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Lala Ram and anr. Vs. Bhajani - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad High Court
Decided On
Case NumberCivil Revn. No. 799 of 1965
Judge
Reported inAIR1970All398
ActsCode of Civil Procedure (CPC) , 1908 - Order 21, Rule 84
AppellantLala Ram and anr.
RespondentBhajani
Appellant AdvocateB.L. Jaiswal, Adv.
Respondent AdvocateRadha Krishna Rakhal Das, Adv.
DispositionRevision allowed
Excerpt:
.....make it advisable to do so'.conditions nos. these provisions clearly show that, once the executing court has issued a warrant of sale to any officer to sell the attached property by auction, then it is such officer who has to complete the sale. thereafter under rule 85 as well as under the conditions of sale, the purchaser is required to deposit into court the balance of the purchase money within 15 days. provided that it shall be inthe discretion of the court or officer holding the sale to decline acceptance of the highest bid when the price offered appears so clearly inadequate as to make it advisable to do so......respect, we are unable to agree with the observation that, after the bidding is completed, the sale officer must in every case place the matter before the court and that it is for the court to accept the bid and to declare the purchaser. the relevant provisions of order xxi do not support this conclusion. in this case also, it appears that the highest bid had not been accepted by the nazir and that he had merely forwarded the bids to the court. it does not appear from the judgment, but this may have been the prevailing practice in calcutta or it may have been provided for in some rules made by the high court. 5. in poongavana naicker v. muthurama naidu : air1953mad762 , a learned single judge of the madras high court has followed the above mentioned three decisions and held that the.....
Judgment:

G.C. Mathur, J.

1. Lala Ram applicant No. 1 obtained a simple money decree against Bhajani, opposite party. In execution of the decree, some Bhumidhari land of the Judgment-debtor was attached. On May 25, 1963, the Munsif (executing Court) ordered the issue of the sale proclamation, fixing September 14, 1963, for the sale. On May 27, 1963, the warrant of sale was issued, directing the Amin to sell the attached property by auction. The Amin was directed to return the warrant by September 16, 1963, with an endorsement certifying the manner in which it had been executed. The Amin held the auction on September 14, 1963. The highest bid of Girraj applicant No. 2 of Rs. 1,200/- was accepted by the Amin and on the same date, Girrai denosited with the Amin a sura of Rs. 300/-. being 25 per cent of the purchase money. The Amin then returned the warrant together with his report to the Munsif and on September 16, 1963, the Munsif passed an order 'bid is approved'. On October 15, 1963, the judgment-debtor filed an application under Order XXI. Rule 90 of the Code of Civil Procedure to set aside the sale. On November 6, 1963, the Munsif dismissed the application as time-barred, holding that it had been filed beyond the period of limitation of 30 days from September 14, 1963, the date of the sale. Two days later, on November 8, 1963, the Munsif passed the following order:--

'Sale dated 14-9-1963 is confirmed. Execution is struck off in full satisfaction '

Against the order dismissing the application for setting aside the sale, the judgment-debtor filed an appeal. The District Judge, who heard the appeal, was of the view that the date of the sale was September 16, 1963, the date on which the Munsif approved the bid and that the application for setting aside the sale was filed within 30 days of that date. He accordingly allowed the appeal and directed the Munsif to entertain the objection and to decide it on merits. Against this order, the decree-holders and the auction purchaser have come to this Court in revision.

2. The real question, which arises for consideration in this case, is whether the date of the sale is September 14, 1963, when the Amin auctioned the attached property, or September 16, 1963, when the Munsif approved the bid. Under Article 166 of the Limitation Act of 1908, limitation for making an application under Order XXI, Rule 90 is 30 days from 'the date of the sale'. Admittedly, the application filed by the judgment-debtor is beyond 30 days from September 14, 1963, but within 30 days from September 16, 1963. In allowing the appeal, the District Judge has observed:--

'The Amin has not accepted the bid but he has mentioned in the bid list that a certain bid was the highest bid and then submitted the papers to the learned Munsif who formally accepted the bid on 16th Sept. It cannot, therefore, be said that the Amin had accepted the bid and the order of the learned Munsif is redundant.'

