1. This second appeal arises out of proceedings in execution of a mortgage decree. The appellant is a Court auction purchaser in execution of that decree. Respondents 1 to 3 claimed that they were entitled to the eastern half of the property purchased by the appellant. The proceedings commenced as an original suit in the first instance, but was subsequently converted into an application under Section 47 Civil Procedure Code. Respondents 1 to 3 were the plaintiffs and o the appellant was the first defendant. The first Court, the executing Court, dismissed the application, but on appeal by the appellant herein-before the Court of the Subordinate Judge, Tirunelveli, respondents 1 to 3 have been declared entitled to the property claimed by them. Hence this second appeal.
2. The facts are as follows: The subject matter of the dispute between the parties is a house within the limits of Malapalayam Panchayat The entire house is described in the application as the first schedule. The portion claimed by the respondents r to 3 is described in the second schedule. The second schedule is the eastern half of the entire house. This property originally belonged to one Mohamad Abdullah Labbai. He died leaving behind him his son, Sahul Hamid, and two daughters, Asan Bathumal Bivi and Aminal Bivi. Respondents 1 to 3 are the children of Asan Bathummal Bivi. Asan Bathu'm mal died a good many years ago. She had another son called Abdul Jaleel. The property devolved upon the heirs of Abdullah Lebbai; Sahul Hamid became entitled to a half share, and each of the daughters. Asan Bathummal and Aminal Bivi became entitled to a quarter Aminal Bivi conveyed her quarter share in the house by two deeds dated 2-6-1946 and 11-6-194C. Abdul Jaleel -relinquished his interest in this property and in the other properties belonging to Abdullah Labbai in favour ox respondents 1 to 3 under a release deed dated 15-3-1951.
It will be convenient to refer to respondents 1 to 3 as the respondents in this judgment. Thus, the respondents became entitled to the half share in the first schedule house. The other half share belonged to Sahul Hamid. In 1946, Sahul Hamid, claiming to be the exclusive owner of the property, executed a mortgage bond in favour of one Abdullah Taraganar. This was behind the back of the respondents. Unaware of this mortgage the respondents filed a suit for partition in O.S. No. 449 of 1951: on the file of the District Munsif, Tirunelveli, claiming their hall: share in nil the properties of Abdullah Labbai including the suit property. The mortgagee, Abdullah Taraganar was not impleaded as a party. Sahul Hameed, who was the first defendant in that suit, appears to have raised a contest disputing the respondents' claim for a share. Abdullah Taraganar, the mortgagee, instituted a suit to enforce the mortgage O.S. No. 420 of 1952 on the file of the same Court, but he, however, impleaded the respondents, as defendants 2, 3 and 6. They contended that Sahul Hamid was not competent to execute a mortgage, as if he was the full owner of the property, and that the mortgage would not bind their half share. Finding himself in a difficult predicament, Abdullah Taraganar discreetly exonerated the respondents from the mortagage claim. If is specifically stated in the judgment in O.S. No. 429 of 'E952 that the respondents are exonerated from the suit. But, unfortunately, however, the decree that was drafted in pursuance of that judgment made it appear, as if all the defendants in the suit, the mortgagor Sahul Hamid and the present respondents, were jointly and severally liable to pay the mortgage decree. Nobody noticed this defect in the decree, at the time when it was drafted.
The partition suit filed by the respondents ended in a final decree on 5-2-3954. There was a partition of all the assets of the late Abdullah Labbai by metes and bounds, and eventually the eastern half of the suit property, which is the second schedule, was allotted to the respondents. In execution of that decree, they applied to the Court for delivery of possession of the second schedule property, but they were met with the obstruction of the appellant. It must now be mentioned that, in execution of the mortgage decree obtained by Abdullah Taraganar against Sahul Hamid after exonerating the respondents, the entire hypotheea, namely, the first schedule was sold in Court auction, and the appellant became the purchaser. It is true that ostensibly he is a third party purchaser. It is, however, alleged by the respondents that he is only a creature of Abdullah Taraganar. Be that as it may, the respondents could not take delivery of the property from the appellant. After some infructuous attempts to get delivery of the property, the respondents filed an application for amendment of the mortgage decree in I. A. 618 of I954 m O.S. 420 of I952 to have the decree in the mortgage action corrected and re-drafted in accordance with the judgment therein. The appellant, the Court auction purchaser, was impleaded as a party to this application, and he objected to the amendment. But his objection was overruled, and the amendment prayed for was granted.
