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State Bank of India Vs. the Sonepat Central Co-operative Bank Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtPunjab and Haryana High Court
Decided On
Case NumberLetter Patent Appeal No. 183 of 1978
Judge
Reported inAIR1982P& H427
ActsCode of Civil Procedure (CPC) (Amendment) Act, 1976; Code of Civil Procedure (CPC), 1908 - Sections 104 - Order 21, Rules 58 and 90 - Order 43, Rule 1
AppellantState Bank of India
RespondentThe Sonepat Central Co-operative Bank Ltd. and anr.
Cases Referred and Padmalay Das v. Official Liquidator
Excerpt:
.....where any immovable property had been sold in execution of a decree, the decree-holder, or any person entitled to share in a rateable distribution of assets, or whose interests are affected by the sale, may apply to the court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it :provided that no sale shall be set aside on the ground of irregularity or fraud unless upon the facts proved the court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud. the facts show that the case is clearly distinguishable. the learned full bench came to the conclusion that if a receiver is appointed subsequent to the date of the execution sale, as well as in a case where he had been appointed before,..........where any immovable property had been sold in execution of a decree, the decree-holder, or any person entitled to share in a rateable distribution of assets, or whose interests are affected by the sale, may apply to the court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it : provided that no sale shall be set aside on the ground of irregularity or fraud unless upon the facts proved the court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud.' 5. the contention of mr. chhibber is that a person who claims a title paramount to the judgment-debtor is included in the words whose interest are affected by the sale. in support of his contention, he places reliance on sheo prasad v......
Judgment:

Rajendra Nath Mittal, J.

1. This Letters Patent appeal has been filed against the judgment dated 19th Jan., 1978, of the learned single Judge.

2. Briefly, the facts are that the Rohtak Central Co-operative Bank Ltd., Rohtak (hereinafter referred to as the decree-holder), obtained an award dated 10th May, 1965, against Badh Khalsa Co-operative House Buildings Society Ltd., Badh Khalsa, Sonepat hereinafter referred to as the judgment-debtor), for the recovery of a sum of Rupees 2,31,171.87. The award was executed by the decree-holder in the Court of the Senior Subordinate Judge, Sonepat. In execution of the decree, the land in dispute was sold by public auction on 2nd Oct., 1970. The State Bank of India, Sonepat (hereinafter called the Objector), filed objections under Order 21, Rule 90, Civil P. C., challenging the validity of the sale. The objector, in order to prove its locus standi to file objections, inter alia pleaded that the land had been sold by the judgment-debtor to one Joginder Singh prior to the making of the award, who created an equitable mortgage in its favour by deposit of title deeds. It challenged the sale on various grounds, which are not relevant for the decision of the present appeal.

3. The objection petition was contested by the decree-holder, who controverted the pleas of the objector and inter alia pleaded that the objector had no locus standi to file the objection petition. On the pleadings of the parties, the following issues were framed :--

1. Whether sale is liable to be set aside for the grounds alleged in the petition filed by the objector State Bank of India ?

2. Whether objector has locus standi to file this objection petition ?

3. Relief.

The executing Court treated issue No. 2 as a preliminary issue and held that the objector had no locus standi to file the objection petition. Consequently, it dismissed the same. The objector came up in appeal to this Court. The learned single Judge affirmed the judgment of the executing Court and dismissed the appeal. This Letters Patent appeal arises against the said judgment.

4. The only question that arises for determination is whether a person, who claims the property by title paramount to the judgment-debtor, can file objections under O. 21, R. 90 of the Code. In the present case, admittedly, the Code before its amendment by the Code of Civil Procedure (Amendment) Act, 1976, applies. Rule 90 reads as under :--

'90. Application to set aside sale on ground of irregularity or fraud.--(1) Where any immovable property had been sold in execution of a decree, the decree-holder, or any person entitled to share in a rateable distribution of assets, or whose interests are affected by the sale, may apply to the Court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it : Provided that no sale shall be set aside on the ground of irregularity or fraud unless upon the facts proved the Court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud.'