This is incorrect and is not borne out by the record. The record clearly shows that the Amin had accepted the highest bid of Girraj. The warrant of sale issued to the Amin directed him to sell the attached property by auction and to report compliance by September 16, 1963. The sale proclamation also states that the attached property will be sold by the Amin. On the Fard Neelam, the Amin has noted down all bids received by him, including the last bid of Rs. 1,200/- by Girrai. After the bids, the Amin has stated that no higher bid than that of Girrai was forthcoming and, therefore, the auction was concluded in favour of Girrai for Rs. 1,200/-. On the back of the warrant of sale, the Amin has written out his compliance report. In this report also, he has stated that no higher bid than that of Girrai for Rs. 1,200/- was forthcoming, that the price offered appeared to be adequate and, therefore, the sale was concluded in favour of Girrai forRs. 1,200/-. He has further stated that Girrai had deposited Rs, 300/- in cash towards one-fourth of the sale price and that he had been ordered to deposit the remaining three-fourths of the price, i.e., Rs. 900/- on or before September 29, 1963. From these tacts it is abundantly clear that the Amin had accepted the highest bid of Girrai and had taken the deposit of Rs. 300/- on account of 25 per cent of the sale price. These reports do not bear out the observation of the District Judge that the Amin had not accepted the bid of Girraj and had merely forwarded the bids for acceptance to the Munsif.

3. Learned counsel for the judgment-debtor has contended that, as a matter of law, the sale was completed only when the Munsif approved the bid and, therefore, it is the date of the approval of the bid by the Munsif which is the date of the sale. In support of his contention, he has placed reliance upon several reported decisions. In all these cases. Order XXI, Rule 84 C.P.C. came up for consideration. This rule reads:

'84(1) -- On every sale of immovable property the person declared to be the purchaser shall pay immediately after such declaration a deposit of twenty-five per cent on the amount of his purchase-money to the officer or other person conducting the sale, and in default of such deposit, the property shall forthwith be re-sold.'

In Jaibhadar Jha v. Matukdari Jha, AIR 1923 Pat 525, it was held that it is only when the presiding officer closes the bidding and formally accepts the bid and declares the purchaser that the sale is complete and that mere closing of the bid does not complete the sale. It appears from the judgment of this case that the sale was conducted by the Nazir and, after recording the bids, he sent the bid-sheet, in accordance with the practice, to the Munsif who wrote 'close' against the last offer and signed the order. Thereafter the auction purchaser deposited one-fourth of the sale price. It is thus clear that the Nazir had not accepted the highest bid and had merely forwarded the bid list for acceptance to the Munsif. In these circumstances, the sale was complete only when the Munsif accepted the bid and declared the purchaser.

4. In Ratnasami Pillai v. Sabapathy Pilial, : AIR1925Mad318 , it was held that, when a court sale takes place, the sale in favour of a particular individual is not complete unless and until it receives the confirmation of the Court and that it is the acceptance of the Court that constitutes the contract. In this case, the auction was held by the Receiver and Ratnasami Pillai was the highest bidder. When the bids were taken before the Court for confirmation, it refused to accept Ratna-sami Pillai's bid and directed a re-sale. It appears that, in this case, the Receiver had not accepted the highest bid of Ratnasami Pillai. The contention before the High Court was that Ratnasami Pillai having made the highest bid, there was a concluded contract between him and the receiver. It is this contention which Was repelled. Therefore this case also does not lay down any general proposition of law which can be applied to the present case.

In Surendra Mohan v. Manmathanath Banerji : AIR1931Cal583 , the Calcutta High Court, following the decision of the Patna High Court in AIR 1923 Pat 525 (supra), observed:

'Though the sale may be made by an Officer of the Court or by any person appointed in this behalf, the sale is a sale by the Court; the officer of the Court, for instance the nazir or any person empowered by the Court, is simply a ministerial officer appointed to carry out certain duties imposed upon him by the Court. After the sale is held and completed, so far as the bidding is concerned, the matter must be placed before the Court and, under Order 21, Rule 84, on every sale the person declared to be the purchaser shall pay, after such declaration, a deposit of 25 per cent on the amount of his purchase money to the officer conducting the sale. Accordingly, before such declaration is made, the sale does not become complete and effective and the bidder does not acquire any interest in the property.'

