1. This case comes before us on a reference made by the District Judge of Moradabad under the provisions of Order 46, Rule 1, Civil P.C.
2. The facts are as follows:
In execution of a decree obtained against the minor heirs of one Abdus Sattar, deceased, certain immovable property of the judgment-debtors was attached and notified for sale. This property was sold by auction on 20th October 1924. On 23rd March 1924 the guardian of the minors had entered into a contract with Mt. Rifaqat-un-nisa for sale to her of the property which was under attachment. At that time the guardian (Mb. Fatima-ul-Hasna) had not obtained from the District Judge the sanction to the transfer which it was necessary for her, as the certificated guardian, to secure. The Judge's sanction was not got till 25th September 1924. Acting on the sanction so obtained, she executed a sale deed of the property in favour of Mt. Rifaqat-un-nisa on 23rd of October 1924, i.e., three days after the Court sale. On 19th November 1924 the guardian of the minor judgment-debtors and Mt. Rifaqat-un-nisa presented a joint application to the execution Court under Order 21, Rule 89(1) praying that the auction sale should be sat aside. Tender of the sum required by the rule to be paid was made. It was represented that the property which has been sold was worth Rs. 7,000, while the price it had fetched at the auction was Rs. 1,200 only. It was prayed that if it should be held that Mt. Rifaqat-un-nisa, the purchaser, was incompetent to make an application under the rule in question, the application should be treated as made on behalf of the judgment-debtors and accepted accordingly. The Munsif to whom the application was made, following the judgment of a Bench of this Court, Ishar Das v. Asaf Ali Khan (1911) 31 All 186, rejected the application. He held that the judgment-debtors having transferred the property after the date of the Court sale and before the date of the application, could not apply as they had lost all their interest in the property. He further held that Mt. Rifaqat-un-nisa, as a subsequent purchaser under a private sale, was not entitled to apply to have the Court sale set aside.
3. The judgment-debtors appealed to the District Judge who, instead of deciding the appeal, has made this reference asking for the opinion of this Court regarding the true construction of Order 21, Rule 89. In his order of reference the District Judge points out that other High Courts have declined to accept the interpretation of this rule laid down in Ishar Das's case (1911) 31 All 186 above referred to.
4. He cites in this connexion the following rulings:
Pandurang v. Gobind AIR 1916 Bom 57. Dhanwanti v. Sheo Shankar AIR 1919 Pat 501 and Sundaram v. Mausa Mavuthar AIR 1921 Mad 157.
5. He also refers to a Full Bench decision of this Court in which the correctness of the view taken in Ishar Das's case (1911) 31 All 186 was questioned: Yad Ram v. Sundar Singh AIR 1923 All 392(F B). In this latter case one of the Judges, Piggot, J., while describing the construction of Order 21, Rule 89 as a 'somewhat difficult question of law' held that it was not open to this Court to decide the question in proceedings taken in revision. He suggested, however, that the matter could be brought before this Court by a means of a reference under Order 46, Rule 1 and a similar suggestion was made by Walsh, J., who was clearly of opinion that the view of the law taken in Ishar Das's case was not correct, and that the true interpretation of the Rule was laid down in the Patna case cited above: Dhanwanti v. Sheo Shankar AIR 1919 Pat 501. The learned District Judge has taken the hint conveyed in the judgment just mentioned and has now referred the question for our decision.
6. Mr, Piare Lal, who appears on behalf of the auction-purchaser, has taken a preliminary objection to the entertainment of the reference on the ground that the referring order does not show that; the learned District Judge entertained any reasonable doubt regarding the question of law involved. Indeed the argument is that it is not possible for the Judge to entertain such doubt as the rule has already been interpreted in a decision of this Court which he is bound to follow. In support of this argument two cases of the Bombay High Court have been referred to: Bhanaji Raoji Khoji v. Joseph De Brito (1905) 30 Bom 226; Naru Koli v. Chima Bhosle (1884) 18 Bom 54; and a case of the Oudh Court, Ajodhia Prasad v. Raghubir (1913) 15 OC 380. Those cases undoubtedly lay down the principle that a Subordinate Court ordinarily makes a reference under Order 46, Rule 1, in order to obtain a decision upon a point of law which has already been settled by the authority of a superior Court whose judgments bind the Courts below.
