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Mangal and anr. Vs. Mathura Prasad and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1935All470; 157Ind.Cas.33
AppellantMangal and anr.
RespondentMathura Prasad and ors.
Cases ReferredAmba Lal v. Ram Gopal Madho Prasad
Excerpt:
- - 4. having failed against the decree-holders, the auction-purchasers have now brought the present suit against the attaching creditor of the original judgment-debtors. 363, it was clearly laid down that under the present civil procedure code, an auction-purchaser, who has been deprived by means of a suit against the judgment-debtor of the property purchased by him, cannot obtain a refund of the purchase-money without getting the auction-sale set aside. 5. we may quote the next sentence of their lordships as well: this however is because the sheriff is authorised by the writ to seize the property of the execution-debtor which lies within his territorial jurisdiction and to pass the debtor's title to it without warrantying that title to be good. unless there be a special remedy..........appeal arising out of a suit for refund of the amount deposited by the plain tiffs in court as auction-purchasers of certain properties against the contesting defendants who had attached and taken the surplus of the decretal amount which remained to the credit of the judgment-debtors.2. it appears that a suit had been filed by digambar and others against the judgment-debtor and the decree-holder on 3rd july 1924, for declaration that the property did not belong to the judgment-debtor and was not liable to be sold, and for recovery of possession. while that suit was pending, the decree-holder put up the property for sale, and it was sold on 4th september. 1924, and purchased by the present plaintiffs. before the period of 30 days expired and the sale could be confirmed, the.....
Judgment:

Sulaiman, C.J.

1. This is a plaintiffs' appeal arising out of a suit for refund of the amount deposited by the plain tiffs in Court as auction-purchasers of certain properties against the contesting defendants who had attached and taken the surplus of the decretal amount which remained to the credit of the judgment-debtors.

2. It appears that a suit had been filed by Digambar and others against the judgment-debtor and the decree-holder on 3rd July 1924, for declaration that the property did not belong to the judgment-debtor and was not liable to be sold, and for recovery of possession. While that suit was pending, the decree-holder put up the property for sale, and it was sold on 4th September. 1924, and purchased by the present plaintiffs. Before the period of 30 days expired and the sale could be confirmed, the auction-purchasers applied to the Court praying that the payment of sale proceeds may be held over till the decision of the civil suit. They however made no application under Order 21, Rule 91 for the setting aside of the sale on the ground that the judgment-debtors had no saleable interest in the property at all. Their; application was allowed by trial Court, but on the decree of the trial Court being reversed in appeal the money was taken away by the decree-holder, judgment-debtor. The auction-purchasers were made parties to the civil suit and the suit was first decreed by the trial Court, then it was dismissed by the lower appellate Court and was ultimately decreed by the High Court.

3. The auction-purchasers first made an attempt to recover the amount taken away by the decree-holders and applied under Sections 144, 147 and 151, Civil P.C., for refund of the amount on the ground that the judgment-debtors had no saleable interest,. The matter came up to the High Court and their application was ultimately dismissed. The judgment is reported as Sahu Deputy Shankar v. Mangal Sen 1933 All. 63. We shall refer to it again later.

4. Having failed against the decree-holders, the auction-purchasers have now brought the present suit against the attaching creditor of the original judgment-debtors. The Courts below have dismissed the suit on the ground that, it is not maintainable. As regards the broader question whether the auction-purchaser can maintain a separate suit for refund of the purchase-money on the ground that the judgment-debtor had no saleable interest at all there is a slight conflict of opinion in the various High Courts. But in this Court the rule is now firmly established that a suit is barred altogether. In Nannu Lal v. Bhagwan Das 1917 All. 363, it was clearly laid down that under the present Civil Procedure Code, an auction-purchaser, who has been deprived by means of a suit against the judgment-debtor of the property purchased by him, cannot obtain a refund of the purchase-money without getting the auction-sale set aside. The Bench quoted the observation of their Lordships of the Privy Council in Dorab Ally Khan v. Abdool Azeez (1880) 3 Cal. 806, that:

execution and the purchaser is afterwards evicted under a title paramount to that of the judgment-debtor, he has no remedy against either the sheriff or the judgment-creditor.