With great respect, we are unable to agree with the observation that, after the bidding is completed, the sale officer must in every case place the matter before the Court and that it is for the Court to accept the bid and to declare the purchaser. The relevant provisions of Order XXI do not support this conclusion. In this case also, it appears that the highest bid had not been accepted by the Nazir and that he had merely forwarded the bids to the Court. It does not appear from the judgment, but this may have been the prevailing practice in Calcutta or it may have been provided for in some rules made by the High Court.

5. In Poongavana Naicker v. Muthurama Naidu : AIR1953Mad762 , a learned Single Judge of the Madras High Court has followed the above mentioned three decisions and held that the sale becomes complete only when the Court accepts the final bid. This case does not carry us any further. It, however, appears from the judgment that, under the civil rules of practice in force in Madras, the Nazir, who conducts the sale, is required to put up the matter before the Court and 'it is then left to the Court to accept the auction of the Nazir or to reject it'.

In Ramkrishna v. Dulichand AIR 1956 Madh Bha 30, a Single Judge of the High Court of Madhya Bharat observed;

'If, therefore, the officer conducting the sale has no authority to accept a bid or conclude the sale, the sale is not complete until the bid is accepted by the Court, That is exactly the position in Madhya Bharat'

This case is of no assistance as It has not been shown to us that there is any practice in this State or that there is any rule Of law providing that the officer appointed to conduct the sale has no authority to accept the highest bid or to conclude the sale.

6. We may now consider the decision which has necessitated the reference of this case to a larger Bench by the learned Single Judge before whom the revision originally came up for hearing. This is a Division Bench decision of the Oudh Chief Court in Hadi Husain v. Zainul Ibad . wherein the Bench approved and followed an earlier decision in Hari Shankar v. Amina Bibi AIR 1935 Oudh 131 in which it was held;

'The sale of property in an auction by the order of a Court, although held by an officer of the Court or by any person appointed in this behalf, is nevertheless a sale by the Court itself. It is not completed until the Court formally accepts the bid and declares the purchaser under Order 21. Rule 84, C. P. C. prior to such order the bidder, whose bid has been accepted by the sale officer at the time of the bid, does not acquire any interest in the property.'

It may be that, in Oudh also, there was a practice or some rule requiring the bids to be submitted for acceptance of the Court. We are not prepared to accept that, under the provisions of the Code, the sale officer is not competent to accept the highest bid and to declare the purchaser, or that the sale officer is bound to place the bids before the Court for acceptance.

7. We will now examine the relevant provisions of the Code. Sales in execution of decrees and orders are dealt with in Order XXI of the Code from Rule 64 onwards. Rule 64 provides:

'64. Any Court executing a decree may order that any property attached by It and liable to sale, or such portion thereof as may seem necessary to satisfy the decree, shall be sold, and that the proceeds of such sale or a sufficient portion thereof, shall be paid to the party entitled under the decree to receive the same.'

Rule 65 provides that every sale In execution of a decree shall be conducted by an officer of the Court or by such other person as the Court may appoint in this behalf, and shall be made by public auction In the manner prescribed. Rule 66(1)provides:

'66(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 made in the language of such Court,'

Sub-rule (2) of Rule 66 lays down the contents of the proclamation and Rule 67 lays down the mode of making the proclamation. The proclamation is to be made in Form No. 29 of Appendix 'E' to the First Schedule of the Code. The proclamation has to mention, inter alia, the officer who is to hold the sale and the time and place of the sale. It also mentions the conditions of sale. Condition No. 3 is in these words:--

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

Conditions Nos. 6 and 7, which are also relevant, are in these words:--

'6. In the case of immovable property, the person declared to be the purchaser shall pay immediately after such declaration a deposit of 25 per cent on the amount of his purchase-money to the officer conducting the sale, and in default of such deposit, the property shall forthwith be put up again and resold.'

'7. The full amount of the purchase-money shall be paid by the purchaser before the Court closes on the fifteenth day after the sale of the property, exclusive of such day, or if the fifteenth day be a Sunday or other holiday, then on the first office day after the fifteenth day,'

Condition No. 8 then provides:

'8. In default of payment of the balance of the purchase-money within the period allowed, the property shall be resold after the issue of a fresh notification of sale.'

