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Ravi Nandan Prasad Vs. Jagar Nath Sahu and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1925All459; 87Ind.Cas.278
AppellantRavi Nandan Prasad
RespondentJagar Nath Sahu and ors.
Excerpt:
.....a much wider scope and there seems to be no good ground for holding that it should not include an auction-purchaser, the calcutta high court: under order 21, rule 13 which deals with cases of attachments, all that is required is a specification of the judgment-debtor's share of interest in the property to the best of the belief of the decree-holder, and so far as he has been able to ascertain the same. he has no general right to ask the court to enquire into the interest of the judgment-debtor and set aside the sale if it is satisfied that he did not possess the exact amount of interest which was announced to be sold. under order 21, rule 66 it is the duty of the decree-holder to sea that all incumbrances to which the property is liable are mentioned as well as every other thing which..........the proper construction of order 21, rule 90 of the code of civil procedure. in the court below an auction-purchaser who had purchased property put up for sale under a decree applied to have the sale set aside on the ground that he had suffered substantial loss owing to irregularity in the publication and conduct of the sale. an objection was taken in the court below that the auction-purchaser had no right to apply under this rule. that objection was overruled by the learned judge, who adopted the view taken by the madras high court in a case to which i will refer in a moment, and he then went on to hold that the property had been misdescribed by a material omission from the sale proclamation which omitted to mention that the property was subject to a charge called a perjawat, that the.....
Judgment:

Walsh, J.

1. This is a first appeal from an order which raises an important question - though to my mind a simple question - of the proper construction of Order 21, Rule 90 of the Code of Civil Procedure. In the Court below an auction-purchaser who had purchased property put up for sale under a decree applied to have the sale set aside on the ground that he had suffered substantial loss owing to irregularity in the publication and conduct of the sale. An objection was taken in the Court below that the auction-purchaser had no right to apply under this rule. That objection was overruled by the learned Judge, who adopted the view taken by the Madras High Court in a case to which I will refer in a moment, and he then went on to hold that the property had been misdescribed by a material omission from the sale proclamation which omitted to mention that the property was subject to a charge called a perjawat, that the applicant was unware of it, and that he was induced to enter into the purchase by misrepresentation, which led him to believe that ho was purchasing an absolute ownership, whereas it was only a lease-hold property, and he therefore set the sale aside and directed that the money should be refunded to the purchaser.

2. The main question which has been very fully argued before us - all the authorities both before and since the present Coda having been referred to during the discussion - was whether the learned Judge was right in holding that an auction-purchaser can apply under Order 21, Rule 90. The question whether he can or cannot is obviously a very important one to auction-purchasers as a class, because if he can, and does not, or if he does and applies unsuccessfully, he is clearly prohibited under Rule 92 of the same Order from bringing a suit. This prohibition may in certain cases turn out to be a serious disadvantage to auction-purchasers. Under the old Code he could, and often did, bring a suit, and in some Courts a sort of traditional belief has taken root that he can bring a suit and cannot apply under this rule. If he has to apply under the rule, he has by the provisions of the Coda very little time at his disposal in which to do so, and if he allows the time to run out, he cannot fall back upon a right to sue, which, if it existed, would give him much more time to prepare for his case and to collect the relevant material. It might, however, on the other hand be pointed out that there are very good reasons why the Code should have provided that he should apply, and not bring a suit. Everybody else who can conceivably be affected by the sale-using that term in its widest sense-has to apply and cannot sue. There does not seem any real reason why the auction-purchaser should stand in any different category. Moreover the Court executing the decree, controlling and carrying out the sale, is obviously the Court best equipped for determining the question whether there has been irregularity or fraud in the publishing or conduct of it, and a fortiori if it is the best Court for the purpose, it is clearly best in the interests of the parties and for the Court that the matter should be disposed of as speedily as possible and by an application, rather than by a dilatory suit, for after all it is the execution proceedings which are concerned, and it is desirable that the question whether the sale ought to be confirmed or not should be settled as speedily as possible. But whether the foregoing observations are sound or not-and they are merely obiter-they cannot affect the interpretation of this rule if the language of the rule is clear.

