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Abdul Ghani Vs. Mahendra Kumar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal No. 1194 of 1974
Judge
Reported inAIR1979All106
ActsCode of Civil Procedure (CPC) , 1908 - Sections 47 and 144; Code of Civil Procedure (CPC) (Amendment) Act, 1956
AppellantAbdul Ghani
RespondentMahendra Kumar and ors.
Appellant AdvocateP.C. Gupta, Adv.
Respondent AdvocateL.P. Naithani and ;V.B. Upadhaya, Advs.
DispositionAppeal allowed
Excerpt:
.....the distinction which was previously made by the courts between a purchaser who was himself a decree-holder and a stranger auction-purchaser has been completely obliterated and the said decisions are no longer good law. i shall first proceed to consider the law before the amending act of 1956 and shall then examine the validity of the submission of the learned counsel that the said law no longer holds good after the amendment. , embodies a well-established rule of equity that on the reversal of a decree the party against whom the wrong decree is passed should, as far as possible, be placed in the same position which he would have occupied but for such decree because it is the duty of the court to act rightly and fairly according to the circumstances towards all the parties involved.....s.j. hyder, j.1. the facts of this execution second appeal lie on a narrow ambit. the decree-holder-respondent no. 2 is the father of the auction-pur chaser-respondent no. 1. the former is hereinafter referred to as the decree-holder and the latter as the auction-purchaser. the decree-holder obtained a money decree against the judgment-debtor-appellant. the said decree was an ex parte decree. the judgment-debtor applied under order 9 rule 13 of the civil p. c. for setting aside the said decree. while the restoration application was still pending, the decree-holder applied for the execution of the decree by attachment and sale of the bhumidhari land of the judgment-debtor. in the said execution case, about 24 bighas of land belonging to the judgment-debtor was attached and was purchased by.....
Judgment:

S.J. Hyder, J.

1. The facts of this execution second appeal lie on a narrow ambit. The decree-holder-respondent No. 2 is the father of the auction-pur chaser-respondent No. 1. The former is hereinafter referred to as the decree-holder and the latter as the auction-purchaser. The decree-holder obtained a money decree against the judgment-debtor-appellant. The said decree was an ex parte decree. The judgment-debtor applied under Order 9 Rule 13 of the Civil P. C. for setting aside the said decree. While the restoration application was still pending, the decree-holder applied for the execution of the decree by attachment and sale of the Bhumidhari land of the judgment-debtor. In the said execution case, about 24 bighas of land belonging to the judgment-debtor was attached and was purchased by the auction-purchaser for a sum of Rs. 5,000/-and the sale was duly confirmed. Thereafter, the ex parte decree was set aside by the trial court.

2. After the ex parte decree had been set aside the judgment-debtor applied for restitution under Section 144 read with Section 47 of the Civil P C. According to the judgment-debtor, the property had been purchased by the decree-holder himself in the name of his son. He further pleaded that the auction-purchaser was not a bona fide purchaser for value. The auction-purchaser repelled the said contention. The execution court allowed theobjection and set aside the sale in favour of the auction purchaser and granted the restitution claimed by the judgment-debtor. The trial court inter alia held as follows :--

'Had he (i.e. the auction-purchaser) paid the amount from the account of his shop, he would have definitely entered it in hi.s shop, account and his unexplained testimony shows that this amount was paid by some other person and according to the allegations of the applicant, it was paid by the O, P. No. 1 (i.e. the decree-holder) and this auction was purchased by him (i.e., the decree-holder) in the name of his son O. P. No. 2 (the auction-purchaser).'

(The words within brackets have been supplied by me.)

3. Against the order of the execution court, the auction-purchaser preferred an appeal. It was allowed by the first court of appeal. It was held by the court of appeal that the auction-purchaser not himself being the decree-holder, the purchase at a court auction made by him could not have been assailed by the judgment-debtor. It accordingly allowed the appeal and set aside the order of the execution court. The judgment-debtor has now come in second appeal to this court.

