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Cherla Poulose Koovapally Kattavil Vs. K.P. Sathiavan Nair and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtKerala High Court
Decided On
Case NumberC.M.A. No. 12 of 1969
Judge
Reported inAIR1970Ker94
ActsCode of Civil Procedure (CPC) , 1908 - Order 21, Rule 90
AppellantCherla Poulose Koovapally Kattavil
RespondentK.P. Sathiavan Nair and anr.
Appellant Advocate K.M. Joseph, Adv.
Respondent Advocate P.N. Sankaranarayana Pillai, Adv.
DispositionAppeal dismissed
Cases ReferredDhirendra Nath Roy v. Kamini Kumar Pal
Excerpt:
.....judgment-debtor or is free from any defect of title and principle of caveat emptor applies to such sales - sale in execution of decree not void for reason that property sold in court auction does not belong to judgment-debtor - appellant cannot maintain petition under order 21 rule 90 - remedy available to auction purchaser only when there is total absence of title on part of judgment-debtor and not in case where there is only defect in title. - - a logical extension of the reasoning in air 1939 nag 179 and ilr 47 all 479 =(air 1925 all 459) will be to hold that even unsuccessful bidders taking part in the auction are entitled to the benefit of order 21, rule 90, c. it may be that unsuccessful bidders would have been prepared to purchase the property at higher price if the wrong..........or that it is free from any defect of title and the principle of caveat emptor applies to such sales. sale in execution of the decree is not void for the reason that the property sold in court auction does not belong to the judgment-debtor. probably that is the reason why the legislature wanted to specifically give a remedy to the auction-purchaser only in cases where there is total absence of title and not in cases of defect of title. we therefore hold that the appellant cannot maintain a petition under order 21, rule 90. c. p. c.12. order 21, rule 91 c. p. c. cannot have an application at all as it enables the auction purchaser to set aside the execution sale only on the ground that the judgment-debtor had no interest in the property sold. it is not the appellant's case that the.....
Judgment:

Krishnamoorthy Iyer, J.

1. The appellant who is the stranger-auction purchaser in execution of the decree in O. S. 15 of 1964 on the file of the Principal Subordinate Judge's Court, Ernakulam, complains against the dismissal of E. A. 813 of 1968 filed by him under Section 151, Order 21, Rules 90 and 91 C. P. C. to set aside the Court sale. The properties of the third defendant were purchased by the appellant in Court auction on 11-11-1968 for Rs. 9280.70 and he deposited Rs. 2321 being l/4th of the auction amount under Order 21. Rule 84 C. P. C. E. A. 813 of 1968 was filed on. 18-11-1968 on the ground that the leasehold interest created by the 3rd defendant in the property in 1960 was not disclosed in the sale Proclamation and its. non-disclosure is an act of fraud practised by the decree-holder and the 3rd' defendant on the intending purchasers and the court and therefore the sale is liable to be set aside. In E. A. 813 of 1968 the appellant also prayed for the return of the sum of Rs. 2321 deposited by him. The decree-holder filed his objections on 26-11-1968. Thereafter and. within fifteen days from the date of auction the appellant deposited the full amount of the purchase money payable under Order 21, Rule 85 C. P. C. and the amounts required for stamp duty for the issue of sale certificate under Order 21, Rule 94, C. P. C. It was after such deposit that he prosecuted E. A. 813 of 1963 which was dismissed by the execution Court.

2. Though the person alleged to be the lessee of the third defendant was impleaded as a respondent in E. A. 813 of 1968 he was subsequently removed from, the party array. The Subordinate Judge took the view that it is not open to an auction purchaser to pray for setting. aside a court sale under Section 151 or Order 21, Rule 90 or 91, C. P. C. It has to be pointed that no enquiry was. conducted and no finding was given by the execution court on the question whether the properties sold in court auction are subject to any lease granted by the 3rd defendant.