3. The question whether an auction-purchaser is entitled to apply, depends on the question whether he is included in the expression 'a person whose interests are affected by the sale.' It is necessary to observe that this expression was not contained in the corresponding provision which was in force up to 1908, and up to that date the, auction-purchaser could not apply but could bring a suit. It follows therefore, that for the purpose of determining this question, the cases decided before 1908, or decided after 1908, with reference to proceedings which had begun before 1908, bearing upon the question whether auction-purchasers could apply or could properly bring a suit, are wholly irrelevant, and for my part, I decline to look at them. Unfortunately I find them still cited, as though they were relevant and authoritative, in textbooks dealing with the law under this rule, and they have been cited as authorities in one decision from which I feel compelled to differ. The expression to be considered is: 'whose interests are affected by the sale.' I find myself compelled to hold a? a matter of law that a person who is the highest bidder, whose bid is accepted, who is compelled by law to pay a deposit, and unless something intervenes, is compelled by law to complete his purchase is a person 'whose interests are affected by the sale, It is impossible to use a wider term than 'a person's interests.' In the ordinary use of the word in the English language it is a term covering every sort of interest recognised by law, such as, in the case of an auction-purchaser, liability to pay the money, liability to complete and take a transfer of the property, and from his own point of view the necessity of finding the necessary funds, and also the necessity of carrying through to fruition the provisional contract into which he has entered. If the expression were 'interest in the property,' it would of course be confined to an interest in the property sold antecedent to the sale. If the word were merely 'interest' without the plural and without the words 'in the property,' it might be possible to hold that the word 'interest' was confined to interest in the thing itself at the time of the sale. But that is not the expression, and to my mind the actual expression, in the rule is free from ambiguity or difficulty of any kind and ought to be construed as meaning what it says. It would be unnecessary further to labour this point if it were not for two decisions of the Patna High Court relied upon by the appellant. The first is the case of Khetre Mohan Datta v. Sheikh Dilawar (1918) 3 Pat. L.J. 516 decided in the year 1918. No reference is contained, either in the judgment, or in the head-note, to the rule which the Court was construing. The Court seems to have assumed that the question was settled beyond controversy and not open to argument. The judgment says:--'the Munsif very properly held that the auction-purchaser was not a person who could come in and attack his own purchase,' and it went on to say 'it is quite clear that it is not open to a party who purchases at an auction sale to impugn the validity of his own purchase.' It is clear therefore that the Court was treating it as a matter which was well settled. I cannot, with great respect, accept the expression used in the foregoing quotation, that an auction-purchaser complaining of any irregularity antecedent to the sale, is attacking his own purchase. What he is attacking is the conduct of the sale on the publication of the material factors or description of the property put up for sale, and it seams to me a mis-description to say that in seeking relief from a burden which has been unjustly imposed upon him by an irregularity mis-describing the subject-matter of his purchase, or concealing material facts, he is making as attack upon his own purchase. It is merely a complaint that he has, either as the result of a mistake, or of a trick, bought something which he had not the slightest intention to buy, and that he is saddled with something which was not, so far as he is concerned, his purchase at all. The Madras High Court in 1921 in the case of Bhavirisethi Gopalakrishnayya v. Pakanati Pedda Sanjeeva Reddi : (1920)38MLJ228 without apparently being aware of the decision in Patna held that the expression included the auction-purchaser. This is the decision which the Court below has rightly followed. I merely wish to say with regard to it, that I find it puts too narrow an interpretation even on the word 'interest.' It treats the word 'interest' as being an interest in the property which he has acquired at the sale, declining to hold as the Patna High Court has done, that it was confined to the narrow meaning of interest prior to the sale. For my part, as I have already said, I see no reason for limiting it even to the notion of interest in the property sold. The matter came again before the Patna High Court in the year 1923 in the case of Kartik Chandra Chatterji v. Nagendra Nath Roy A.I.R. 1924 Pat. 319 and that Court had before it, and had to construe, Rule 90 with which we are now concerned, and it also had the advantage of considering the decision I have just referred to of the Madras High Court. The learned Judge who delivered judgment in that case repeated what he had said in the previous case of the Patna High Court to which I have referred, saying that it was settled in that Court, that is to say, Patna that the auction-purchaser could not apply except under Rule 91, and in explaining that Rule 90 was not designed for the relief of the auction-purchaser at all, it cited decisions from the Calcutta High Court and by the Privy Council antecedent to 1908, which to my mind are irrelevant. The Court declined to follow the view taken in Madras, holding that it was precluded from doing so by the language of Rule 90, and held that 'interests affected by the sale' mean 'interests in the property existing before the sale.' I do not think that we have any right to insert fundamental amendments of this kind into the plain language of a rule. To my mind that is not interpretation but legislation, and I can only repeat that we are bound to take the words as they stand, and that it is quite obvious that an auction-purchaser whose bid is accepted and who is provisionally bound to complete his purchase, is a person whose 'interests are affected by the sale.' I would even be prepared to go further by way of attempting to explain why the word 'auction-purchaser' is not used in the rule as it is used in the next rule, which provides that the auction-purchaser may apply to set) aside the sale where the judgment-debtor has no saleable interest in the property, and say that in a case, for example, where the auction-purchaser was a mere trustee or agent employed to purchase on behalf of a syndicate of persons who were either unwilling or unable to be present, and who entered into the purchase, on their behalf in his own name, and then quarrelled with them and declined to take the necessary steps to set aside the sale if there has been irregularity against which they desired to protect themselves, yet although they were not actually the purchasers at the sale in so many words, they would be persons whose interests were affected by the sale, and who might ultimately apply on the ground that the auction-purchaser declined to do so on their behalf. The result is that in my view the auction-purchaser is now brought into the same category as the decree-holder, judgment-debtor and other persons in previous rules upon the subject, and may apply under Rule 90 with the natural result that he is prohibited from bringing a suit on the same complaint. On this ground I hold that the appeal fails subject to the further question whether we are prepared to confirm the learned Judge on the merits.