The learned District Munsif, who disposed of the amendment application, however, observed thus
'The auction purchaser has purchased only the right, title and interest of the first defendant and he would be entitled to the same even if the amendment is allowed.'
A civil revision petition was filed in this Court by the auction purchaser, which was dismissed by Basbeer Ahmed Sayeed, J., even at the stage of admission. The learned Judge observed thus:
'This order is not. to be taken as adjudicating 'upon the rights of the auction purchaser. There is no reason to interfere ......'
Under these circumstances, the respondents filed the suit O.S. No. 270 of 1956, which was later on converted into an application under Section 47 Civil Procedure Code for a declaration of their title to the second schedule property and for possession with mesne profits at the rate of Rs. 80 per year. The learned District Munsif who held an enquiry into the application, reached the conclusion that the appellant was a bona fide third party Court auction purchaser, who purchased the property believing in good faith that the decree made the respondents as much liable as the original mortgagor himself, and that therefore, even if they bad succeeded in getting a half share of the property as a result of the partition suit, they could not put forward their title as against him.
This judgment was set aside by the learned Subordinate Judge, on the ground that there was no warranty of title in a Court sale, and that, if in fact and in truth, the respondents were entitled to a half share, the mere fact that the appellant purported to purchase the entire property would not clothe him with a higher title than what the original mortgagor had respect of the property. I may at once observe that the judgment of the learned Subordinate Judge has missed the real point in controversy between the parties. To say the least, his judgment is unsatisfactory.
3. The real point that arises for consideration in this second appeal is, whether the appellant is a bona fide third party Court auction purchaser, who purchased the property on the faith of the terms of a decree which have now been corrected, as being not in conformity with the judgment. If the mortgagee, Abdullah Taraganar had purchased the property himself, he could not have successfully resisted the claim of the respondents. It is now settled law that a third party purchaser who acts bona fide and purchases a property in a Court auction sale in execution of a decree, gets an indefeasible title, once. the sale is confirmed even if the decree happens to be ultimately reversed or modified on appeal. The rights of such a person are different from the rights of a decree holder purchaser, who, in the event of the decree. being set aside, is bound to restore the property back to the original owner by way of restitution. In the present case, it is true that the decree itself has not been reversed or modified; but, in my opinion, the amendment of the decree is, in reflect, a variation of the decree. 1 have, therefore, to uphold the claim of the appellant, if it were to be found that he is a bona fide purchaser.
The distinction between a decree-holder purchaser and a third party purchaser was pointed out by the judicial Committee in Nawab Zainul Abdin Khan v. Mohamed Asghar Ali Khan, 15 Ind App 12 (PC). Sir Barnes Peacock, who delivered the judgment of the Board, observed thus at p. 15:
'It appears to their Lordships that there is a great distinction between the decree-holders who came in and purchased under their own decree, which was afterwards reversed on appeal, and the bona fide purchasers who came in and bought at the sale in execution of the decree to which they were no parties, raid at a time when that decree was a valid decree, and when the order for the tale was a valid order ......... So in this case those bona fide purchasers who were no parties to the decree which was valid avid in force, bad nothing to do further than to look to the decree and to the order of sale.'
This decision lays down the principle that a bona fide purchaser, who is not a party to the decree, should be protected from the sale being defeated by reason of the subsequent events which might affect the decree. I do not, however, understand the observation of the Board, as laying down an inflexible rule of law that there is no duty cast upon a purchaser beyond 'looking to the decree and to the order of sale'. The word 'bona. fide' has to be understood and interpreted according to the context in which it occurs, and according to its real import in that context. For example, a bona fide sale might mean that the alleged transaction is not a sham affair. A bona fide dispute can only mean a situation of real contest and not a mock quarrel. A bona fide Court auction purchaser refers to a person who has not purchased litigation but property for investment or other purposes. 'Bona fide' means good faith. The essence of good faith is honesty. Generally speaking, negligence may not be incompatible with good faith. 'Good faith' is defined in the General Clauses Act, 10 of 1897, as 'a thing shall be deemed to be done in 'good faith' where it in fact done honestly, whether it is done negligently or not'. That definition, of course, may not strictly be applicable to a consideration of a question like the present, but it is useful to some extent,- for the purpose of ascertaining the true content and meaning of the word 'bona fide' or 'good faith'.
But even negligence may, in a particular context, mean lack of bona fides. Lord Selbourne observed in Agra Bank Ltd. v. Barry, (1874) 7 HL 135-
'Omission to investigate title may be evidence, if it is not explained, of a design, inconsistent with bona fide dealing, to avoid knowledge of the title.'