7. One need not quarrel with the principle so laid down which is so obviously correct as to require no further discussion. But this is not an ordinary case. Apart from the fact that the correctness of the judgment in Ishar Das's case (1911) 31 All 186 has been challenged in other High Courts there is the fact that it has been doubted in this Court in the Full Bench case referred to above and the further fact that an invitation has been thrown out in language which plainly suggests the willingness of this Court to have the question reconsidered. In the circumstances, we are satisfied that the District Judge might well entertain a reasonable doubt and that he did in fact do so. We hold that he was competent to make this reference. The crux of the case is the interpretation in Order 21, Rule 89(1) of the words 'person owning such property.' Can these words be construed to mean the judgment-debtor? If the words are to be taken in their literal sense, and without qualification, I think they would not. We have it that by the time the occasion for an application under Rule 89(1) has arisen, the immovable property 'has been sold,' and it seems to me impossible to predicate of a person whose property has been sold that he is still the owner in the ordinary acceptance of that term. There has been a sale at which a person has become a purchaser and ordinarily this purchaser would be the owner. Once sold, the property cannot revert to the judgment-debtor unless the sale is set aside for one or other of the reasons mentioned in Rr. 89, 90 and 91 of Order 21. It is true that the auction-purchaser, having bid and having deposited the purchase money, does not at once acquire an absolute title as owner; he can only get this by the passing of an order under Rule 92(1) by which the sale is confirmed. But till this order is made the auction-purchaser is at least the owner sub-mode; he has, acquired the right to the property subject only to the chances of the sale being set aside on any of the grounds upon which the Court is entitled to set it aside.
8. This was the view expressed by their Lordships of the Privy Council in Bhawani Kunwar v. Mathura Prasad Singh (1912) 40 Cal 89. There a mortgagee decree-holder had purchased the property of his judgment-debtor on 19th March 1900. The question was, who was the owner of the property on 29th March 1900, the date on which the property became liable to sale for arrears of Government revenue? The sale was not confirmed in favour of the auction-purchaser until the 23rd April 1900, but it was held, notwithstanding that when 29th March was reached, the property which fell than into arrears of revenue was the property in fact and in law of no one but the purchaser. And this, although under the old Code (Section 316) which was applicable to the case, the title to the property sold did not vest in the purchaser until the date of the certificate of sale, that is the date of the order confirming the sale. A priori the same view would be taken now that under Section 65 of the present Code the title is deemed to have vested in the purchaser from the date of the 'sale and not from the time when the sale becomes absolute. But it seems plain that Rule 89(1) does not contemplate the auction-purchaser as the 'person owning the property;' for it is not to be conceived that any auction-purchaser is going to apply to the Court to set aside a sale made in his own favour on the terms that he shall deposit five per cent. of the purchase-money for payment to himself and shall deposit in addition the entire amount of the decretal debt which may exceed, and frequently does exceed, considerably, the amount of his bid. The only provision for an application by the auction-purchaser is to be found in Rule 91 by which he can apply to set aside the sale on the ground that the judgment-debtor had no saleable interest in the property sold. If then Rule 89(1) does not treat the auction-purchaser as the owner, and if the judgment-debtor cannot be treated as the owner for the reasons above given, the rule is defeated; for the only right to apply would then be in a person 'holding an interest' in the property by virtue of a title acquired before the auction sale. The person who holds an interest in property is distinct from the owner. And yet the rule provides for an application by either.
9. It seems reasonably clear then that if Rule 89(1) is to be given its full effect the language cannot be construed literally, and the expression 'person owning such, property' cannot mean a person owning such property at the date of the application. The only interpretation which avoids the difficulty is the one by which the expression is construed to mean the person who owned the property at the date of the sale. And this conclusion is, I think, fortified by other considerations. In the Code of 1882, Section 310-A gave the corresponding right to apply to 'any person whose immovable property has been sold' words which obviously included the judgment-debtor. It is difficult to conceive any good reason for supposing that it was intended to deprive the judgment-debtor of this valuable right of getting the sale set a side before it is confirmed. I agree with the observations made in this connexion by Batchelor, J., in Pandurang Laxman v. Gobind AIR 1916 Bom 57. Again, if regard be had to the policy of the rule, the interpretation above suggested is more acceptable than the literal interpretation. It cannot be doubted that the rule was enacted for the benefit of the judgment-debtor. It gives him a last chance of getting the sale set aside before confirmation upon the terms of satisfying the decretal debt and of paying compensation to the auction-purchaser for the loss of his bargain. If, at the last moment, he is able to make an arrangement by which he can liquidate the debt and compensate the auction-purchaser as well, why should he be debarred from applying under the rule?