4. The question of the merits is really a much more difficult one, largely by reason of the fact that the learned Judge is 80 satisfied that the merits of the application are established, that; he has omitted to state the steps by which he arrives at certain conclusions or inferences which he has summarized in his judgment. I agree with him that the principle of caveat emptor does not apply under this rule where it is shown that there has been a misdescription or a concealment amounting to a substantial misrepresentation affecting the equality and value of the property. I use the word 'quality' advisedly, because I do not think that the expression 'substantial loss' is necessarily confined to 'pecuniary loss.' It is not true to say that if a man thinks he is buying unencumbered property and finds afterwards that it is encumbered to no greater extent than Rs. 5 per annum, that the difference is necessarily represented by capitalizing the annual sum of Rs. 5. A man making decision whether he shall bid and purchase a. property, is a free agent. He is entitled to make his own choice, and he is entitled to know what it is for which he is asked to pay, and in my judgment he is entitled to say, when he discovers that he is burdened with some charge of which he was ignorant, 'the amount of this charge is not in itself a matter of great consequence to me, but its very existence is a thing which stamps the property with a character I do not like, find I should not have purchased, or at any rate I was not prepared to pay a substantial price for the property if it was charged in any way.' Now there are two features about this case which impress me very much in favour of the finding that substantial loss has been made out. The proclamation described the property as free from encumbrance. To my mind that was a fundamental misdescription and misrepresentation of the character of the property. It was a misrepresentation holding out the property to be free when it was not free. One attack which the appellant has made upon the finding of the learned Judge is that the learned Judge says in his judgment: 'he, the purchaser purchased it thinking that it is muafi land, and therefore paid a very big sum for it,' and it is said that the learned Judge has gone beyond the evidence in holding that fact in favour of the applicant, because the applicant did not, as ho really should have done, go into the box. Whether by a sort of mutual understanding, which frequently happens with out a dear record being left behind to testify to it by those present at the trial it was treated as common ground that the applicant thought he was getting free property one cannot say with certainty in this case. But it seems tome that the appellant is in this difficulty. He had been the mortgages of the property and he in possession of the document relating to it, and a very superficial acquaintance with them must have shown him the existence of this encumbrance. Either he was guilty of gross carelessness in supplying the materials to the Court without consulting the relevant documents which would have shown him what the materials ware, or he knew and wilfully concealed the existence of this small charge. Inasmuch as he himself allowed the Court to describe the property in the proclamation as free from encumbrance, it does not lie in his mouth to complain that the learned Judge has attributed to the purchaser the same belief which the decree-holder allowed the Court to advertise. A man who even honestly misdescribes the subject-matter of a sale by misrepresentation, such as the description 'free from encumbrance,' when there is an encumbrance cannot be heard in a Court of law to complain that the purchaser knew what he was buying. The learned Judge has found that the purchaser has suffered substantial loss, and even conceding that a pedantic criticism of the judgment may succeed in showing that there are gaps in the reasoning by which he has reached his conclusion, the judgment satisfies me that the learned Judge was convinced that this was one of those cases which I described in the foregoing observations in which the mere monetary amount of the existing charge was not the only material factor in holding that the purchaser had suffered substantial loss by reason of the irregularity in the publication and description of the sale in the proclamation, but that he arrived at the conclusion because he was satisfied, and I think rightly, that the purchaser objected to buy the property with any encumbrance at all quite apart from the question what its amount might be. I think there was abundant evidence to justify the finding that substantial loss had been suffered in the sense in which that expression is used in Section 90, even though the sum was not a, large one, and upon the evidence I should have come to the same conclusion.