3. There was considerable discussion, at the Bar as to the maintainability of E. A. 813 of 1968 under Order 21, Rule 90 C. P. C. we shall first examine that question. The counsel for the appellant contended that even though his client had no interest in the property prior to the court sale he is even then a person 'whose interests are affected by the sale' under Order 21, Rule 90. C. P. C. There is a sharp difference of opinion on this issue, among the several High Courts and the-question is not free from difficulty. The words 'any person whose interests are affected by the sale' in Order 21, Rule 90, C. P. C. are no doubt of a wider import than the expression 'a person holding an interest in the property sold' occurring in Order 21, Rule 89, C. P. C. The question is whether an auction purchaser has got any interests which are affected by the sale. If the word 'interest' occurring in Order 21. Rule 90 C. P. C. is to denote interests independent of the court sale and not those arising by virtue of the Court sale, then the auction purchaser has no right to apply. The reasonable view on a plain reading of the provision is to hold that the 'interests' contemplated in Order 21, Rule 90, C. P. C. refer to interests not created by the sale itself but affected by the sale. The difference in the language in Order 21. Rule 89 and Rule 90 cannot have any bearing in this connection. If the decisions which have construed Section 311 of the C. P. C. 1882 are relevant in this connection it is clear in view of the decision of the Judicial Committee in Birj Mohun Thakur v. Rai Uma Nath Chowdhry, (1893) ILR 20 Cal 8 (PC), that an auction purchaser cannot apply to set aside a sale under Order 21. Rule 90, C. P. C. The expression 'person whose immovable, property has been sold' in the Code of 1882 was construed in the Full Bench decision of the Calcutta High Court in Asmutunnissa Begum v. Ashruff AH, (1888) ILR 15 Cal 488 (FB) to mean ''any person whose interests were affected by the sale' and the legislature adopted these words in the 1908 Code. The non-inclusion of an auction purchaser in Order 21, Rule 90, C. P. C. especially because of the decision in (1893) ILR 20 Cal 8 (PC), is a circumstance that cannot be overlooked. It is an accepted rule of construction as pointed out by the Privy Council in Abdur Rahim v. Abu Md. Barkat Ali, AIR 1928 PC 16. Their Lordships said:--

'It is a sound rule of interpretation to take the words of a statute as they stand and to interpret them ordinarily without any reference to the previous state of the law on the subject or the English law upon which it may be founded, but when it is contended that the Legislature intended by any particular amendment to make substantial changes in the pre-existing law, it is impossible to arrive at a conclusion without considering what the law was previously to the particular enactment and to see whether the words used in the statute can be taken to effect the change that is suggested as intended.'

4. The decisions in Gopalakrishnayya v. Sanjeeva Reddi, 33 Mad LJ 228 = (AIR 1920 Mad 145) Ravinandan Prasad v. Jagarnath Sahu, ILR 47 All 479 = (AIR 1925 All 459) and A. I. Railwaymen's Benefit Fund Ltd. v. Ramchand, AIR 1939 Nag 179 would interpret the word 'interests' in Order 21, Rule 90 C. P. C. to include the interests of the auction purchaser also. A different view was taken in Surendra Nath Das v. Alauddin Mis-try: AIR 1928 Cal 828; K. V. A. L. Chettiar Firm v. M. P. Maricar, AIR 1929 Rang 33(1). Nihal Chand v. Pritam Singh, AIR 1932 Lah 468(2) and Balkrisnna v. Sakharam, AIR 1936 Bom 311.

5. In this connection it is necessary to refer to some of the other provisions in the Code. Order 21, Rule 64, provides that the person declared to be the purchaser of immovable property shall pay immediately after such declaration a deposit of twenty-five per cent on the amount of his purchase-money to the officer and in default of such deposit the property shall forthwith be resold. Order 21, Rule 85 provides that the purchaser shall pay the full amount of the purchase money into court on the 15th day from the date of the sale of the property. Order 21, Rule 86 says that if there is default to comply with Rule 85 of Order 21. the deposit may, if the Court thinks fit, after defraying the expenses of the sale be forfeited to the Government, and the property shall be resold, and the defaulting purchaser shall forfeit all claim to the property cr to any part of the sum for which it may subsequently be sold. Order 21, Rule 71, provides that any deficiency of price which may happen on a re-sale by reason of the purchaser's default, and all expenses attending such re-sale, shall be certified to the Court by the officer or other person holding the sale, and shall, at the instance of either the decree-holder or the judgment-debtor, be recoverable from the defaulting purchaser under the provisions relating to the execution of a decree for the payment of money.