5. We may quote the next sentence of their Lordships as well:

This however is because the sheriff is authorised by the writ to seize the property of the execution-debtor which lies within his territorial jurisdiction and to pass the debtor's title to it without warrantying that title to be good.

6. The learned Judge also laid emphasis on the provision in Rule 92 that no suit shall lie to set aside the sale. This case was followed by another Division Bench in Ram Sarup v. Dalpat Rai 1921 All. 377, where the change introduced in the new Civil Procedure Code, as compared with the older Codes, were discussed. It was pointed at p. 69 that:

in an auction-sale however which takes place against the will of the judgment-debtor, there can possibly be no warranty of title on behalf of the judgment-debtor. Nor does the decree-holder through the sale-officer, gives any guarantee; he merely puts up for sale the rights and interest which the judgment-debtor might possess in the property. The auction-purchaser, who purchases the property therefore takes the risk, and if it turns out that the judgment-debtor really has no interest in the property sought to be sold, it is the misfortune of the auction-purchaser. Unless there be a special remedy provided for compensation, I fail to discover any rule of equity, which would entitle him to got back his money.

7. Many difficulties that would arise if the contrary view were upheld, were pointed out in that case; and it was further pointed out that if there were any rule of equity entitling an auction-purchaser to recover the amount, the same rule mright very well apply to a case where a smaller interest is owned by the judgment-debtor. The Full Bench in Bindeshri Prasad Tiwari v. Badal Singh 1923 All. 394, distingushed the ruling in Ram Sarup v. Dalpat Rai 1921 All. 377, and held that where the sale takes place under an invalid decree, there is a clear equity in favour of the purchaser entitling him to recover the amount back. The learned Judges pointed out that it is a well-established principle that the auction-purchaser is not bound to look beyond the decree. If a decree is in existence he is entitled to assume that it is a valid decree.

8. In the case of Sahu Deputy Shankar v. Mangal Sen 1933 All. 63, referred to above, which arose out, of the application made for the refund of the purchase-money by the auction-purchasers against the decree-holder a Bench of this Court discussed the rulings of the various High Courts and pointed out that the view expressed by this Court in the case of Nannu Lal v. Bhagwan Das 1917 All. 363. followed in Ram Sarup v. Dalpat Rai 1921 All. 377, was followed by the Bombay High Court in Balvant Ranganath v. Bala 1922 Bom. 205, and by the Lahore High Court in Habib Uddin v. Hatim Mirza 1925 Lah. 467. and by the Madras High Court in Pravathi Ammal v. Govindasami Pillai 1916 Mad. 290. and also by the Calcutta High Court in Rishikesh Laha v. Manik Molla 1926 Cal. 971. They noted that two out of the three Tudgas in the Oudh case of Bahadur Singh v. Ram Phal 1930 Oudh 148 124 I.C. 641, have taken a contrary view. The learned Judges pointed out that the majority of the Oudh Bench had proceeded on the assumption that there was a. warranty by the decree-holder that the property belonged to the judgment-debtor, and thought it unnecessary to discuss this proposition, as it has been well established in this Court that:

as regards sales under a decree of a Court there is no warranty of title either by the decree-holder or by the Court.