5. The contention of Mr. Chhibber is that a person who claims a title paramount to the judgment-debtor is included in the words whose interest are affected by the sale. In support of his contention, he places reliance on Sheo Prasad v. Hira Lal, (1890) ILR 12 All 440 (FB), Abdul Gani v. A. M. Dunne,(1893) ILR 20 Cal 418, Mt. Mehr Bano v. Sher Mohammad, AIR 1936 Lah 969, All India Railwaymen's Benefit Fund Ltd., Nagpur v. Ramchand Hemraj Maheshri, AIR 1939 Nag 179, Jagat Narayan Singh v. Khartar Sah, AIR 1941 PC 45, T. S. Sailappan v. Subbiah Pillai, AIR 1963 Mad 156 (FB) and Saraswathi Ammal v. Manickavasaka Reddiar, AIR 1975 Mad 147.

6. On the other hand, Ch. Ram Sarup has strenuously argued that the aforesaid words include only those persons who are claiming under the judgment-debtor and not claiming a title paramount to him. To fortify his argument, he cited Asmutunnissa Begum v. Ashruff Ali, (1888) ILR 15 Cal 488 (FB), Hardwari Lal v. Muhammad Salamat Ullah Khan, AIR 1916 All 147, Medni Prasad Singh v. Nand Keshwar Prasad Singh, AIR 1923 Pat 451, Kunjolal Pal v. Idurali Sardar, AIR 1927 Cal 82 and Padmalay Das v. Official Liquidator, Puri Bank Ltd., AIR 1971 Orissa 75.

7. We have duly considered the arguments of the learned counsel. From the cases referred to at the bar, it is clear that the point is a controversial one and two different views have been expressed by the High Courts. However, we prefer to have the view canvassed by Ch. Ram Sarup and taken by the learned single Judge. The reason for doing so is that in execution of a decree for the recovery of the decretal amount, the interest of the judgment-debtor in the property is sold. In case an objector claims a paramount title to the judgment-debtor in that property, he can establish that right by an independent suit. If he is allowed to get it decided in objections under Rule 90, that would open another flood gate of litigation for the auction-purchaser. That does not appear to be the purpose of the said rule. In our view, it provides for setting aside the sale by the executing Court on the ground of material irregularity or fraud in publishing or conducting it on the objections of a person who claims interest in the property through the judgment-debtor. It does not appear to be the intention of the Legislature in framing the rule that the question of title of third person should be decided therein. The interest of the person who claims title paramount to the property sold is not affected adversely by such sale. He can claim it by an independent suit.

8. The matter was considered by a Full Bench of five Judges of the Calcutta High Court in Asmutunnissa Begum's case, (1888 ILR 15 Cal 488) (supra), wherein it interpreted Section 311 of the Civil P. C., 1882, which contained the words 'any person whose immovable property has been sold under this chapter may apply'. The learned Chief Justice, speaking for the Court, held that a person who claimed to be a purchaser from the judgment-debtor prior to attachment was not entitled to come in under Section 311 and object to the sale of the judgment-debtor's property. The reason for arriving at the conclusion, as given by the learned Chief Justice, was that the title of that person to the property was not affected by the sale. There is some difference in the language of Section 311 of the Code of 1882 and that of Rule 90 of O. 21 of the Code of 1908, but so far as the present question is concerned, there does not appear to be difference in the provisions of the two Codes. Even the facts of that case are similar to those of the present case. Therefore, in our opinion, the above ratio will apply even after the amendment of the Civil P. C., in 1908. The same interpretation is spelt out from the other cases referred to by Ch. Ram Sarup and Jagat Narayana Singh's case (AIR 1941 PC 45) (supra) to which reference has been made by Mr. Chhibber. In the latter case objections to the Court sale were filed by a person claiming title paramount to the property inter alia on the ground that irregularities had been committed in conducting the sale. It was observed by their Lordships of the Privy Council that a third party objecting to the sale of his property for the judgment-debtor of another person cannot disregard R. 58 of O. 21 and apply after the sale under R. 90 of that Order treating the case as one of irregularity in publishing or conducting the sale.

9. It is true that in the present case, no attachment had been effected prior to the sale of the property and that entitles the objector to raise an argument that it did not get the opportunity to file objections under O. 21, R. 58. However, if it could not file objections, it could institute a suit claiming paramount title in the property. The objector, in our view, has no right to challenge the auction on the ground of irregularity in publishing or conducting the sale. If in the suit it is held owner of the property, the natural consequence will be that the sale will not be binding on it.

