conflict of opinion, one line of cases represented by ILR 59 Mad 202 : (AIR 1936 Mad 50) (FB) and the others to be referred to presently taking the view that this right was a general one and not traceable to Section 315 - the other line expressing a contrary view.
(42)We will begin the discussion on this subject with Pachayappan v. Narayana, ILR 11 Mad 269 in which it was stated that this right was conferred upon the purchaser for the first time under Section 315. As observed above under the previous Code, a purchaser could not get a refund of the money paid by him for his purchase on the ground that the judgment-debtor had no saleable interest in the property sold. In Mohideen Ibrahim v. Mahomed Mura Levai, 23 Mad LJ 487 at p. 491 Napier J., one of the members of the Division Bench, observed that Sec. 315 conferred a substantive right to receive back the purchase money.
(43) To s similar effect is the dictum in Parvathi Ammal v. Govindasami Pillai, ILR 39 Mad 803 : (AIR 1916 Mad 290 (2) ) Seshagiri Ayyar, J. who delivered the judgment of the Bench observed :
'The right of action to obtain a refund consequent on the want of saleable interest in the judgment-debtor is not a right inhering in a purchaser, but is the creature of a statute, and the right thus conferred can only be exercised within the limitations prescribed.'
Subbureddi v. Ponnambala Reddi, 1918 Mad WN 655 : (AIR 1919 Mad 498) stated the rule in similar terms.
(44) In the Same trend of thought is the decision of another Division Bench of that Court, Thirumalaisami,
Naidu v. Subramanian Chettiar, ILR 40 Mad 1009 : (AIR 1918 Mad 353). Says Oldfield J., Who spoke for the court :-
'The former Code accordingly conferred on him special right, which the present Code has restricted and for the enforcement of which it provides special procedure.'
'That turned on the language of Sec. 315 of the old civil Procedure Code, which gave an auction-purchaser two chances of recovering his money if the judgment-debtor had no saleable interest in the property sold, viz., a chance under Sec. 313 within thirty days before the confirmation of the sale, and another under Sec. 315 by application after the confirmation of the sale. But the latter remedy has been omitted in the present Code and therefore, is no longer available.'
(46) These rulings of the Madras High Court have laid down that Sec. 315 of the old Code gave a new and specific right in this behalf and this right was superseded by the omission thereof in the present Code. This result flows from the omission of the second and the fourth paragraphs of that section in Rule 93 and the replacement of the words 'entitled to an order for repayment' for the words 'receive back' in paragraph 3 of the old section.
(47) There are decided cases of other High Courts which are in consonance with this doctrine and we may refer to some of them. In Balvant Raghunath v. Bala, ILR 46 Bom 833 : (AIR 1922 Bom 205) it was held that the statutory right given by Sec. 315 of the Code of 1882 to file a suit for recovery of the purchase money was taken away in the present Code and if it was found that the judgment-debtor had no saleable interest in the property sold, the purchase money could not be recovered until and unless the sale was set aside. This was the assumption of Santimappa Venkappa v. Balbhim Co-op. Credit Society of Hebsur, : AIR1950Bom313 .
(48) The Calcutta High Court adopted this principle in Rishikesh Law v. Manik Molla, ILR 53 Cal 758 : (AIR 1926 Cal 971), Page J., observed that the effect of O. 21, R. 93 C. P. C., was that the only method under the Code by which the auction-Purchaser was entitled to obtain a refund of the purchase money was to apply to set aside the sale as therein provided and the statutory right granted specifically in that respect under Sec. 315 of the old code of 1882 was superseded in the Code of 1908. The learned counsel on either side did not cite to us any case wither of the Bombay or of the Calcutta High court which has deviated form the rule.