5. We therefore, hold that the appeal must be dismissed with costs.

Sulaimani, J.

6. I agree. Under Section 311 of the old Code the decree-holder or any person whose immovable property had bean sold could apply to have the sale set aside on the ground of a material irregularity in publishing or conducting it. On the language of that section it was quite clear that an auction-purchaser could not apply. The Privy Council in the case of Birj Mohun Thahur v. Rai Uma Nath Chowdhry (1893) 20 Cal. 8 held that an auction-purchaser did not come within the moaning of that section. In the later case of Kala Mea v. Harperink (1903) 36 Cal. 323 their Lordships of the Privy Council affirmed the decree in a Civil suit brought by an auction-purchaser on the ground of misrepresentation made by the sale officer. The language of the corresponding provision in the new Code hag been materially altered. Under Order 21, Rule 90 in addition to the decree-holder and to any person entitled to share in a rateable distribution of assets, every person whose interests are affected by the sale, has a right to apply. There cm be no doubt that the expression 'any person whose interests are affected by the sale' is much wider and the question is whether it includes an auction-purchaser also or not.

7. It is impossible to answer this question on mere general considerations. On the one hand it may be conceded that an auction-purchaser purchases the property at an open competition where no warranty of title is given and that therefore when he bide he takes a certain amount of risk if it turns out that the property which he has got is not worth the amount which he paid. It must also be conceded that to give him a summary remedy under this rule to apply to have the sale set aside would be taking away from him the right to bring a separate suit, and would also be curtailing the period during which hecan seek his remedy. On the other hand it cannot be denied that if there exist heavy incumbrances on a property which is put up for sale and they are not announced at the time of the sale the auction-purchaser may offer a very high price for it and may be seriously prejudiced thereby. An auction-purchaser is not ordinarily a party to the proceedings and he often cornea on the scene at the last moment and knows vary little about the property that is put up for sale. If all the particulars necessary to disclose to him the nature of the interest he is going to bid for, are not mentioned at the time and he ha3 no right to have the sale set aside by reason of such omission it would be denying him justice. As I have said it is unsafe to answer the question on general considerations only. It is our duty to interpret the words of the rule as they stand. The expression perhaps is not as clear as it may have bean and it is its ambiguity which has led to a conflict of opinion between the Patna and Madras High Courts. The learned Judge of the Patna High Court in the case of Khetro Mohan Datta v. Sheikh Dilawar (1918) 3 Pat. L.J. 516 and in the case of Kartik Chandra Chatterji v. Nagendra Nath Roy A.I.R. 1924 Pat. 319 seam to take the expression interests as meaning an interest in the property put up for sale. They therefore argue that the auction-purchaser's interest in the property is really created by the sale and cannot be said to have been affected by it. On the other hand the learned Judges of the Madras High Court in the case of Gopala Krishnayya v. Sanjeeva Reddi : (1920)38MLJ228 have taken the view that if the interests of an auction-purchaser are affected when the sale is to be set aside they must also be affected if the sale is to be confirmed.