10. It is notorious that a forced sale of immovable property often results in a price far below the real value, and it is obviously much to the advantage of the judgment-debtor to allow him to get a better price if he can. He may not be able to retain the property after the sale is sat aside but by paying off the decretal debt he stands free of further liability and can protect any other property he may have. The decree-holder gets what he is seeking, namely full satisfaction of his claim while the auction-purchaser gets reasonable compensation for his disappointment. The Rule interpreted and worked in this sense operates for the benefit of all concerned.
11. It is upon these considerations that other High Courts have been led to hold that in Rule 89(1) the person owing the property is the person who owns it at the date of the sale: vide the Bombay case cited above; the case of Dhanwanti v. Sheo Shankar AIR 1919 Pat 501 and Sundaram v. Muasa Mavuther AIR 1921 Mad 157. I am of opinion that we should give effect to this view in preference to that taken by the Bench of this Court in Ishar Das v. Asaf Ali Khan (1911) 31 All 186.
12. The construction adopted by our Court is too rigid, and fails, in my opinion, to allow full scope to the policy of the Rule. It operates harshly against the interests of the judgment-debtor and that is a result to be avoided if possible.
13. I would therefore answer this reference by saying that in Order 21, Rule 89(1) the words 'person owning the property' mean the person owning the property at the date of the auction-sale; that in the particular case now before us the application under the Rule in question in which the judgment-debtors join should have been allowed; and that a person to whom a judgment-debtor purports to convey subsequent to the date of the auction-sale is not entitled to apply under the Rule being by the terms of the Rule itself excluded on the ground that any title he may have acquired was not acquired before the auction-sale.
14. I concur in the conclusion.
15. The preliminary objection has no force. As laid down by their Lordships of the Privy Council in Puttu Lal v. Parbati Kunwar AIR 1915 PC 15, a subordinate Court is bound to follow the decision of a Bench of the High Court to which it is subordinate unless that decision has been overruled by a decision of a Full Bench of that Court or by His Majesty in Council, or unless the law has been altered by a subsequent Act of the Legislature. Ordinarily therefore when there is a clear pronouncement by a High Court, which has not been doubted subsequently, the subordinate Courts are bound to follow it no matter whether that decision has been dissented from by other High Courts. The subordinate Courts should not, under such circumstances, entertain any reasonable doubt as to its soundness. But where some doubts have been expressed by Judges of the same High Court in subsequent cases and other High Courts have expressly dissented from that ruling and the subordinate Courts entertain a doubt, it would be impossible to hold that a reference under Order 46, cannot be made.
16. As to the merits there is undoubtedly a conflict of opinion and the Rules Committee might well have considered the advisability of amending Order 21, Rule 89.
17. A Bench of the Allahabad High Court in the case of Ishar Das v. Asaf Ali Khan (1911) 31 All 186, held that 'where a judgment-debtor, after the execution sale, has executed a registered deed of transfer in favour of a third party, neither the judgment-debtor nor such transferee is competent to apply under Order 21, Rule 89.' On the other hand, other High Courts, though holding that such transferee cannot apply, have held that the judgment-debtor is not disentitled from applying. It is unnecessary to refer to all the cases. Reference may be made only to Pandurang Laxman v. Gobind Dada AIR 1916 Bom 57; Sundaram v. Mausa Mavuthar AIR 1921 Mad 157 and Musammat Dhanwanti Kuer v. Sheo Shankar Lall AIR 1919 Pat 501.
18. Under Order 21, Rule 89, where immovable property has been sold in execution of a decree, any person, either owning such property or holding an interest therein by virtue of a title acquired before such sale, may apply to have the sale set aside. Now the first question which arises for consideration is, at what point of time must the applicant own the property or hold an interest therein? Must this ownership or interest exist at the time of the sale, or must it exist at the time when the application is being made? Tudball and Chamier, JJ., in the Allahabad case, held that the Rule means that the person must own the property or hold on interest therein at the time which he is applying. Shah, J., in the Bombay case, and Mullick and Jwala Prasad, JJ., in the Patna case, have held that he must own it or hold an interest at the time when the sale took place. I prefer to agree with Tudball and Chamier, JJ., on this point. It is our first duty to give to the Rule its plain grammatical meaning. It begins by saying: Where immovable property has been sold,' and at this place uses a present prefect tense. It then speaks of any person either 'owning' such property or holding' an interest therein etcetera, may apply, and here present participles are used. The Rule must, therefore, mean that any person who owns such property or holds an interest therein etcetera has the right to apply; that is he must own it or hold the interest at the time when he is applying. Had the Legislature intended that the ownerships or the interest need have existed at the time of the sale only it would have used some such words: 'who owned such property or held an interest therein etcetera at the time of the sale.' The point of time must be the same for the words 'owning' and 'holding.' If we were to add the words 'at the time of the sale' in the last expression, it would read 'holding an interest therein at the time of the sale by virtue of title acquired before such sale.' In that case the last nine words would be altogether superfluous; for if a person must hold an interest at the time of the sale it cannot but be by virtues of a prior title. If the Rule required the existence of the interest at the time of the sale then it may also be difficult for the heirs of a judgment-debtor, who has died subsequently to the auction sale to apply. On the other hand, mortgagees who held an interest at the time of the sale but whose mortgages have been paid off or lessees whose periods of leases have expired subsequent to the auction sale, might claim a right to apply. I therefore, feel that there is no justification for introducing into the language of this Rule words like 'at the time of the sale.