(49) The same principle is enunciated in Nagendranath Ghosh v. Sambhu Pandey, ILR 3 pat 947 : (Air 1925 Pat 106). Commenting on the omission of paragraph 2 of Sec. 315 in O. 21, R. 93 and substituting for the words ' Shall be entitled to receive back' the words 'shall be entitled to man order for repayment', the learned Judges observed that the present code made material alteration in the provisions of the Code of 1882 and, consequently, it was no longer open to the auction-purchaser to maintain a regular suit for obtaining among other things the relief of payment of purchase money. This was approved by a Full Bench of the same High Court in Surendra Kumar Singh v. Srichand Mahata, ILR 15 Pat 308 : (AIR 1936 Pat 97) (FB).
(50) The same principle was enunciated by the Full Bench of five Judges of the Allahabad High Court in Amar Nath v. Firm Chhote Lal Durga Prasad, ILR (1938) All 922 : (AIR 1938 ALL 593) (FB). It is not necessary to multiply citations on this aspect of the matter. Suffice it to say that the preponderance of authority is in favour of the view that there was no right in common law residing in the auction price when he was evicted from the properties purchased by him by reason of the defective title of the judgment-debtor.
(51) We have mow to deal with ILR 59 Mad 202 : (AIR 1936 Mad 50) (FB) which struck a divergent note disagreeing with the principle stated above. On the controversy bearing on the right of suit, Ramesam J., who delivered the opinion of the Full Bench observed :
'Taking the first question, viz., whether the respondent is entitled to a refund at all even by way of a suit, the question depends upon the rights of the parties as they flow out of the circumstances of the case and not upon whether a provision for such a suit is made in the Civil Procedure Code. The Civil Procedure Code is a Code of adjective law and cannot create rights of action though it may recognise them or take them away. Forgetting for a moment all technicalities and the Codes of Procedure, one would think on the facts that the auction for money had and received.'
(52) According to the learned Judge, the right of suit was only recognised by the Civil Procedure Code of 1882 but not created there under since the Civil Procedure Code which deals with adjective law could not create rights of action.
(53) With due respect, we are unable to assent to this broad proposition. It is true that the Civil Procedure Code is intended to regulate the procedure and, normally the legislature while enacting adjective law does not confer substantive rights. But it could not be posited as an invariable rule that a substantive right could not be conferred by the Procedure Code.
(53A) If this right is not traceable to these Codes from what other statute or upon what general principle could such right be deducted? The rulings of the Privy Council and of other High Courts which have interpreted the relevant statutory provisions of the code of 1859 and which we have cited above embody the principle that a purchaser in such circumstances could not get a return of the auction price. The view that there was such a common law right is inconsistent with and is opposed to the rule contained in those pronouncements.
(54) It was laid down in those cases that the Court sales carry no guarantee of the title of the judgment-debtor in the property sold and all that was purchased at the Court auction was the right, title and interest of the judgment-debtor, whatever it might be, and if it turned out that he acquired nothing it was his misfortune. The purchaser buys the property at his own peril and therefore, he bears the loss just as he keeps the profit to himself when the bid is knocked down in his favour for a very low price. If it were so, in our opinion, there could be no legal basis on which such a right could satisfactorily rest. If under common law a purchaser cannot seek redress in a Court of law in those circumstances, the conclusion in inescapable that the right of recovery is founded on the provisions of the Civil Procedure Code.
(55) In ILR 59 Mad 202: (AIR 1936 Mad 50) (FB) Ramesam J., after stating that Sec. 315 only recognised the subsisting right to bring a suit said :
'What is meant is that, though in a court sale there is not such a warranty as to the extent of title as we find in a private transactions between a vendor and a purchaser, still the code adopts the view that there is a limited kind of warranty, viz., that the judgment-debtor possesses some little interest, however small it may be.'
(56) We are unable to appreciate this distinction. There is neither a general principle of law nor statutory provisions except the relevant provisions of the Code which lends support to this theory. As already observed while Sec. 315 gave an unrestricted right to a purchaser to get back the auction price, the present Code has limited that remedy to the special procedure in execution provided by R. 91 read with Rules 92 and 93.