The executing Court has also to Issue a warrant of sale of property in Form. No. 27 of Appendix 'E' to the officer authorised to conduct the sale. In this warrant, the officer is commanded to sell the attached property by auction and to return the warrant on or before the date fixed with an endorsement certifying the manner in which it has been conducted or the reason why it has not be'en executed. These provisions clearly show that, once the executing Court has issued a warrant of sale to any officer to sell the attached property by auction, then it is such officer who has to complete the sale. There is no indication in these provisions that the sale officer is merely to record the bids and submit them to theexecuting Court for acceptance. As already observed above, we have not been referred to any practice in this State of the sale officer merely recording the bids and submitting them for acceptance to the executing Court or to any rule making such provision.

8. Rule 84 has already been quoted above. In our opinion, the language of this rule does not at all justify the conclusion that the acceptance of the highest bid and the declaration of the purchaser have to be made by the executing Court and not by the sale officer. The rule may be quoted again, emphasising the words which support our conclusion:

'84(1)-- On every sale of immovable property the person declared to be the purchaser shall pay immediately after such declaration a deposit of twenty five per cent on the amount of his purchase-money to the officer or other person conducting the sale, and in default of such deposit, the property shall forthwith be resold.'

There is no doubt that the sale is to be held by the sale officer. The sale, the declaration of the purchaser, the deposit of 25 per cent of the purchase price and the resale on default in making the deposit have to take place in the same continuation and as parts of the same proceeding. The declaration of the purchaser has to follow the sale, the deposit is to immediately follow the declaration and the resale has to follow forthwith the default in making the deposit. This can only be if all the steps are taken on the date of the auction and by the sale officer. If the intention of the rule were that, after the auction sale, the declaration of the purchaser is to be made by the Court, then it would have provided for the deposit of 25 per cent of the purchase-money also before the Court and would have further provided that, in default of the deposit, the Court shall redirect a fresh sale. It appears to us that, under Rule 84, the executing Court does not come into the picture and all steps have to be taken by the sale officer. The Court comes into the picture only after the property has been sold by the sale officer. Thereafter under Rule 85 as well as under the conditions of sale, the purchaser is required to deposit into Court the balance of the purchase money within 15 days. Under Rule 86, if the purchaser makes default in making the deposit of the balance of the purchase-money, the Court may forfeit the 25 per cent deposit and direct a resale of the property. The scheme of the rules shows that, under Rule 84, the acceptance of the highest bid and the declaration of the purchaser has to be made by the officer appointed to sell the property.

9. Some reliance is placed in some of the decisions referred to above on thefollowing words in the third condition ofsale mentioned in the sale proclamation:

'.....Provided that it shall be inthe discretion of the Court or officer holding the sale to decline acceptance of the highest bid when the price offered appears so clearly inadequate as to make it advisable to do so.'

These words confer a discretion on the sale officer to refuse to accept the highest bid if the price offered is inadequate. They do not indicate that the sale officer has no power to accept the highest bid or to declare the purchaser. On the other hand, the conferment of this discretion to reject necessarily implies a power in the sale officer to accept the highest bid. These words also confer an overriding discretion on the Court to reject the acceptance of the highest bid by the sale officer if the price is inadequate. This does not mean that the sale cannot be concluded by the sale officer, but only that the Court has the power to reject the sale concluded by the sale officer if it finds that the price is inadequate. It is only in one case, namely, when the purchase price is inadequate, that the Court can override the decision of the sale officer accepting the highest bid. But if the Court does not find that the highest bid is inadequate or does not consider it advisable to override its acceptance by the sale officer, the sale stands and the date of the sale will be the date on which the sale officer accepted the highest bid and declared the purchaser.

10. All that is necessary for a sale to be complete under Order 21, Rule 84 Is that the sale officer should accept the highest bid and declare the purchaser and the purchaser should deposit 25 per cent of the purchase price. If the Court has the power to set aside the sale and does so, then the sale will be wiped out; but, if the Court approves of the sale, then the sale by the sale officer stands. If the sale stands, then the date of the sale cannot be any other date but the date on which the sale officer accepted the highest bid and declared the purchaser.

11. We may now refer to the cases which support this view. In Munshi Lal v. Ram Narain, (1913) ILR 35 All 65, the auction was held on August 22 and Ram Narain was the highest bidder. The sale officer did not conclude the sale as there was some uncertainty about the amount due under the decree and he postponed the matter till he received information from the Court. He received information on August 28 and, on that date, he concluded the sale and accepted one-fourth of the purchase money from Ram Narain. The question was when did the sale take place. A Division Bench of this Court observed:

'We cannot accept the contention that directly a bid is made, the sale is concluded. .................. Under Order 21, Rule 84, a person, who is declared to be the purchaser at a sale has immediately after such declaration to make a deposit of 25 per cent on the amount of his purchase-money to the officer conducting the sale. It is. therefore, quite clear that for the conclusion of a sale it is necessary for the sale officer to accept the final bid and to make a declaration as to who is the purchaser and to order the purchaser to forthwith, pay 25 per cent of the purchase-money.'

