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Ramnath Chunilal Vs. Grandhi Sattirazu and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1931Mad465; (1931)61MLJ909
AppellantRamnath Chunilal
RespondentGrandhi Sattirazu and ors.
Cases Referred(Umesh Chandra v. Mt. Safiyatannessa A.I.R.
Excerpt:
.....2 to 4 were entitled to notice in proceedings under rule 89 the absence of notice to some of the decree-holders like respondents 2 and 4 though others had notice invalidates the order setting aside the sale as against those who had no notice. seeing that the respondents have absolutely no merits but have to rely solely on what is at best an omission, the result would be the same and the sale would again be set aside. 7. it may be unnecessary but perhaps as well to say that i say nothing about the 'persons affected''in petitions under rules 90 and 91. 8. in the result the order of the learned judge is set aside and the petitioner is declared entitled to recover from the respondents 2 to 4 such sums as they may have received by way of rateable distribution out of the purchase-money..........rule 92 on an application under order 21, rule 89, is notice of the application necessary to other decree-holders who have applied for rateable distribution of the purchase-money deposited by the purchaser? (2) if such notice: is necessary, but has been given to some but not to all such decree-holders, can the purchaser whose sale has been set aside enforce repayment of the purchase-money under rule 93 against these decree-holders who have not received notice but have received their share of the purchase-money?2. the facts are as follows: in execution of the decree in o.s. no. 38 of 1920 in the district court of east godavari immovable properties belonging to the debtors were sold on or about 5th january, 1925 and purchased in different lots of which one lot was purchased by the.....
Judgment:

Krishnan Pandalai, J.

1. Two questions arise in this petition: (1) Before an execution sale is set aside under Order 21, Rule 92 on an application under Order 21, Rule 89, is notice of the application necessary to other decree-holders who have applied for rateable distribution of the purchase-money deposited by the purchaser? (2) If such notice: is necessary, but has been given to some but not to all such decree-holders, can the purchaser whose sale has been set aside enforce repayment of the purchase-money under Rule 93 against these decree-holders who have not received notice but have received their share of the purchase-money?

2. The facts are as follows: In execution of the decree in O.S. No. 38 of 1920 in the District Court of East Godavari immovable properties belonging to the debtors were sold on or about 5th January, 1925 and purchased in different lots of which one lot was purchased by the petitioner, a stranger to the decree, for Rs. 4,000 and he deposited the purchase-money in the usual course. There were a number of other decrees against the same judgment-debtors, the holders of which including the respondents 2 to 4 and the petitioner himself who held one of them had applied under Section 73 for rateable distribution of the assets when realised. The sale was never confirmed because on 4th February, 1925, i.e., within 30 days of the sale, the 5th respondent who had obtained a mortgage from the judgment-debtors of the property prior to the sale but after its attachment deposited the amount of the decree in O.S. No. 38 of 1920 for payment to that decree-holder together with 5 per cent, of the purchase-money for payment to the purchasers and applied under Order 21, Rule 89 and Rule 92 (2) for the sales being set aside. To that petition the decree-holders in O.S. No. 38 of 1920, the judgment-debtors and the auction-purchasers including the present petitioner were added as respondents. Of the holders of other decrees two had the notice of the petition, i.e., the present petitioner who was impleaded was himself the holder of another decree. The 3rd respondent, another decree-holder, intervened with a petition objecting to the sale being set aside as he had attached the money paid by the mortgagee to set aside the sale. The petition was dismissed by the District Judge on the ground that the 5th respondent had no right to apply as his mortgage though before the sale was subsequent to the attachment of the property sold. But this Court in appeal on 25th February, 1926, set aside that decision and held that 5th respondent had a right to apply and set aside the sale. See Viranna v. Sattiraju (1926) 52 M.L.J. 157. In the appeal the same persons were impleaded as in the first Court and though 3rd respondent was not formally impleaded it is impossible to believe that he being a local pleader of position and having intervened in the Lower Court was not aware of the proceedings in appeal. After the decision in appeal, the petitioner on 16th August, 1926, applied to the District Court under Rule 93 for repayment of the purchase-money and for payment of the 5 per cent. on it to which he was entitled and as in the meanwhile the respondents 2 to 4 had received their rateable shares, they were impleaded. The learned Judge has held that the respondents 2 to 4 having received rateable distribution out of the purchase-money are persons affected under the proviso to Rule 92 (2) to whom notice of the application to set aside the sale should have been given, that they had no such notice and that therefore they are not bound by the order in the appeal or liable to repay what they received under R.93.

3. The learned Judge's order results, as he himself says, in the obvious injustice that the purchaser by Court sale whose sale has been set aside by the Court not at his own instance as in applications under Rule 91 but at the instance of the judgment-debtor's alienee and who according to the law applicable both to private and Court sales has the right to get back his money if the sale falls through without his default is deprived both of the property and his money. The only decision referred to by the learned Judge is the one reported in Komandur Krishnamacharlu v. Danoji : (1918)35MLJ604 . That was a case of an application under Rule 91 by the purchaser himself on the ground that the judgment-debtors had no saleable interest in the property sold. He succeeded in his application but did not make parties to the proceeding certain other decree-holders who had obtained orders for rateable distribution of the sale proceeds before the application was made to set aside the sale. The District Munsif held on an application by the purchaser under Rule 93 that those decree-holders were not bound by the order setting aside the sale and therefore were not bound to repay the money they had received. Abdur Rahim, J., in upholding this order did so on the ground that even if the District Munsif had erred in law he was not disposed to interfere in revision. He however made the observation that:

if it were necessary to express my view on this point, I should be inclined to hold that persons who had obtained orders for rateable distribution are persons affected by an application to set aside the sale within the meaning of Rule 92, and an order made behind their back cannot bind them for the purposes of Rule 93.