(57) The effect of the provisions of the relevant Civil Procedure Code and the authorities already cited and to be referred to presently is that neither the Court nor the execution creditors offer a covenant of title of the judgment-debtors to the property and that the purchaser takes all the risks in buying the property and so cannot make the decree-holder liable for any loss sustained by hum as a result of want of title of the judgment-debtor, the principle of caveat emptor applying to Court sales. There is no valid foundation for the view that there is an implied or a limited kind of warranty of title that the judgment-debtor possesses some interest however small that may be.
(58) It is interesting to know that the Division bench of the Rajasthan High Court in Thakar Lal v. Nathulal, which has upheld the right of the auction-purchaser to maintain such a suit, in agreement with ILR 59 Mad 202 : (AIR 1936 Mad 50) (FB) and other like decisions, emphatically stated after quoting the relevant provisions of the Civil Procedure Code relating to execution sales, that there was no warranty of title of any kind, express or limited at Court-sales. The learned Judges said that it was more or less settled law that what passes at the Court sale was the right, title and interest of the judgment-debtor and there was overwhelming judicial authority in favour of that proposition. They added that it would be straining things beyond permissible limits to hold that any warranty of title - whether express or implied - is given by the court or by the decree-holder with respect to property which is auctioned at a court-sale.
(59) As substantiating this conclusion, reliance was placed on Sobhag Changulabchand v. Bhaichand, ILR 6 Bom 193 (FB) Sundara Gopalan V. Venkatavarada Ayyangar , ILR 17 Mad 228, Shanta Chander v. Nainsukh, ILR 23 All 355, Shadi Ram v. Amin Chand, AIR 1930 Lah 937, Kunjikavu Amma v. Janaki Amma, : AIR1957Ker98 and ILR 3 Cal 806 (PC).
(60) The cited cases undoubtedly establish the proposition stated by the learned Judges.
(61) We will notice here some other rulings which vouch this principle. It was ruled in 23 Mad LJ 487 that what was confirmed on the sale becoming absolute was only the right, title and interest of the judgment-debtor, which implies that there was no covenant of title. The principle was stated in similar terms, in ILR 40 Mad 1009 : (AIR 1918 Mad 353) namely that the doctrine of warranty of title could not be applied to court-sales or be the basis of proceedings except those which the processual law permitted and there was no warranty between the decree-holder and the purchaser, there was no other basis for the contractual relation between them since the former had no ownership of the properties sold. The learned Judges further said:
' In a court-sale nothing passes beyond the right, title and interest of the debtor ; and , as there is no guarantee that it exists or is of any particular extent, the purchaser would have no cause of action apart from the statute.'
In similar words is this rule stated in ILR 50 Mad 639 : (Air 1927 Mad 394), namely a court sale carried no guarantee that the property was that of the judgment-debtor and that the property was that of the judgment-debtor and that the auction purchaser took the risk and bore the loss of it was subsequently discovered not to be the property of the judgment-debtor. The learned Judges remarked that the opposite conclusion would be opposed to one of the fundamental principles of court-sales. In A. S. No. 90 of 1952 (Mad) (unreported) Krishnaswami Ayyangar and Somayya JJ., of the madras High court stated that the view that under the common law there was no warranty of title in a court-sale could not be contradicted. It may be incidentally mentioned here that it is these learned Judges who for the first time doubted the soundness of ILR 59 Mad 202 : (AIR 1936 Mad 50) (FB) as being in conflict with the rule laid down by the Full Bench of the Calcutta High Court in 12 Suth WR 8 (FB) and several other authorities and stated that it required re-consideration.
(62) ILR 23 ALL 355 is another case which has pointed out the risks of a purchaser at a Court auction sale and in which it was held that the purchaser must be taken to buy the property with all risks and defects in the judgment-debtor's title excepts as provided by Secs. 313 and 315 of the Civil Procedure Code of 1882. Mangal Sen v. Mathura Prasad, ILR 57 All 690 : (AIR 1935 All 470) is another instance of this doctrine.
(63) This view was upheld by a Bench of five Judges of the Allahabad High court in ILR 1938 All 922 : (AIR 1938 All 593) (FB) to which reference has already been made. We will advert to this ruling in the proper context.