9. The learned Judges relied on Shanta Chandar Mukerji v. Nain Sukh (1901) 23 All. 355, and distinguished the Full Bench case of Mehar Chand v. Milkhi Ram 1932 Lah. 401. and considered the latter ruling not to be applicable because the decree under which the property had been sold in case was never set aside. As the question was reviewed by the Bench and the opinion expressed on the strength of the previous authorities there seems to be hardly any necessity to re-consider the point again. But we may however point out that the Calcutta Bench in Rishikesh Laha v. Manik Molla 1926 Cal. 971, after% a consideration of numerous authorities came to the conclusion that the only remedy open to the plaintiffs was to apply as provided in the Code for an order setting aside the sale and a consequential order for a refund of the purchase-money. They, no doubt, pointed out that where there was a misrepresentation or fraud, there might perhaps be some other remedy. In the case of Habibuddin the learned Chief Justice of the Lahore High Court considered the changes introduced in the new Civil Procedure Code, as compared with the Code of 1882, and came to the conclusion that the assumption made in some of the cases that there was:

an implied warranty of some saleable interest when the right, title and interest of a judgment-debtor is put up for sale,

10. was not warranted by any provision of the Code and emphasised that:

that there is no warranty of title in respect of a Court sale can no longer be disputed, and it is also clear that apart from statute, there is no principle of law which would allow an auction-purchaser to maintain a suit for the recovery of the purchase money even when it is found that the judgment-debtor had no saleable interest at all in the property sold. The statute however allows the purchaser 'to recover his purchase-money provided that he can show that the judgment-debtor had no saleable interest and the Court sets aside the sale on that ground. The right of the purchaser being the creation of the statute, the remedy to enforce that right must he confined to that prescribed by the statute.

11. The Bench agreed with the view previously expressed by this Court as well as the Calcutta and Lahore High Courts and distinguished the Bombay case. On the other hand, a majority of the Judges in the Oudh Full Bench case already quoted expressed a different opinion and dissented from the Allahabad view. It is rather curious that although the Allahabad view was based to a large extent on the principles of Order 21, Rule 92(3), there seems to be no reference whatsoever to this sub-rule in the judgment of either of the two-learned Judges. The majority apparently did not consider the point of view that this sub-rule bars a subsequent suit because perhaps it was not pressed at the bar. The third learned Judge, who agreed with the Allahabad view, referred to this rule briefly, but not quite in the way in which it had been emphasised here.

12. This case seems to have been followed by a Full Bench of the Lahore High Court in Mehar Chand v. Milkhi Ram 1932 Lah. 401, overruling their own previous case. In referring to the Full Bench of our Court Bindeshri Prasad Tiwari v. Badal Singh 1923 All. 394, the learned Judge, who delivered the judgment in the case, remarked that he was unable to see any material difference between the case of a purchaser in a money decree who is deprived of the property for want of judgment-debtor's title in it and the case of a purchaser in a mortgage-decree, who is deprived of the property because the mortgagor had no right to mortgage it, and the grounds of objection to sale in both cases appeared to the learned Judges to be analogous. He therefore thought the distinction between the two cases pointed out by the learned Judges who decided the Full Bench case of this Court appeared to him to be without any material difference so far as the right of purchaser to refund is concerned. With great respect we would point out that the ratio decidendi of the Full Bench case has been entirely overlooked. The Full Bench proceeded, on the ground that the decree itself had been set aside and was invalid,, and not that the sale had passed no title although the decree was invalid.. The distinction in our opinion is quite obvious. Where the decree is not set aside there is no equity in favour of an auction-purchaser if no warranty of title has been given. But where the decree itself is set aside, then there is no equity in the decree-holder retaining the amount which he has received by the auction. The learned Judges of the Lahore Full Bench also emphasised that in some Calcutta cases there was a, reservation made that where an auction-purchaser at a Court sale had suffered loss through the fraud of the execution creditor or the breach of any duty which the execution credit for owes to the auction-purchaser, he is entitled to receive compensation for the loss which thereby he has sustained. But we may point out that a suit for compensation on account of fraud or misrepresentation or breach of warranty is one thing and a suit for a refund of the consideration on the ground that no sale has taken place is quite another. The Full Bench of the Lahore High Court conceded that there was 'considerable difference of opinion on the point involved', and considered that:

although the Court does not guarantee any title there is an implied warranty of some title by the decree-holder the existence and extent of which however has not been determined or guaranteed by the Court.