4. On behalf of the appellant, two points have been pressed. Firstly, it has been contended that the lower appellate court has completely overlooked the addition of the Explanation to Section 47 of the Civil P. C. by the Amending Act of 1'956. In other words, his contention was that by addition of the said Explanation, the distinction which was previously made by the courts between a purchaser who was himself a decree-holder and a stranger auction-purchaser has been completely obliterated and the said decisions are no longer good law. It was next contended that it was not proved that the auction-purchaser was a bona fide purchaser for value. It was submitted that the execution court had recorded a categorical finding that the actual purchaser was the decree-holder himself who had supplied the money and that the lower appellate court has erred in reversing the order of the execution court without setting aside this finding. I shall first proceed to consider the law before the amending Act of 1956 and shall then examine the validity of the submission of the learned counsel that the said law no longer holds good after the amendment.

5. The earliest case about which reference has been made in this connection is Zain-ul-Abdin Khan v. Muhammad Asghar AH Khan (1888) ILR 10 All 166. In the said case, their Lordships of the Privy Council observed as follows:--

'It appears to their Lordships that there is a great distinction between the decree-holders who came in and purchased under their own decree, which was afterwards reversed on appeal, and the bona fide purchasers who came in and bought at the sale in execution of the decree to which they were no parties, and at a time when that decree was a valid decree, and when the order for sale was a valid order.

A great distinction has been made between the case of bona fide purchasers who are no parties to a decree at a sale under execution and the decree-holders themselves. In Bacon's Abridgment, Title 'Error', it is laid down, citing old authorities, that 'if a man recovers damages, and hath execution by fieri facias, and upon the fieri facias the sheriff sells to a stranger a term for years, and after the judgment is reversed, the party shall be restored only to the money for which the term was sold, and not to the term itself, because the sheriff had sold it by the command of the writ of fieri facias.' There are decisions to a similar effect in the High Court at Calcutta. They are collected in a note in Broughton, in his book on the Civil P. C. fourth edition, note to Section 246, Act VIII of 1859. So in this case, those bona fide purchasers, who were no parties to the decree which was then valid and in force, had nothing to do further than to look to the decree and to the order of sale.'

6. This decision has been consistently followed, as it ought to have been followed, by different High Courts and it is not necessary to refer to all those cases, An analogous question arose for the consideration of the Supreme Court In the case Janak Raj v. Gurdial Singh : [1967]2SCR77 . In the said case, the decree-holder had obtained a money decree against the judgment-debtor. In execution of the said decree, the property of the judgment-debtor in that case was sold. The decree was subsequently set aside and the auction-purchaser who was a stranger to the decree applied to the execution court for confirmation of sale, Against that application the judgment-debtor of that case filed an objection. Their Lordships of the Supreme Courtheld against the Judgment-debtor and observed as follows (at pp. 613, 614):--'For the reasons already given and the decision noticed, it must be held that the appellant-auction-purchaser was entitled to a confirmation of the sale notwithstanding the fact that after the holding of the sale the decree had been set aside. The policy of the Legislature seems to be that unless a stranger auction purchaser is protected against the vicissitudes of the fortunes of the suit, sales in execution would not attract customers and it would be to the detriment of the interest of the borrower and the creditor alike if sales were allowed to be impugned merely because the decree was ultimately set aside or modified. The Code of Civil Procedure of 1908 makes ample provision for the protection of the interest of the judgment-debtor who feels that the decree ought not to have been passed against him. On the facts of this case, it is difficult to see why the judgment-debtor did not take resort to the provisions of Order XXI, Rule 89. The decree was for a small amount and he could have easily deposited the decretal amount besides 5 per cent of the purchase money and thus have the sale set aside. For reasons which are not known to us he did not do so.'

7. In this very case, the attention of their Lordships of the Supreme Court was invited to the amendment introduced by the amending Act of 1956 on behalf of the judgment-debtor. Dealing with the said question, it was stated by their Lordships as follows (at p. 614):--

'Lastly, it was contended that the amendment of Section 47 of the Code of Civil Procedure altered the whole situation inasmuch as by the Amending Act of 1956 auction purchasers are to be treated as parties to the suit. We are not here concerned with the question as to whether restitution can be asked for against a stranger auction purchaser at a sale in execution of a decree under Section 144 of the Civil P. C. and express no opinion thereon. In our opinion, on the facts of this case, the sale must be confirmed.'