(64) In ILR 46 Bom 833 : (AIR 1922 Bom 205) it was held that in sales under legal process there was no warranty of title either by the decree holder or by the Court. For this conclusion, reliance was placed on the observations of Privy Council in ILR 3 Cal 806 (PC) which are as under :
'Now it is, of course, perfectly clear that when the property has been sold under a regular execution, and the purchaser is afterwards evicted under a title paramount to that of the Judgment-debtor, he has no remedy against either the sheriff or the judgment-creditors.'
(65) : AIR1950Bom313 also contains the law to the same effect.
(66) The Patna High Court is also of the same view as could be gathered from ILR 3 pat 947 : (AIR 1925 Pat 106) and ILR 15 pat 308 : (AIR 1936 Pat 97) (FB).
(67) In Maung Naung v. Maung Ba Gye, ILR 6 Rang 468 : (AIR Rang 272), it was held that no regular suit lay since there was no warranty of title in Court sales.
(68) We do not think it is necessary to refer to the other decisions which embody the same principles. It is sufficient to say that the current of authority is in favour of this proposition.
(69) To come back to ILR 59 Mad 202 : (AIR 1936 Mad 50 ) (FB), the reasoning of the learned Judges that Court practically makes a promise that the auction-purchaser would have a refund of the purchase-money is based upon the view of the existence of a limited kind of warranty.
(70) For the reasons already mentioned, we cannot share the view of the learned Judges that either there was promise by the Court that the auction-purchaser will have a refund of his purchase money or that Sec. 315 merely furnished an additional remedy in execution. Nor are we persuaded to concur in the opinion of the learned Judges that the auction-purchaser would have a right of action for money had and received.
(71) In our judgment, there is no scope for invoking the doctrine of money had and received since it could not be postulated that the executing creditor received money which he had no right to do and by a legal fiction the receipt by him was for the use of the plaintiff. If no one had guaranteed the title of the judgment-debtor to the property sold under a legal process and the purchaser had purchased only the judgment-debtor's interest therein for what it was worth, it could not be predicted that there was any failure of consideration for the purchase of that or that the judgment-creditor either unjustly or inequitably had with drawn the amount deposited by the purchaser. The question of failure of consideration would arise only if there was a covenant of title. In the absence of it, the principle of money had and received would inapplicable and the suit for return of the money cannot be sustained on that ground.
(72) the learned Judges thought that it was unconscionable that the decree-holder should retain benefit of the money so obtained and the auction-purchaser should lose it and that the latter should have a right of action for money had and received. If the argument based upon equity should be pursued to its logical conclusion as observed by Srivastava J., in Bahadur Singh v. Ramphal, ILR 5 Luck 552 : (AIR 1930 Oudh 148) (FB) in his dissenting judgment, then the party who is really benefited is the judgment-debtor and the remedy should more appropriately be against him rather than against the judgment-Creditor. Moreover, if the auction purchaser is allowed to claim a refund on the ground of his having made a bad bargain, it stands to reason that the decree-holder or the judgment-debtor should have a corresponding right to recover from him the real price in case he happened to make a good bargain and the sale confirmed in his favour. It is not disputed that there is no such obligation on the part of the auction-purchaser and no right inhering either in the execution debtor or the creditor to compel him to make over such a benefit to either of them. Therefore there is really no principle of equity or justice in favour of the auction-purchaser.
(73) It is convenient at this stage to refer to Mehr Chand v. Milkhi Ram ILR 13 Lah 618 : (AIR 1932 Lah 401) (FB) which was called in aid in ILR 59 Mad 202 : (AIR 1936 Mad 50) (FB). It was laid down there that there was an implied warranty in Court-sales to the extent there was some little title in the judgment-creditor and when the purchaser lost the property by reason of want of title of the judgment-debtor to the property, there was failure of consideration and, consequently, a suit for money had and received could be sustained and this right was independent of the Code of 1882. We have already discussed this issue at some length and we do not propose to repeat the reasons adduced in support of the contrary opinion.