13. It is on the supposition that there is no guarantee of title and yet there is some implied warranty of title that the decision proceeded. It seems to us that if there is no warranty of title-given to the auction-purchaser then there can be no equity in favour of the auction-purchaser to claim a refund of his purchase-money when it is found that no title exists. And even if it be assumed that there was a guarantee that the judgment-debtor had some, even though a millionth part, of the interest sold the suit for damages for breach of warranty could, not justify a decree for the return of the entire amount; but damages would, have to be assessed at a value commensurate with the small extent of the share which was guaranteed and which did not exist. On principles of equity it is difficult to support the proposition that a suit for refund lies when the interest of the judgment-debtor in the share sold is zero, but no suit liies when the extent of that share is some fraction, even though negligibly small. The real question is not of equity and justice when admittedly there is no warranty of title. The question is whether in view of the provisions of the new Civil Procedure Code, a civil suit for refund of this amount is at all allowed.

14. Now Order 21 provides several grounds on which a sale of immovable property which has taken place can be set aside. It may be set aside under Rule 89 when the whole amount is deposited in cash within the time allowed. It may be set aside under Rule 90 on the ground of material irregularity or fraud in publishing or conducting it; and it may be set aside under Rule 91 on the ground that the judgment-debtor had no saleable interest in. the property sold. When Rule 92 provides that where no application is made under Rules 89, 90 or 91. or where such application is made and disallowed, the Court shall confirm the sale. Sub-rule (3) further provides that no suit to set aside an order made under this rule shall be brought by any person against whom such order is made. The effect of this sub-rule, which has not been fully appreciated in some of the cases, is that a civil suit to set aside an order made under this rule is prohibited. Now, an order under Rule 92 may be made either where the auction-purchaser does not apply to have the sale set aside on the ground that the judgment-debtor had no saleable interest or on the ground where he ,so applies, but fails to prove that the judgment-debtor had no such saleable interest. In either case the confirmation of the sale prevents him maintaining a suit to set aside an order under this rule. Once the sale is confirmed it must be presumed that there is no defect in the sale either under Rule 89, Rule 90 or Rule 91, and it follows logically that it must be presumed conlusively that there no defect of want of saleability of the interest of the judgment-debtor.

15. The cases which have been inclined to take the contrary view proceed on the ground of great hardship on the auction-purchaser. But where there is no warranty of title there can be no question of hardship at all. The auction-purchaser purchases property with open eyes, knowing full well that there is no guarantee of title. He cannot therefore complain if it turns out that the title which he thought he was purchasing did not in fact exist. Nor do we see any equity or justice in his favour as against the decree-holder. It. might well be that if this auction-purchaser had not made the higher bid somebody else would have taken the property with the risk that it entailed. Where, of course, some facts have been concealed or there is fraud on misrepresentation, other than fraud or irregularity in publishing or conducting the sale, there may perhaps be some remedy by way of damages, against the person responsible for the fraud or misrepresentation. But that is an entirely different question which cannot be confused with the question of the n on sale ability of the interest of the judgment-debtor.

16. It seems to us that Order 21, Rule 93 provides a speedy remedy for a, refund of the purchase-money in the only case in which an application for setting aside a sale on the ground of non-saleability of the interest is made within time and the Court is empowered under that rule to direct any person to whom the money has been paid to, refund the amount. Such an order therefore can be passed against the decree-holder, against the judgment-debtor and any other person who might have taken away any part of the money I deposited by the auction-purchaser. But a Separate suit is not allowed, presumably because it was considered that an auction-sale being an involuntary sale, there could not possibly be a warranty of title given by the judgment-debtor; nor could a suit lie against the decree-holder for failure of consideration because the decree-holder himself was not the transferor. It seems to us that there is some inconsistency in holding that the Court in selling the property does not guarantee any title and at the same time saying that there is an implied warranty of title that some interest exists on behalf of the decree-holder. A sale takes place under the authority of the Court and without warranty of title. In such circumstances, neither inequity nor under the statutory provisions of the Code, a suit is maintainable.