8. The reason for the distinction drawn by the courts between an auction purchaser who is himself a decree-holder and a stranger auction purchaser has been elaborately explained by a Division Bench of the Patna High Court in Chota Nagpur Banking Association v. C.T.M. Smith AIR 1943 Pat 325. Sir Fazl All, C. J., as he then was, delivering the opinion of the court held:--

'Section 144, Civil P. C., embodies a well-established rule of equity that on the reversal of a decree the party against whom the wrong decree is passed should, as far as possible, be placed in the same position which he would have occupied but for such decree because it is the duty of the court to act rightly and fairly according to the circumstances towards all the parties involved and to remove as far as possible the consequence of a wrong or unjust decree. One can understand this rule being relaxed in those cases where it conflicts with another rule of equity, namely, that a bona fide purchaser for value should not be allowed to suffer on account of the mistakes or irregularities committed by a Court of law, but I do not see why it should be relaxed in favour of a party who had due notice of the fact that the decree in execution of which he was proceeding to purchase the property was liable to challenge and had been challenged because he cannot be deemed to have acted with the due care and caution if in spite of such notice he proceeded to purchase the property.................. It is true that a stranger tothe decree is not bound to enquire into the merits of the plaintiff's claim or into the validity of the decree and, therefore, ordinarily the presumption is that such a person is unaware of these matters, but where there is clear and cogent evidence that he was fully aware of the merits of the controversy in regard to the property purchased by him and was also aware that the validity of the decree was under challenge, there is no room for that presumption.'

In the case reported in Ganapathy Mudaliar v. Krishnamachariar (1918) 45 Ind App 54 : (AIR 1917 PC 121), tbe Privy Council held that in a case where the decree-holder himself is an auction purchaser, the sale held and confirmed in his favour cannot be called in question by means of a separate suit but it could only be set aside by filing an objection under Section 244 of the Civil P. C. 1882 which corresponds to Section 47 of the Civil P. C, of 1908.

9. In view of the decision of the Supreme Court in Mahijibhai Mohanbhai Barot v. Patel Manibhai Gokalbhai : [1965]2SCR436 , it is now well settled that an application under Section 144 C. P. C. is an application in execution. A fortiori an objection against such an application shall be an objection under Section 47 C. P. C.

10. From the cases referred to above, the propositions which emerge may now be stated.

(1) if at a court auction, property is purchased by the decree-holder himself, the auction sale may be set aside and restitution allowed to the judgment-debtor in case the decree is set aside or reversed provided the other conditions of Section 144 C. P. C. are satisfied.

(2) No such restitution can be claimed by the judgment-debtor in case the property has been purchased at an auction sale by a purchaser who is stranger to a decree provided such purchase is bona fide.

(3) Proceedings for restitution under Section 144 C. P. C. are execution proceedings.

(4) Restitution can be claimed only under Section 144 read with Section 47 of the Civil P. C. and not by a separate suit.

11. Learned counsel for the appellant has, however, strongly urged that after the amendment introduced in Section 47 C. P, C., the distinction between points 1 and 2 (supra) which was previously drawn by the courts has now become academic. According to him, after the amendment, restitution can be claimed even if the property has been purchased by a bona fide purchaser who was stranger to the decree if the said decree is set aside or reversed. The amendment to Section 47 C. P. C. introduced by the Amending Act of 1956 is in the form of an Explanation and reads as follows:--

'For the purposes of this section, a plaintiff whose suit has been dismissed, a defendant against whom a suit has been dismissed and a purchaser at a sale in execution of the decree are parties to the suit.'

12. Reliance was placed on Harnandrai Badridas v. Debidutt Bhagwati Prasad : [1974]1SCR210 in which Mukherjea, J., delivering the opinion of the court, stated as under (at p. 2427):--

'It is important to remember that after the decision of the Privy Council in Ganapathy's case, 45 Ind App 54: (AIR 1917 PC 121) there has been an amendment of Section 47 as a result of which the purchaser at a sale in execution of a decree, whether he is the decree-holder or not, is unquestionably a party to the suit for the purpose of Section 47. Having regard to this, all questions arising between the auction purchaser and the judgment-debtor must in our view be determined by the executing court and not by a separate suit.'