(74) We have, however to dispose of the argument that the provisions of Order 21, Rules 13, 14 and 61 read with the pronouncements of the Judicial Committee in ILR 3 Cal 806 (PC) and Kissori Mohun Roy v. Harsukh Das, ILR 17 Cal 436 (PC) support the view that there was always a representation by the decree-holder that the property sought to be attached and sold belonged to the judgment-debtor or, in any case, he had some saleable interest and that this view was strengthened from a perusal of the form of application for execution under a warrant of attachment prescribed in appendix E of the first - schedule to the Civil Procedure Code
(75) We are not convinced that Rule, 13, 14 or 61, either read singly or conjointly give any support to the view that Court-sales involve a representation by the decree-holder regarding the title of the judgment-debtor. Order 21, Rule 13 recites :
'Where an application is made for the attachment of any immoveable property belonging to a judgment-debtor, it shall contain at the foot -
(a) a description of such property sufficient to identify the same and, in case such property can be identified by boundaries or numbers in a record of settlement or survey, a specification of such boundaries or numbers; and
(b) a specification of the judgment-debtor's share or interest in such property to the best of the belief of the applicant, and so far as he has been able to ascertain the same.'
Rule 14 which enables the court to require a certified extract from the Collector does not point to any representation by the decree-holder in this regard. Rules 61 and 64 do not throw any light on this issue.
(76) Coming back to ILR 618 : (AIR 1932 LAG 401 ) (FB) we are not aware of any portion of the judgment in ILR 3 Cal 806 (PC) which establishes the proposition stated by the learned Judges. On the contrary the passage extracted by us above militates against any such theory. The learned Judges after extracting two passages, one occurring at page 813 of the report, i.e., 'Now, it is of course perfectly clear etc....' and another at page 816, namely, 'There is no doubt etc.' ....... which do not in any manner suggest that Court-sales involve a representation either by the Court or by the judgment-creditors and which, on the other hand negative such conjunction with ILR 17 Cal 436 (PC).
(77) In our opinion , ILR 17 Cal 436 (PC) (supra) has no bearing on the question under debate. That concerned a suit for the establishment of the plaintiff's right to the goods attached and for damages as representing the difference between the value of the goods and the depreciated price arising from the delay in the disposal of the goods in respect of wrongful attachment. The claim for damages was resisted on the plea unless it was alleged and proved that he had litigated maliciously and without probable cause. This objection was overruled by their Lordships of the Privy Council with the remarks that that was a rule which
obtained between the parties to a suit when the defendant suffered loss through its institution and dependence and it did not apply to proceedings taken by the injured party after the wrong was done in order to obtain redress. It was found that the illegal attachment of the goods to the third party was a direct act of the decree-holders for which they became immediately responsible in law.
(78) We do not think that ILR 17 Cal 436 (PC) has any analogy in the context of an inquiry like this. So, we are unable to construe ILR 17 Cal 436 (PC) (supra) read with ILR 3 Cal 806 (PC) as supporting the proposition that the decree-holder guarantees the judgment-debtor title to the property put up for sale and a breach of the covenant would entitle the purchaser to claim a return of the purchase money. We have already said that there is no basis for this theory either in common law or in any statute and that the purchaser buys the property on his own peril and with all the attendant consequences and with no right of repayment of money when deprived of the property as a result of absence of title thereto in the judgment-debtor.
(79) It follows that the purchaser has to depend for any relief in this regard on the provisions of the civil Procedure Code. If that were so, the rights conferred by the Code have to be exercised within the limitations prescribed therein and we cannot subscribed therein and we cannot subscribe to the view that Sections 313 and 315 provide additional remedy to the auction purchaser to get back the money paid by him for the purchase in execution proceedings and that these provisions do not in any way bar the right of suit for that purpose.