17. The question of handship, as already pointed out, is not of any great weight because, apart from the fact that there is no warranty of title and the purchase is made with eyes open, the auction-purchaser has generally plenty of time, as soon as the proclamation is issued to make enquiries about the title and then he has a further period of 30 days to satisfy himself as to the title of the judgment-debtor. Very often it is on account of the risk which he runs that bids are not offered upto the full market value of the property if title were guaranteed. If in spite of this he is either unable to discover the defect in title or fails to apply under Rule 91, it is his misfortune that he took the risk in bidding for the sale. We have already mentioned that the auction-purchaser in the previous proceeding failed to obtain an order for refund in his favour as against the, decree-holders. He however succeeded in getting an order for refund against the judgment-debtor personally. It is therefore unnecessary for us to consider how far the judgment-debtor himself can be made to refund the amount taken by him when he has no saleable interest at all either under Section 47 or Section 144 or Section 151, Civil P.C. The present respondents were not parties to the original litigation and they took away the money as attaching creditors of the property of the judgment-debtors.

18. In Anand Krishna Devi 1931 All. 377. it was held that where a decree-holder had himself purchased property at auction and then found that half of the property had gone out of his possession and applied for execution of his decree for half of the decretal amount, he was not entitled to ask the judgment-debtor to refund one half of the price which the decree-holder had chosen to pay. In that case it had been found that the judgment-debtor was entitled to only half of the property which was purchased by the decree-holder in full satisfaction of his decree and yet the Court did not grant the decree-holder any remedy against the judgment-debtor for compensation on account of the loss apparently suffered by the decree-holder. On the other hand in the recent, case of Amba Lal v. Ram Gopal Madho Prasad 1933 All. 218. another Division Bench oil this Court had to consider the question of a refund of the purchase-money, where it was discovered later on that the 'share of the judgment-debtor was less than, that which was purported to be sold. The application had been made under Sections 144 and 151, Civil P.C. The Bench held that, Section 144 had no application because the decree of the, trial Court had not been reversed or I modified, but they came to the conclusion that under Section 151 the Court had 1 authority to order the rival decree 1 holders who had taken a share of the amount deposited by the auction-purchaser, who happened to be the executing decree-holder himself, to refund a proportionate amount taken out by them. The Bench considered that there was clear authority of this Court that in the case of a purchaser, other than the decree-holder, the only remedy of the purchaser for return of the purchase money was that provided for by Order 21 as there was no warranty of title at Court sales. It was remarked:

Though it is true that there is no warranty of title at Court sales and that what is sold is merely the right and interest of the judgment-debtor... and that it is no doubt too late in the day to question the rule.

19. But the learned Judges considered that where it is found that the judgment-debtor had no saleable interest in the property sold there was no equitable principle to justify the retention by the decree-holder of the price paid by the. auction-purchaser in the event of the property purchased by him being lost to him. The question before the Bench was not whether a separate suit is or is not maintainable. The only question which arose in that case was whether the Court which had itself ordered, a rateable distribution of the purchase-money among the rival decree-holders could re-adjust the amount on discovering that the whole of the property purchased by one of the decree-holders would not pass to him. We are therefore not called upon to consider any such case. But we may with respect point out that the observation goes to some extent against the previous rulings of this Court. It would be putting a decree-holder, who is himself responsible for attaching the judgment-debtor's property and putting it up for sale. in a better position than an innocent auction-purchaser who was not responsible for the putting up of the property to sale. An auction-purchaser would be prevented from maintaining a suit, whereas a decree-holder who either through his negligence or deliberate omission attached or put up the property would be able to recover the amount from others when it is later on found that the property was not saleable. It seems to us_ that there is some conflict between this case and the case of Anand Krishna Devi 1931 All. 377. quoted by us above; but as it is not necessary for us in the present case to express any opinion on the question whether there is any remedy either under Section 147 or Section 151, Civil P.C., we would not commit ourselves at this stage. When a question arises directly in another case and it is found that there is real conflict between the two cases, the only proper course would be to refer the point to a Full Bench -and not dissent from either of these rulings.