19. This view, however does not dispose of the matter. With great respect I think that Tudball and Chamier, JJ., were misled by the assumption that a judgment-debtor who had executed a deed of transfer has parted with all his interest and has no longer got any locus standi left. I should also like to add that a judgment-debtor who wants to have the sale set aside is not necessarily applying for the exclusive benefit of his private transferee but may himself be benefited by the higher price which he has been able to obtain by private negotiation as very often properties are sold at auction for a grossly inadequate price. On the other hand though agreeing with the view expressed by the other High Courts, I am not prepared to adopt all their reasons.
20. The auction sale of a judgment-debtor's interest does not necessarily before confirmation extinguish the interest of the judgment-debtor in the property. The ownership of the property does not ipso facto vest in the auction-purchaser before the confirmation. The property cannot automatically pass to the auction purchaser as soon as the sale takes place for he has fifteen days to deposit the whole purchase money. In default of payment the property is to be re-sold as, the property of the judgment-debtor and obviously not as the property of the defaulting auction-purchaser. In my judgment the judgment-debtor continues to own it till the sale is confirmed but as soon as the sale is confirmed the vesting of the interest in the auction-purchaser relates back under Section 65 to the date of the sale. To say that where immovable property is sold in execution of a decree and such sale has become absolute it shall be deemed to have vested in the purchaser from the time when the property is sold and not from the time when the sale becomes absolute, is quite a different thing from saying that the property becomes vested in the purchaser from the time of the sale even though no confirmation has taken place. I agree with the view expressed by Bachelor, J., in the Bombay case and Old field, J., in the Madras case that the judgment-debtor is still the owner of the property in the eye of the law so long as the auction-sale is still unconfirmed. Mullick, J., in the Patna case, has interpreted the decision of their Lordships of the Privy Council in Bhawani Kuwar v. Mathura Prasad (1912) 40 Cal 89 as an authority for holding that the property passes from the judgment-debtor to the auction-purchaser at the moment of the sale irrespective of the time of confirmation, even before that confirmation takes place. I regret that I am unable to agree that result follows from their Lordships' pronouncement. The Privy Council case was a peculiar one and the dispute arose after the auction-sale had been actually confirmed. In that case the sale in execution of the mortgage decree was confirmed first. The mortgage was then extinguished and the mortgagee became the purchaser. As such he was liable to pay the arrears of Government revenue. The revenue sale took place after he had become full proprietor. The language used by Lord Shah must be taken with reference to the particular facts of that case where the only point was whether the incumbrance was or was not kept alive. I cannot imagine their Lordships to have intended to lay down that the property passed from the judgment-debtor and vested in the auction-purchaser as soon as the sale took place and before it was confirmed. The language of Section 316, Civil P.C., which was applicable to the sale in the case before their Lordships was emphatic and ran as follows: 'So far as regards the parties to the suit and persons claiming through, and under them, the title to the property sold shall vest in the purchaser from the date of such sale certificate and not before.'
21. There is an analogous provision in Section 47, Registration Act, under which a registered document operates from the time from which it would have commenced to operate if no registration thereof had been required or made and not from the time of its registration; and yet it has never been held that an unregistered deed of transfer for which registration is necessary passes title to the transferee from the moment of its execution. The title passes only after registration, but as soon as the registration is complete the title dates back from the time of its execution. I am therefore clearly of opinion that the judgment debtors did not cease to own the property merely because the property had been knocked down to an auction-purchaser but its sale had not yet been confirmed by the Court.