13. The contention advanced on behalf of the appellant is based on a misconception of the nature of the provisions contained in Section 144 and Section 47 of the Civil P. C. The aforesaid two provisions operate in different fields and are of different nature. Section 144 C. P. C. confers a substantive right on the judgment-debtor to obtain restitution in case the decree is reversed, modified or set aside. Section 47 of the Civil P. C. is procedural in nature.

14. It is true that the Civil P. C. mainly deals with adjective law just as the law of evidence or the law relating to limitation. However, the substantive law and adjective law cannot be kept in watertight compartments. In practice a sharp line cannot be drawn segregating these two different sub-divisions of law. A conclusive evidential fact, though it finds place in the law of evidence, is properly speaking a branch of substantive law. Similarly, the law of prescription may, in an appropriate case operate as a vestive fact and may confer upon an intruder the rights of owner. Salmond on Jurisprudence, 12th edition page 462, has laid down:--

'Although the distinction between substantive law and procedure is sharply drawn in theory, there are many rules of procedure which, in their practical operation, are wholly or substantially equivalent to rules of substantive law. In such cases the difference between these two branches of the law is one of form rather than of substance.'

15. The judgments referred to above clearly recognise a right in a judgment-debtor to claim restitution when a decree has been modified, set aside or reversed if all other conditions of Section 144 of the Civil P. C. are satisfied. The aforesaid provision is peremptory in its operation, and a judgment-debtor who has been wronged by an incorrect decree is entitled as a matter of right to be placed in the position which he would have otherwise occupied but for such a decree. Section 47 of the Civil P. C. is merely procedural. It inter alia provides that all questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge or satisfaction of the decree, shall be determined by the court executing the decree and not by a separate suit. In other words, the said section of the Civil P. C. enumerates the various kinds of disputes which can be decided by the executing court, It further places a bar on a civil suit being filed in relation to such disputes. The Amending Act of 1956 has only laid down that amongst others auction purchasers, irrespective of the fact whether they were parties to the suit from before or not, shall be deemed to be such parties for the purposes of the section. I cannot subscribe to the view that the said jamendment has the exceptional effect of depriving a bona fide auction purchaser of the benefit of sale in his favour. As pointed out by Fazl Ali, C, J. in the case of Chota Nagpur Banking Association (supra) such an auction purchaser is entitled to protection on an equitable principle that he should not be made to suffer on account of any mistake or irregularity committed by a court of law. The first contention advanced on behalf of the appellant must, therefore, fail.

16. The second submission advanced on behalf of the appellant stands on a better footing. The lower appellate court, while reversing the decree of the trial court has only held that the decree-holder Ratan Lal and his son Mahendra Kumar are separate in mess and residence. It also held that Mahendra Kumar, the auction purchaser, has a separate business. It has, however, not recorded any finding that Mahendra Kumar was a bona fide purchaser for value and had no knowledge of the ex parte decree obtained by his father in pursuance of which the sale was held. He has also not found that the auction purchaser did not know that the judgment-debtor had made an application for setting aside the said decree and that the application was awaiting disposal.

17. It may be that a stranger to the decree is under no duty to enquire into the merits or into the validity of the decree in pursuance of which a sale is held. A stranger will necessarily be unaware of such matters. In the instant case, the auction purchaser is the own son of the decree-holder and the execution court has held that the money invested in the sale came from the decree-holder. This finding has not been reversed by the court of appeal. It has been held in S.P. Sahul Hamid v. P.M. Abdul Majid : AIR1964Mad252 , that burden of proving bona fides lies on an auction purchaser seeking to protect the sale which is concluded in his favour. The lower appellate court has proceeded on the basis that there is a presumption that a person who is not a party to the suit must be deemed to be a bona fide purchaser for value whatever may be the facts of the case, There is no warrant in law for raising such a presumption. In my opinion, the second submission urged on behalf of the appellant deserves to succeed.

18. The result is that this appeal succeede and is hereby allowed. The decree of the lower appellate court is set aside and the decree of the execution court is restored. The appellant will be entitled to his costs throughout. The amount deposited by the appellant pending orders of the court as security shall be refunded to him.


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