4. This is not a decision. Giving every weight to the observation of so learned a Judge it was made in a case in which the facts were different from those in this case. In the first place the present is a case of an application under Rule 89 by the judgment-debtor's alienee whereas that was an application by the purchaser himself under Rule 91. Assuming for the moment that persons who have got orders for rateable distribution are 'persons affected' within the meaning of Rule 92 in applications both under Rule 89 and Rule 91, with which I will deal presently, still the consequences of a failure to make such a person party need not be the same when the failure was by the judgment-debtor or his alienee as where it is by the purchaser himself. Secondly, there is nothing to show that before the application was made on 4th February, 1925, any of the respondents had obtained orders for rateable distribution. It is impossible that any such order could have been made because 30 days had not then elapsed after the sale and 1 cannot imagine how any order for rateable distribution can be made before the sale is confirmed and the title passes. These orders were in all probability passed after the District Judge dismissed the petition. If therefore only those who have obtained orders as distinguished from those who have merely applied for rateable distribution before the date of the application had to be impleaded in the present application, none of the respondents come within that class. Lastly, so far at least as the 3rd respondent is concerned, he intervened on his own petition in the present matter before the District Judge and was heard and as 1 have stated must have had notice of the proceedings in appeal.

5. But it seems to me that in applications under Rule 89 at any rate persons (decree-holders) who have applied for rateable distribution of the sale proceeds have no such direct or proximate interest as to make them persons 'affected thereby' and are therefore not entitled to notice under Rule 92. No doubt, if the sale is upheld they have a chance of getting a share of the sale proceeds and if it is set aside they lose that chance. But that chance they derive not because they are purchasers of the property for whose loss of bargain a solatium is provided by Rule 89 or the decree-holder who has brought it to sale for whose satisfaction (and not that of other decree-holders) that rule specially provides or the judgment-debtor for whose benefit that rule provides a period of grace of thirty days for paying the particular decree debt (and not the debts of other decree-holders) and avoiding the sale. In short, the chance for other decree-holders of getting rateable distribution is entirely contingent on the sale being confirmed which itself is contingent on the judgment-debtor or his alienee not paying up the particular decree debt plus 5 per cent. within 30 days of the sale. The provision thus being one intended to relieve the judgment-debtor and for that purpose of satisfying only the particular creditor who has taken the trouble to execute his decree and to bring the debtor's property to sale and the purchaser who has advanced cash for the price, those are the three classes of persons affected by a petition under Rule 89. The other decree-holders have only a contingent interest in the sale, contingent on its not being set aside by payment of the particular decree debt. As observed by the Privy Council in a case under the Code of 1882 which equally applies to the present Code, 'to bring Section 295 (present Section 73) into play, certain conditions are necessary and one of them is that there should be assets held by the Court.' (Mina Kumari Bibi v. Bijoy Singh Dudhuria , Annamalai Chettiar v. Palamalai Pillai I.L.R. (1917) 41 M. 265 : 33 M.L.J. 707). It is difficult to see how other decree-holders if they were given notice under Rule 89 are in any position to affect the decision of a petition under that rule, by which, read with Rule 92 (2), as soon as the steps necessary are taken (as to which see Narayana Sahu v. Pentamma I.L.R. (1929) 52 M. 861 : 57 M.L.J. 310) the Court is bound to set aside the sale. In the case just cited it was held that it is not essential for an order under Rules 89 and 92 (2) that the auction-purchaser should be included in the petition if it is filed in time or that the notice to him should be taken out or served within the 30 days so long as he is served before the order. No more do I see any necessity for complicating proceedings under Rule 89 by requiring that other decree-holders who have but a contingent interest in the matter should be notified.

6. In this view it becomes unnecessary to decide whether if the respondents 2 to 4 were entitled to notice in proceedings under Rule 89 the absence of notice to some of the decree-holders like respondents 2 and 4 though others had notice invalidates the order setting aside the sale as against those who had no notice. In this case I asked the learned advocates for the respondents to say in what way the absence of notice had prejudiced them, in other words, how they could have avoided the sale being set aside, if the 5th respondent, being held to be entitled to apply, had paid the necessary sums and made the application in proper time. They replied that they were entitled to rely on the statutory requirement of notice and that in the absence of such notice the order passed behind their back cannot bind them. I find it difficult to reconcile myself to the position that a sale conducted by the Court could be declared invalid so far as the judgment-debtor and decree-holder and purchaser are concerned, and yet be valid as against another creditor because a notice which should have been sent to him was not sent. In such a case I should say that the omission was a mere irregularity which dad not affect the validity of the order (Umesh Chandra v. Mt. Safiyatannessa A.I.R. 1928 C. 267) ; and in any case there would be no difficulty in view of Section 151 of the Civil Procedure Code to regularise the matter by treating the original petition to set aside the sale as still pending so far as the respondents who had no notice are concerned and in disposing of the matter in their presence. Seeing that the respondents have absolutely no merits but have to rely solely on what is at best an omission, the result would be the same and the sale would again be set aside. It is however unnecessary to pursue the matter.

7. It may be unnecessary but perhaps as well to say that I say nothing about the 'persons affected'' in petitions under Rules 90 and 91.

8. In the result the order of the learned Judge is set aside and the petitioner is declared entitled to recover from the respondents 2 to 4 such sums as they may have received by way of rateable distribution out of the purchase-money deposited by him together with interest at 5 per cent. from the date of receipt to date of payment. The (petitioner is also entitled to 5 per cent, of his purchase-money out of the amount deposited by the 5th respondent. The Lower Court will ascertain the amounts payable by each respondent and make orders accordingly. The petitioner and 5th respondent will have their costs in the Lower Court and here from the respondents 2 to 4 in proportion to their respective liabilities.


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