(80) We know turn to ILR 5 Luck 552 : (AIR 1930 Oudh 148) (FB) in which two of the Judges held that the auction-purchaser was entitled to recover his money from the Civil Procedure Code while the third Judge (Srivastava J.) expressed a contrary opinion. The majority rested their opinion practically on the same reasons as in ILR 13 Lah 618 : (AIR 1932 Lah 401) (FB). In addition, Hasan, J. who concurred in the opinion of Stuart C. J., thought that ILR 3 Cal 806 (PC) supports the majority view. We are unable to agree with the learned Judge on this regard. We have set out earlier the principle underlying that pronouncement and given the relevant extracts containing its ratio decidendi. At the risk of repetition, we may say that the statement of law that where the Sheriff acts within his jurisdiction the auction purchaser could have no redress against the execution creditors applies with full force to sales held in enforcement of the decrees. The remand of the case for further trial was necessitated by the fact that the Sheriff while seizing the property of the execution debtor situate outside his jurisdiction acted under the specific instructions of the execution creditor and as such as his agent and guarantees his title. Their lordships had stated that the case before them was distinguishable form the case where he had acted within his competence.
(81) The position is the same with regard to sales under the Code. It cannot be and is not contended that a sale of property with a defective title of the judgment -debtor is void and it is beyond the jurisdiction of a Court to sell such property. We are not aware of any passage in the judgment of Sir J. W. Colvile, who delivered the opinion of the Board, which is suggestive of the existence of the general remedy as propounded by the learned Judge.
(82) Srivastava J., who differed from them stated that the case of Sheriff's sales applied with full vigour to cases where the property was sold under regular execution. The learned Judge continued that he could not find anything in the code of civil Procedure relating to execution of decree. which could be 'construed as a warranty on the part of the decree-holder and the said provisions seemed to him rather to negative any such warranty since the decree-holder could have no definite knowledge as regards the title of another. party, the judgment-debtor'. After extracting the relevant rules of Order 21, the learned Judge said:
'The very qualified texture of the rules quoted above shows that the decree-holder could not be expected and has not therefore been required to vouch for the title of the judgment-debtor in the property sought to be sold. He is only required to specify the Judgment-debtor's interest so far as he has been able to ascertain the same.'
(83) We feel that this statement represents the correct legal position.
(84) In this context, the provisions of Order 21, Rule 66 are apposite. It recites :
(1) Where any property is ordered to be sold by public auction in execution of a decree the Court shall cause a proclamation of the intended sale to be drawn up in the language of such court.
(2) Such proclamation shall be drawn up after notice to the decree-holder and judgment-debtor and shall state the time and place of sale and specify as accurately as possible -
(a) the property to be sold;
(f) every other thing which the court considers material for a purchaser to know in order to judge of the nature and value of the property. the proclamation settled under this provision gives a good deal of information about the property sought to be sold, the encumbrances to which it is liable and all other particulars which the Court considers material for the purchaser to know in order to judge the nature and value of the property. In these circumstances, if ultimately the auction-purchaser is deprived of the property because of want of saleable interest of the judgment-debtor in it, he cannot either blame or hold anyone responsible for this. That being so, there is no question of failure of consideration for the purchaser. Nor could it form the basis of a suit for money had and received when the purchaser is evicted form the property owing to want of saleable interest, in the judgment-debtor. The principle that a suit lay to obtain a refund of the auction price from the decree-holder when it was discovered that the judgment-debtor had no saleable interest therein and that the alteration in law in the code of 1908 did not constitute a bar in this regard, adumbrated in ILR 5 luck 552 : (AIR 1930 Oudh 148) (FB) ; ILR 13 618 : (AIR 1932 Lah 401) (FB) and ILR 59 202 : (AIR 1936 Mad 50) (FB) was adopted to Mathai v. Ommen, : AIR1963Ker148 , Bappu Rawther v. State of Kerala, : AIR1964Ker109 , Amolak Chand Mewa Ram v. Mohammed Shafi, AIR 1948 EP 1 and Maung Aye Maung v. Scott and Co., AIR 1940 Rang 1 (FB) . It is not necessary to deal each of these cases separately since they either merely follow one or other of the three leading cases cited above or base their views on reasons similar to those assigned in the first mentioned ruling.