10. No doubt, in Sheo Prasad's case, (1890 ILR 12 All 440) (FB) (supra), Mahmood, J. while dissenting with the majority view, made observations in the nature of obiter dicta that a person claiming title paramount to or independent of the judgment-debtor is within the meaning of S. 311 of the Code. But that view was even not followed by a Division Bench of that Court in Hardwari Lal's case, (AIR 1927 Cal 82) (supra). With great respect to the learned Judge, we have not been able to persuade ourselves to accept the view.

11. In Abdul Gani's case, (1893 ILR 20 Cal 418) (supra), immovable property was sold in execution of a decree against the ostensible owner as his property. The beneficial owner filed objections under S. 311 of the Civil P. C., 1882. The Munsif and the District Judge held that the objector had no locus standi to file the objections. In the High Court, the case was heard by a Division Bench. A difference arose between the two learned Judges and it was referred to a third Judge. The majority held that the objector strictly did not claim a paramount title but he claimed it through benamidar and, therefore, he had a right to file objections. The facts show that the case is clearly distinguishable.

12. The facts in Mt. Mehr Bano's case (AIR 1936 Lah 969) (supra) are also different. In that case, the judgment-debtors filed an application under Rule 90 ibid impugning the sate on various grounds. The subordinate Judge upheld their objections and set aside the sale. The Additional District Judge, on appeal, maintained the order. The auction. purchaser filed an appeal to the High Court. The counsel for the respondents raised a preliminary objection that no second appeal was competent under Section 104 read with O. 43, R. 1(j) of the Code. While deciding the question of maintainability of the appeal, it was observed by the learned single Judge that the words 'whose interests are affected by the sale' used in R. 90 were wide enough to cover every person whether he was a party to the suit or a stranger. The observations were in the nature of obiter dicta. In our view, Mr. Chhibber cannot derive any benefit from the above observations which were made in a different context. With respect to the learned Judge we also do not agree with his in this regard.

13. In all India Railwaymen's case, (AIR 1939 Nag 179) (supra), the proposition of law which came up before a Division Bench of Nagpur High Court was as to whether Rule 90 ibid entitled to an auction-purchaser to seek to set aside the sale. In our view, the above proposition is absolutely different than that in the present case and, therefore, the ratio in that case will not be applicable to the present case.

14. The proposition of law in T. S. Sailappan's case (AIR 1963 Mad 156) (FB) (supra), which was decided by a Full Bench, was also different. In that case, the question before the Full Bench was whether an interim receiver appointed under Section 20 of the Provincial Insolvency Act was entitled to apply to set aside a court sale of the property of a debtor under O. 21, R. 90 ibid. The learned Full Bench came to the conclusion that if a Receiver is appointed subsequent to the date of the execution sale, as well as in a case where he had been appointed before, it was competent to the Insolvency Court to clothe the Receiver with the authority to take proceedings under Order 21, Rule 90 of the Code to set aside the sale. It was further held that such authority could be given expressly or even impliedly and if such Court directed the interim Receiver to take charge of the property which had been sold, he would have authority to institute all necessary proceedings to retain the property and thereby make the title of the debtor more perfect. We are of the opinion that this case too does not expressly support the contention of the learned counsel for the appellant.

15. In Saraswathi Ammal's case (AIR 1975 Mad 147) (supra) the proposition of law was somewhat similar to that as in the present case. The law laid down in that case does support the contention of the learned counsel for the appellant. However, with great respect to the learned Judges, we are unable to endorse the same view.

16. After taking into consideration the facts and case law, we are of the opinion that a person, who claims the property by title paramount to the judgment-debtor, cannot file objections under O. 21, R. 90 of the Code. He can file objections under O. 21, R. 58 of the Code, if that remedy is available to him. In any case, he has got a remedy by way of suit.

17. For the aforesaid reasons, we do not find any merit in the appeal and dismiss the same. However, we leave the parties to bear their own costs.

Sandhawalia, C.J.

18. I agree.

19. Appeal dismissed.


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