22. As to the effect of the private transfer by the judgment-debtors after the auction sale, I am of opinion that in spite of it the judgment-debtors must be deemed to still own the property in these proceedings. This was the view expressed by Bachelor, J., at Bombay and Oldfield, J., at Madras, and with their view 1 agree. It is true that a private sale during an attachment or even after an auction-sale is not absolutely void for all purposes. Section 64, Civil P.C., merely says that it shall be void as against all claims enforceable under the attachment. But in proceedings where a claim under the attachment is being enforced, it cannot be doubted that such a transfer is void. The present proceedings are between the decree-holder and the auction-purchaser on the one side and the judgment-debtors and their transferee on the other. In these proceedings the private transfer by the judgment-debtors must be deemed to be absolutely void, ineffectual and a nullity. In fact it is on that assumption that the decree-holder and the auction purchaser would ask the Court to confirm the sale. Can they then consistently plead this very transfer as a bar to the judgment-debtors' application? A transaction which is treated by them as absolutely void cannot with good grace be set up as a bar against the judgment-debtors. So far as these proceedings are concerned it must be assumed that no valid transfer has really taken place, it must therefore be assumed that the interest which the judgment-debtors possessed has not passed from them, and that they will be deemed to continue to be the owners till confirmation. If the sale is set aside and the attachment also withdrawn, the private transfer would become valid. If the sale is confirmed, the auction-purchaser's title will date back to the time of the sale.
23. In this view it is unnecessary for me to express any final opinion as to whether the words by virtue of a title acquired before such sale' qualify the word 'holding' only, or also qualify the word owning'
24. I concur in the conclusion that the judgment-debtor has a right to offer but the subsequent purchaser has not. It is clear that a purchaser from the judgment-debtor subsequent to an auction-sale cannot apply under Order 21, Rule 89, Civil P.C., He is precluded by the terms of the rule as his interest was not acquired before the sale. The question whether the judgment-debtor who has parted with his remaining interest by a private treaty can do so is more difficult and there is much to be said on the literal meaning of the rule for the view taken in Ishar Das v. Asaf Ali (1911) 31 All 186. Two questions have to be considered: the first is whether the words 'owning such property' would refer to the time of auction-sale, or to the time when the application is made. Grammatically they can apply only to the latter date. Moreover, if they were intended to apply to the date of sale, there could be no reason for altering the words of the former Code 'any person whose immovable property has been sold'. The second question is who is to be regarded as the owner at the date of the application under the circumstances mentioned in the reference. Now in the first place, it is clear that for the purposes of the rule the judgment-debtor is treated as the owner notwithstanding the existence of the unconfirmed auction sale. The words 'owning such property' with reference to a time immediately after the auction-sale must apply either to the judgment-debtor or to the auction-purchaser. The latter cannot possibly have been intended. The auction-purchaser is not a person who is likely to want a deposit of five per cent. of the purchase money and the entire decretal amount in order to get a sale to himself set aside. The only question which remains is whether the judgment-debtor ceases to be the person owning the property within the meaning of the rule by reason of a subsequent private transfer.
25. In considering this question the governing consideration to my mind is Section 64 of the Code which makes any private transfer void as against all claims enforceable under the attachment. The sale was held in continuation of a previous attachment. The claim of the auction-purchaser is therefore a claim enforceable under the attachment, as is also the claim of the decree-holder. The private transfer cannot, therefore, confer title on the purchaser as against either of these parties. I therefore, agree with Sulaiman, J., that for the purpose of a proceeding under Rule 89, the object of which is to get the sale set aside on the condition of compensating the purchaser and paying off the full amount due to the decree-holder it cannot operate to divest the judgment-debtor of such ownership as remains to him after the auction-sale.
26. I am conscious that it is paradoxical to hold that a judgment-debtor, who cannot in any event ultimately retain the property is treated as still owning it for the purpose of the rule, but the fact that the rule has been construed in half a dozen different ways by different Judges sufficiently shows that it is impossible to find any construction to which no objection can be taken. The construction adopted above, which is substantially that of my brother Sulaiman and that taken by Batchelor, J., in Pandurang v. Govind AIR 1916 Bom 57, is least open to objection and best carries out the intention of the Legislature. I agree with Mr. Justice Sulaiman that our judgments in this case should be placed before the Rules Committee with a view to the amendment of the rule.
27. The questions formulated by the District Judge in this reference were;
(1) Can a judgment-debtor make an application under Order 21. Rule 89?
Our answer to this question is-'Yes.'
(2) Can a purchaser from a judgment-debtor subsequent to the date of the sale apply under this rule?
Our answer to this is-'No.'
28. Let these answers be returned to the District Judge together with copies of our orders.