6. In Manilal Mohanlal v. Sayed Ahmed, AIR 1954 SC 349 their Lordships of the Supreme Court decided that Order 21. Rules 84, 85 and 86 requiring the deposit of 25 per cent of the purchase-money immediately, on the person being declared as a purchaser, such person not being a decree-holder, and the payment of balance within 15 days of the sale, are mandatory and upon non-compliance with these provisions there is no sale at all. According to their Lordships in the event of a default either under Order 21, Rule 84 or Rule 85 the proceedings for sale are completely wiped out as if they do not exist in the eye of law. This decision has been followed in Ramchand Spg. & Wvg. Mills v. Bijli Cotton Mills (P) Ltd. Hathras, AIR 1967 SC 1344.

7. Persons claiming title paramount to the judgment-debtor or persons claiming to be the purchasers of immovable property sold in court auction from the judgment-debtor prior to the attachment are not qualified to maintain an application under Order 21, Rule 90. The remedy of such a person is either to proceed under Order 21, Rule 58, or under Order 21, Rules 97 to 100, C. P. C. It is not necessary to decide in this appeal whether 'interests' in Order 21, Rule 90, mean only proprietary or possessory interest or will include even pecuniary interests. But whatever may be the nature of the 'interests' the question is whether they should be present prior to the sale. The decision in AIR 1939 Nag 179 which supports the auction purchaser took the view that the auction purchaser has got interests even prior to the sale. It was observed:

'In ILR 51 Cal 495 = (AIR 1924 Cal 786) Dhirendra Nath Roy v. Kamini Kumar Pal, the expression 'any person whose interests are affected by the sale was held not restricted to proprietary or possessory title so as to exclude pecuniary interest. On that wide interpretation, a decree-holder who has lost his right to rateable distribution was held to have such interest as would entitle him to apply under this Rule to set aside a sale held at the instance of another creditor. Can it be said that the auction-purchaser has no pecuniary interest that is affected by the sale? It is obvious that an execution sale primarily affects the interests of three parties although their interests may be different and conflicting, namely the decree-holder, the judgment-debtor and the auction-purchaser. Any person who comes forward to bid at the auction does so manifestly because he has some interest in the purchase of the property. The bidders are persons who are interested in converting their cash into the property which is offered for sale. The interest of the purchaser at the time of the sale appears pecuniary but by necessary implication it comprises an inchoate interest in the property. It cannot therefore be gainsaid that the auction-purchaser has an interest to be protected just &s; the decree-holder or the judgment-debtor has.'

8. In ILR 47 All 479 = (AIR 1925 All 459), the word 'interests' was interpreted by Walsh, J. in the following manner:

'I find myself compelled to hold as a matter of law that a person who is the highest bidder, whose bid is accepted, who is compelled by law to pay a deposit, and unless something intervenes, is compelled by law to complete his purchase, is a person 'whose interests are affected by the sale. It is impossible to use a wider term than 'a person's interest.' In the ordinary use of the word in the English language it is a term covering every sort of interest recognised by law, such as, in the case of an auction purchaser, liability to pay the money, liability to complete and take a transfer of the property, and from his own point of view the necessity of finding the necessary funds, and also the necessity of carrying through to fruition the provisional contract into which he has entered. If the expression were 'interests in the property', it would of course be confined to an interest in the property sold, antecedent to the sale. If the word were merely 'interest' without the plural and without the words 'in the property' it might be possible to hold that the word 'interest' was confined to interest in the thing itself at the time of the sale. But that is not the expression, and to my mind the actual expression in the rule is free from ambiguity of difficulty of any kind and ought to be construed as meaning what it says.'