(85) We will now refer to cases most of which have already been cited and which held that such a suit does not lie under the present Code in view of the material changes effected therein.
(86) In 23 Mad LJ 487, it was ruled that an auction-purchaser had a substantive right of suit under the Code of 1882 for a refund of the purchase money when it was discovered that the judgment-debtor had no saleable interest. Napier J., observed that under the Code of 1908 the auction-purchaser had no right of suit but could only get an order in execution proceedings for repayment of the purchase money and that too only if he discovered the absence of title in the judgment-debtor before the confirmation of sale and not otherwise. The other learned Judge was unwilling to negative it, though he expressed no decision upon it. This opinion of Napier J., was confirmed obiter in ILR 39 Mad 803 : (AIR 1916 Mad 290 (2) ) and found acceptance in ILR 40 Mad 1009 : (AIR 1918 Mad 353). In the later case, it was the opinion of the learned Judges, that the former code conferred on the purchaser a special right which the present Code had restricted and for the enforcement of which it provided a special procedure and that a suit for recovery of the purchase money was incompetent. However, in that case, they upheld the right of the purchaser to maintain the suit as this right had accrued to him while the former Code was in force.
(87) This is also the rule contained in ILR 50 Mad 639 : (AIR 1927 Mad 394). There the decree-holder had by mistake got the property of some person other than the judgment-debtor sold in execution of his decree and purchased himself and entered up satisfaction. After a lapse of thirty days, he discovered the mistake and applied for further execution by setting aside the sale, it was decided by the division Bench that this application was unsustainable as the sale though of the property of the stranger, was not void and as the prayer for setting it aside was beyond the period of limitation allowed by Art . 166 of the Limitation Act. Jagannadha Rao v. Basavayya, 53 Mad LJ 255 : (AIR 1927 Mad 835) accords with this principle.
(88) This dictum found favour with the Bombay High Court in ILR 46 Bom 833 : (AIR 1922 Bom 205) and : AIR1950Bom313 . Both the cases referred to Rustomji Ardeshir v. Vinayak Gangadhar, ILR 35 Bom 29 and distinguished it on the ground that the latter case under S. 315 of the old code, the predecessor of Order 21, Rule 93 C. P. C. and that there was difference in the language of these two provisions.
(89) The law was laid down in similar terms in several of the decisions of the Calcutta High Court, some of the examples being Juranu Mahomed v. Jathi Mahomed, AIR 1918 Cal 148, ILR 53 Cal 758 : (AIR 1926 Cal 971) and : AIR1961Cal172 . The second of these cases explained away the contrary decision in this respect in Prasanna Kumar Bhattacharjee v. Imbrahim Mirza, 36 Cal LJ 205 by saying that the latter decision was based on the decision of the Bombay High court in ILR 35 Bom 29 which as already stated, arose under the old code of 1882, and, therefore, could not serve as an authority for the opposite conclusion. The last one dealt with the earlier rulings of that court and expressed its concurrence with the doctrine of these three cases.
(90) So far as the Allahabad High court is concerned, we have the decision of the Full Bench of five Judges in ILR 1938 all. 922 : (AIR 1938 All. 593) (F.B.) which we had occasion to notice earlier. After a review of the case law bearing on the question under debate, the learned Judges laid down inter alia, differing from ILR 59 Mad 202 : (AIR 1936 Mad 50 ) (FB) and 13 Lah 618 : (AIR 1932 Lah 401) and ILR 5 Luck 552 : (AIR 1930 Oudh 148) that there was no warranty of title in Court-sales, that what was sold was only the right, title and interest of the judgment-debtor and that there was no right of suit recover the purchase money on the ground of absence of title in the judgment-debtor and his only remedy was the one indicated in Rules 91 and 93.