Negligence, bordering on recklessness or complete indifference, is hardly consistent with bona fides. It is the state of mind that determines the question of bona fides. The question, therefore, whether a person acted bona fide in purchasing the property in a Court sale is very largely one of fact and. resolves itself into this. Did he acquaint himself fairly with the proceedings in Court which resulted in the decree put in execution? Did he act as a man of ordinary prudence and caution exercising such diligence as may be expected of a person who was parting with his money to make a purchase? The law has, no doubt, not prescribed any minimum or maximum, as regards the standard of care and caution necessary before a person can answer the description of a bona fide purchaser. . Tint certainly a person cannot say that he need not look beyond the four corners of the decree or the terms of the order of the Court directing a sale, on the assumption that the test of bona fides is satisfied on a perusal of the decree and the order for sale.
4. Mr. K. Ramamurthi Aiyar, learned counsel for the appellant, referred me to the decision in Rewa Mahton v. Ram Kishen Singh, ILR 14 Cal 8 (PC) which is also a case of the Judicial Committee, in support of his contention that there is no duty on the part of a third party seeking to purchase property beyond acquainting himself with the terms of the decree. In that case, the Court ordered sale in execution of a decree. As a matter of fact, the judgment-debtor had a cross-decree against the decree-holder. Without setting off the cross-decree, the decree-holder executed the decree for the full amount. A third party bona fide purchased the property in execution of the decree. The Judicial Committee held:
'...... a purchaser of the property sold is not. bound to inquire into the correctness of the order for execution, any more than into the correctness of the judgment upon which the execution issues ............ he is not bound to enquire whether the judgment-debtor holds a cross-decree of higher amount against the decree-holder any more than he is to enquire, in an ordinary case, whether the decree, under which execution has issued, has been satisfied or not....... Where property, sold in execution of a valid decree, under the order of a competent Court, was purchased bona fide and for fair value, the mere existence of a cross decree for a higher amount in favour of the judgment-debtor, without any question of fraud, would not support a suit by the latter against the purchaser to set aside the sale.'
It must be noted that, even by the exercise of ordinary diligence, it would not have been open to the purchaser in that case to ascertain whether the judgment-debtor held another decree against the decree-holder. But in the present case, the easiest thing for the Court auction purchaser would have been to ascertain the contents of the judgment upon which the decree was founded. Learned counsel also referred me to a decision of Subba Rao, C. J., (as he then was) in Lakshminarayana v. Ramanna 1954 2 Mad LJ (AP) 6 : AIR 1954 AP 5. I do not think that case is really of any assistance in the present context. It was contended in that case that there was an essential difference between an ex parte decree and a decree on merits, and that therefore the decisions holding that the title of a third party purchaser in execution of a decree is not affected by the reversal of the decree would not apply to a case of purchase in execution of an ex parte decree. The learned Chief Justice, if I may say so with respect, rightly repelled this contention. An execution sale in favour of a third party to the decree remains unaffected by a subsequent modification or extinction of the decree. The position would be the same whether the decree is passed after contest or on submission to decree or by remaining ex parte.
5. What are the facts in the present case? There is an averment, and I may say it is only a bare averment on the part of the respondents, that the appellant is a dummy for Abdulla Taraganar. except that both of them are Muslims, there is no evidence to show that Abdullah Taraganar nominally purchased the property in the name of the appellant. But, in my opinion, the burden of proof is upon the Court auction purchaser, the appellant, to show that he acted with bona fides. There is no presumption that a third party purchaser is a bona fide purchaser for value.
It is significant to note that the purchaser has not gone into the witness-box, to depose to the circumstances under which he made the purchase. Apparently, he avoided the witness box, being apprehensive that he might come out in his true colours, if he were to face a cross-examination. An adverse inference will have to be drawn from the appellant's abstention from the witness-box. One thing is clear and it is this. If the appellant had merely looked into the judgment, he would have found that the present respondents were exonerated from the mortgage claim. The judgment and decree go together, and it is inconceivable that a person should claim to have acted bona fide by merely looking into the decree, which was wholly at variance with the terms of the judgment. I am not prepared to hold that the appellant is a bona fide third party purchaser.
6. In this view of the matter, it is unnecessary to consider whether the amendment of the decree long after the purchase would, in any way, affect his rights. I have been referred to a decision of Agha Hussain v. Qasim Ali, : AIR1926All35 , which held that the amendment of the decree would not affect the rights to third parties. It is unnecessary to express any opinion upon that point.
7. In the result, the second appeal fails and is dismissed with costs. No leave.