9. We find it difficult to agree with the reasoning in the above two decisions and to hold that the auction purchaser has got sufficient pecuniary interest prior to the sale to see that the sale is conducted in conformity with the provisions of the Civil Procedure Code. A logical extension of the reasoning in AIR 1939 Nag 179 and ILR 47 All 479 = (AIR 1925 All 459) will be to hold that even unsuccessful bidders taking part in the auction are entitled to the benefit of Order 21, Rule 90, C. P. C. Suppose a non-existing encumbrance is disclosed in the proclamation of sale by the decree-holder. It may be that unsuccessful bidders would have been prepared to purchase the property at higher price if the wrong disclosure was not in the mere proclamation. But if immediately after the sale they came to know that the statement regarding the encumbrance is wrong it may be possible in a wider sense to say that they are persons whose interests will be affected fay the sale and therefore competent to file applications under Order 21, Rule 90, C. P C. We are sure that such could not be the intendment of Order 21, Rule 90 C. P. C, We cannot therefore, accept the very wide interpretation of the term 'interests' in the several decisions including those in AIR 1939 Nag 179 and ILR 47 All 479 = (AIR 1925 All 459).

10. It is also not possible to follow the reasoning in these decisions because of the decision of the Supreme Court in AIR 1954 SC 349. According to their Lordships of the Supreme Court, if there is no compliance of Order 21, Rules 84 and 85 there would be no sale at all. Even if an auction-purchaser were to file an application before the payment of the purchase money under Order 21, Rule 85 it is obligatory for him to deposit the 3/4th of the sale amount. Otherwise the sale proceedings will be wiped out and the application be filed under Order 21, Rule 90, C. P. C. wil be infructuous. In the light of the Supreme Court's decision, it is even possible to hold that there will be no completed sale before the payment of the amount under Order 21, Rule 85, C. P. C. The view which will be consistent with the decision of the Supreme Court is to hold that an auction purchaser cannot maintain an application under Order 21. Rule 90, C. P. C. We also think it necessary to point out that our view gains strength because of Order 21, Rule 91. C. P. C. which enables the purchaser at an execution to have the sale set aside only on the ground that the judgment-debtor had no saleable interest in the property sold.

11. If Order 21, Rule 90 comprehends the filing of an application by an auction purchaser that rule will be sufficient to cover cases where the judgment-debtor had no saleable interest in the property. Order 21. Rule 91. C. P. C. will then be unnecessary. It is well known that a Court sale carries with it no guarantee that the property sold in auction is that of the judgment-debtor or that it is free from any defect of title and the principle of caveat emptor applies to such sales. Sale in execution of the decree is not void for the reason that the property sold in court auction does not belong to the judgment-debtor. Probably that is the reason why the legislature wanted to specifically give a remedy to the auction-purchaser only in cases where there is total absence of title and not in cases of defect of title. We therefore hold that the appellant cannot maintain a petition under Order 21, Rule 90. C. P. C.

12. Order 21, Rule 91 C. P. C. cannot have an application at all as it enables the auction purchaser to set aside the execution sale only on the ground that the judgment-debtor had no interest in the property sold. It is not the appellant's case that the judgment-debtor had no interest in the property sold in auction.

13. The learned counsel for the appellant then submitted that he is entitled to claim the relief under Section 151, C. P. C. In the view we have taken, there is no scope for applying Section 151 in the case before me. Probably in appropriate cases it may be necessary to prevent abuse of process of Court to interfere under Section 151 and set aside the sale. After hearing counsel we see no reason at all for interference under Section 151. C. P. C. The learned counsel for the respondent pointed out that in view of the subsequent conduct of the appellant in depositing the balance of the auction amount and the stamp duty for getting the sale banned he must be deemed to have waived his objection to the sale. There is considerable force in the submission, but in the view we have taken regarding the claim of the appellant for setting aside the Court sale it is unnecessary to decide this point. We are therefore of the view that the appeal is without substance. We therefore dismiss the same, but we make no order as to costs.


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