20. It has been strongly contended by the learned advocate for the appellant that although there may be no remedy by separate suit in a case where a sale has to be set aside, a civil suit is not barred where the sale is itself void and does not require to be set aside. It may be conceded at once that where a decree, in execution of which the sale took place, is itself found to be invalid, or where it is found that the sale officer had no authority to sell the property, the remedy of a 'separate suit would not be barred. The confirmation of the sale would itself be wholly invalid and not binding upon the auction-purchaser who was entitled to assume that the decree was valid and that the sale officer had authority to sell the property. Again, cases of fraud and misrepresentation stand on quite a, different footing. But It is contended that where a suit is pending in respect of a property and the auction-purchaser, without notice of such suit, purchases, it, the sale should be considered to be provisional and subject to the result of such litigation and if therefore it is finally decided against the judgment-debtor that he has no interest, the auction-purchaser should be allowed a refund of the amount. Now, it may be conceded that there is some distinction between him and an auction-purchaser who is sued subsequently by another claimant and loses the property. In the latter case he has an opportunity to defend the title of the judgment-debtor whose interest he has purchased. On the other hand, in a, case where the auction-purchaser purchases a property at a time when the property is the subject-matter of litigation between a third party and his judgment-debtor and the claim is decreed without his knowledge, he is bound by the decree although he personally has not had an opportunity to defend the title of his judgment-debtor. He rums the risk of fraud or collusion on the part of his judgment-debtor after his interest has been sold at auction. But in the present case it is not necessary to consider the position of a bona, fide auction-purchaser who, without notice and without knowledge of another litigation, purchased the property and then found himself bound by the result of such litigation without having had an opportunity to contest the claim. It may be that in some instances a case of fraud and misrepresentation may be made out when a suit for damages might lie.

21. But in the present case the position was that the present appellants became aware of the pendency of the litigation at least. sometime before the expiry of 30 days from the auction-sale and before its confirmation. They actually moved the Court not to pay the sale proceeds to any one and up to that time they had full opportunity of applying for the setting aside of the sale on the ground that the judgment-debtors had no saleable interest. But they took no such steps. On the other hand, they got themselves impleaded as a party to the suit and defended the claim against the claimant. It was only after the then plaintiff succeeded in the High Court that the auction-purchasers thought of getting back the money which they had paid. Up to that stage they were doing their best to retain the property in their own possession. The 'appellants therefore cannot claim to be the persons who had no opportunity of defending the title of the judgment-debtors. As they purchased the property without any warranty of title however unfortunate their position may be they have no remedy to claim a refund because a refund can be claimed on the ground of breach of warranty only and on no other ground. It cannot be said that the money which they paid was taken away by people as money had and received on behalf of the auction-purchasers. The auction-purchasers paid the price of the doubtful interest which they had purchased at some risk. The surplus amount of the money deposited in Court was lying to the credit of the judgment-debtors it was attached by the creditors of these judgment-debtors who were the defendants-respondents in that case and it was taken away by them. We are unable to hold on the authorities that the plaintiffs have a cause of action as against the attaching creditors which entitles them to bring a separate suit and to claim a refund of part of the amount paid by them on the ground that the judgment-debtors had no title when in fact no warranty of title was given. We therefore think that the view taken by the Courts below is correct; the appeal is accordingly dismissed with costs.

Ganga Nath, J.

22. We think that it would be appropriate for the execution Court to see that in drawing up the proclamation of sale, the particulars mentioned therein include reference to any litigation that may at the time be pending as regards the property sought to be sold so that the auction-purchasers may not be deceived or taken unawares. For such a purpose the decree-holder might well be asked to point out whether any such litigation is pending or not.


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