12. In Nur Din v. Bulaqi Mal, AIR 1931 Lah 78 a Single Judge of the Lahore High Court held:

'When the officer of the Court or such other person as the Court may appoint to conduct a sale as provided in Rule 65, Order 21. knocks down the property to the highest bidder, such person must, in my judgment, be declared to be the purchaser of such property and the sale is consequently complete.'

This was approved by a Division Bench of the same High Court in Hoshnak Ram v. Punjab National Bank Ltd., AIR 1936 Lah 555.

13. Mohomed Yacoob v. P. L. R. M. Firm, AIR 1932 Rang 17 is a case very much in point. In this case. Yacoob was the highest bidder at the auction sale conducted by the Receiver, his bid was accepted by the Receiver and he deposited one-fourth of the purchase-price with him. Later, the same day he wrote to the Receiver withdrawing his bid and asked him to re-sell the property. The receiver declined. He then filed a suit for a declaration that the property had not been sold to him on the ground that he was entitled to withdraw his bid until such time as the Court had formally accepted it. Repelling this contention. Page C. J. observed:

'Under Order 21, Rule 65, the receiver was duly authorised by the District Court to conduct the sale, and under Order 21, Rule 84, the appellant was declared by the receiver to be the purchaser, and immediately afterwards paid the deposit of 25 per cent of the purchase price. In my opinion, when his bid was accepted by the receiver and the deposit of 25 per cent of the purchase price had been paid, the sale was effected ..... Of course, ifthere is a rule of practice in the Court that the officer conducting the sale shall not be entitled to accept a bid or conclude the sale, and that such officer is given authority merely to record the bids and forward the bid sheet to the Court in order that the Court may accept or reject the bids or any of them, it follows that no sale takes place until the Court has accepted the bid. Such a practice appears to obtain in Bihar and Orissa, but there is no such practice in Burma. Inthe circumstances of any particular case, it may be found as a matter of fact that the officer conducting the sale did not accept the offer made by the highest bidder but had referred the offer to the Court in order that the Court should accept or reiect it. In a case of that description, no doubt, there would be no completed sale until the offer of the highest bidder was accepted but that is a question of fact to be determined according to the circumstances of each case.'

With regard to the third condition of sale in the sale proclamation. Page C. J. said:

'..... The effect of condition 3is to give the Court a quasi revisional discretion in the matter, and not to require the Court itself to 'knock down' the property.'

14. A Single Judge of this Court has also, in Ebadullah Khan v. Municipal Board, Allahabad. : AIR1950All450 held that, in every case, the Amin need not make a reference to the Court for acceptance of a sale and, as soon as it is found that no higher bidder is forthcoming the Amin can declare the highest bidder and accept and conclude the sale. The Mysore High Court has also taken the same view in Thippiah Maniappa v. Huvinakuli Ramiah AIR 1963 Mys 210 where it was held:--

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

15. From an analysis of the decided cases and of the relevant provisions of the Code it appears to us that, in three cases, the date of the sale will be the date of acceptance or approval of the bid by the Court, namely,

(i) When there is a practice of a rule to this effect;

(ii) When the Court has reserved to itself the power to accept the bid and to declare the purchaser; and

(iii) When the officer conducting the sale does not, in fact, conclude the sale bv accepting the highest bid but refers the matter to the Court.

In other cases, the date of sale will be the date on which, the officer conductingthe sale accepts the highest bid, declares the purchaser and the purchaser deposits 25 per cent of the purchase price. We, therefore, hold that the date of sale in the present case was September 14, 1963, when the highest bid of Girraj was accepted by the Amin and Girraj deposited 25 per cent of the purchase-money with the Amin, The application for setting aside the sale was filed more than 30 days after that date and was time barred.

16. We accordingly allow this revision, set aside the judgment and order of the District Judge and restore that of the Munsif. Parties will bear their own costs of this revision.


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