8. I agree with my learned brother that the expression 'a parson whose interests are affected by the sale' must be taken in its general sense and there is no justification for restricting it to mean interest in the property put up for sale. As pointed out by him the word 'interest' is not used in the singular but is in the plural number. It is easy to imagine cases whore the interest of a parson may be affected by the sale though he may have no actual interest in the property which is put up for sale. The expression is of a much wider scope and there seems to be no good ground for holding that it should not include an auction-purchaser, The Calcutta High Court: also has taken the view that the expression is of very wide import. Abdul Aziz v. Tafazuddin (1914) 19 C.W. N. 326.

9. I wish however to guard myself against being understood to hold that by conceding the right to an auction-purchaser to apply under this rule, I mean to open a door for a general enquiry into the title of. judgment-debtors. To do so would be to call upon decree-holders to prove the titles of their judgment-debtors in the property which they are seeking to sell. I take it that if the decree-holder, in a bona fide belief that the interest which he wants to sell vests in his judgment-debtor and without any fraud, misrepresentation or concealment, puts' up that-interest for sale, it cannot be said that there has been a material irregularity in the omission if a subsequent enquiry were to disclose that the judgment-debtor did not really own the entire interest which was put up for sale. Under Order 21, Rule 13 which deals with cases of attachments, all that is required is a specification of the judgment-debtor's share of interest in the property to the best of the belief of the decree-holder, and so far as he has been able to ascertain the same. The same principle it seems to me would apply to a mortgagee decree-holder also. A decree-holder has a right to put up for sale what he honestly believes to be his judgment-debtor's property and may offer it to be purchased without giving any warranty of title at all.

10. The only case where a question of title can be gone into in these summary proceedings would be a case where an auction-purchaser attempts to prove that the judgment-debtor had no saleable interest whatever. It is supposed that there is an implied guarantee that at least some interest is being put up for sale, and, therefore, if it be a fact that the judgment-debtor has no saleable interest whatsoever, the auction-purchaser is given a remedy under Rule 91 to apply to have the sale set aside. He has no general right to ask the Court to enquire into the interest of the judgment-debtor and set aside the sale if it is satisfied that he did not possess the exact amount of interest which was announced to be sold.

11. In the present case the property was put up for sale and was described as a free hold. There was nothing in the proclamation of sale to suggest that the judgment-debtor had merely a lessee's interest in the property. Under Order 21, Rule 66 it is the duty of the decree-holder to sea that all incumbrances to which the property is liable are mentioned as well as every other thing which the Court considers material for a purchaser in know in order to judge of the nature and value of the property. Even if it be assumed that the ground rent payable on this land cannot be called an incumbrance on the property, nevertheless it must be conceded that it was a particular which was material for a purchaser to know in order to judge of the nature and value of the property. The mortgagee-decree-holder had the title deeds in his possession and must be deemed to have been aware that the property was only lease-hold. His omission to describe it as such was a deliberate omission and it certainly amounted to a material irregularity within the meaning of Order 21. Rule 90. All the conditions under which this land is held are not shown in these proceedings. We do not know exactly what the terms are on which the occupier can be ejected. Further there is a claim on behalf of the Municipal Board for a haq chaharum. That, however, is not admitted either by the decree-holder or the auction-purchaser. It is reasonable to assume that the auction-purchaser would not have offered such a high price for this property if he had known that the property he was going to purchase was a mere lease-hold and not a free-hold. I, therefore, agree with the Court below that it is established that there was a material irregularity in publishing and conducting the sale and in consequence of that irregularity the auction-purchaser has suffered substantial loss.

12. The order of the Court is that this appeal is dismissed with costs.


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