(91) It is not necessary to go back to the earlier decisions of that court beginning from Nannulal v. Bhagwandas, ILR 39 All 114 : (AIR 1917 All 363 ) which contained the same doctrine, having regard to the authoritative pronouncement of that court which, as already stated, reviewed the earlier cases of that court and which may be regarded as one of the leading cases on this topic. It is sufficient to say that there are a number of rulings of that Court which negatived the right of suit in similar circumstances.
(92) We will now turn to the rulings of the Patna High Court. In Nagendra Nath Ghosh v. Sambhu Nath Pandey, ILR 3 Pat 947 : (AIR 1925 Par 106 ) it was held that under the present Code the auction-purchaser could not sue for the realisation of the purchase money on the found that the judgment-debtor had no saleable interest in the property sold and his only right was the one conferred by Order 21, Rule 91 C .P. C. This view was upheld by a Full Bench of that court in ILR 15 Pat 308 : (AIR 1936 Pat 97) (FB)
(93) We do not propose to examine other cases of that court which are in the same trend of thought.
(94) Thus, there is a strong current of authority vouching the proposition that sales in invitum do not involve a covenant of title that the purchaser accepts the property with all its risks and the rule of caveat emptor applies to these cases, that as a necessary corollary he has no right of recovery of the purchase price except as contemplated by the provisions of Order 21, Rule 91 read with Rule 93 and that the remedy of suit which was conferred by section 315 of the Code of 1882 was no longer available by reason of the omission of paragraphs 2 and 4 of that section in the Rule 93 and that the only redress which the purchaser can seek under the present code is to have the sale set aside under Rule 91 before it is made absolute under 92 and thereafter to apply for an order for repayment of that money.
(95) It is not necessary for us to speculate as to why the legislature in enacting the Code of 1908 thought fit to take away the remedy of suit and limit the scope of the relief to the one envisaged in Rules 91 and 92. Perhaps, it was thought that the right of suit involves delay, incertainty and often hardship to execution creditors and that the quick and inexpensive remedy provided by the said rules affords adequate and equitable relief to the purchaser by allowing him to get out of the difficulty before the confirmation of sale and the recording of satisfaction of the decree and this enables the judgment creditors to revive the execution proceedings and to proceed further with them. This need not, however, detain us any longer as we are concerned only with the interpretation of law as it is.
(96) In our judgment , a comparison of the relevant provisions of the old and the present Codes leads us to the inference that the purchaser has no right of suit in the event of his being deprived of the property bought at the Court auction by reason of want of saleable interest of the judgment -debtor and his only remedy is to have the sale set aside, before it becomes absolute.
(97) But the right to recover the auction price in cases of fraud and misrepresentation which have induced the purchaser to buy the property stands on a different footing. If there is a taint or a touch of fraud or deceit or misrepresentation that induced the purchaser to bid for the property successfully, that goes to the root of the sale and impairs its usefulness. Such sales are outside the scope of the relevant provisions of Order 21 and they fall within the principle enshrined in the material provisions of the Indian Contract Act.
(98) This principle is reflected in Kalamea v. Harpering, ILR 36 Cal 323 (PC) , ILR 35 Bom 29 and ILR 17 Mad 228 . So far as the right is concerned there is a consensus of opinion about it and it is not necessary to deal any further with this topic.
(99) For these reasons, we express our respectful dissent from ILR 59 Mad 202 : (AIR 1936 Mad 50 ) (FB) and answer the question referred to us in the negative.
(100) For the reasons mentioned above, we have to reverse the judgments and decree of the Courts below which are founded on ILR 59 Mad 202 : (AIR 1936 Mad 50) (FB).
(101) In any view of the matter, the respondent will not be entitled to any relief since the gift deed was notified in the proclamation of sale and he knew before the sale of the claim proceedings and it was not even alleged in the plaint that he had lost possession of the property as a result of the adjudication in O. S. No. 106 of 1953, brought by the defeated claimants.
(102) In the result, the appeal succeeds and the suit dismissed with costs throughout.
BI/R.G.D. Question answered in negative.
(103) Appeal allowed.